<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 11, 1997
REGISTRATION NO. 333-24715
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AURORA FOODS INC.
(formerly MBW Foods Inc.)
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2099 13-3921934
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
</TABLE>
--------------------------
Community Corporate Center
445 Hutchinson Avenue
Columbus, Ohio 43235
(614) 436-8600
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
--------------------------
MR. THOMAS J. FERRARO
PRESIDENT
AURORA FOODS INC.
COMMUNITY CORPORATE CENTER
445 HUTCHINSON AVENUE
COLUMBUS, OHIO 43235
(614) 436-8600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------
COPIES TO:
<TABLE>
<S> <C>
Mr. James B. Ardrey Frank L. Schiff, Esq.
Dartford Partnership White & Case
L.L.C. 1155 Avenue of the Americas
456 Montgomery Street, New York, New York 10036-2787
Suite 2200 (212) 819-8752
San Francisco, California
94104
(415) 982-3019
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the information of a holding company and there is compliance
with General Instruction G, check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH OFFERING AGGREGATE
NOTE OF SECURITIES AMOUNT TO BE PRICE PER OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED NOTE(1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
9 7/8% Series B Senior
Subordinated Notes due 2007..... $200,000,000 100% $200,000,000 $60,606.06
</TABLE>
(1) In accordance with Rule 457(f)(2), the registration fee is calculated based
on the book value, which has been computed as of July 11, 1997, of the
outstanding 9 7/8% Senior Subordinated Notes due 2007 and 9 7/8% Series C
Senior Subordinated Notes due 2007 of Aurora Foods Inc. to be cancelled in
the exchange transaction hereunder. $30,303.03 has been paid to the
Commission prior to the filing of this Amendment.
--------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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- --------------------------------------------------------------------------------
<PAGE>
AURORA FOODS INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF
ITEMS OF FORM S-4
<TABLE>
<C> <S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside Front Cover Page; Cross Reference
Outside Front Cover Page of Prospectus..... Sheet; Inside Front Cover Page
2. Inside Front and Outside Back Cover Pages Inside Front Cover Page; Outside Back Cover
of Prospectus.............................. Page
3. Risk Factors, Ratio of Earnings to Fixed Prospectus Summary; Risk Factors; Pro Forma
Charges and Other Information.............. Financial Information; Selected
Historical Financial Data--The Company
and MBW Predecessor; Selected Historical
Financial Data--LC Business; Business
4. Terms of the Transaction................... Prospectus Summary; The Exchange Offer;
Certain United States Federal Income Tax
Considerations; Description of Notes
5. Pro Forma Financial Information............ Prospectus Summary; Pro Forma Financial
Information
6. Material Contacts with the Company Being Not Applicable
Acquired...................................
7. Additional Information Required for Not Applicable
Reoffering by Persons and Parties Deemed to
be Underwriters............................
8. Interests of Named Experts and Counsel..... Not Applicable
9. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act
Liabilities................................
B. INFORMATION ABOUT THE
REGISTRANT
10. Information with Respect to S-3 Not Applicable
Registrants................................
11. Incorporation of Certain Information by Not Applicable
Reference..................................
12. Information with Respect to S-2 or S-3 Not Applicable
Registrants................................
13. Incorporation of Certain Information by Not Applicable
Reference..................................
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
14. Information with Respect to Registrant Prospectus Summary; Capitalization;
Other Than S-2 or S-3 Registrants.......... Selected Historical Financial Data--The
Company and MBW Predecessor; Selected
Historical Financial Data--LC Business;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; The Acquisitions; Business;
Management; Certain Related Transactions;
Description of Notes; Description of
Senior Credit Facilities; Financial
Statements
</TABLE>
<TABLE>
<C> <S> <C>
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
15. Information with Respect to S-3 Not Applicable
Companies..................................
16. Information with Respect to S-2 or S-3 Not Applicable
Companies..................................
17. Information with Respect to Companies Other Not Applicable
Than S-2 or S-3 Companies..................
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Not Applicable
Authorizations are to be Solicited.........
19. Information if Proxies, Consents or Management; Certain Related Transactions;
Authorizations are not to be Solicited or Security Ownership
in an Exchange Offer.......................
</TABLE>
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 11, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
AURORA FOODS INC.
OFFER TO EXCHANGE
9 7/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
FOR ALL OUTSTANDING 9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
AND 9 7/8% SERIES C SENIOR SUBORDINATED NOTES DUE 2007
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED
-----------------------------------------------------------------
Aurora Foods Inc., a Delaware corporation (formerly MBW Foods Inc.) (the
"Company"), a wholly-owned subsidiary of Aurora Foods Holdings Inc. (formerly
MBW Holdings Inc.) ("Holdings"), which in turn is a wholly-owned subsidiary of
MBW Investors LLC ("MBW LLC") hereby offers, upon the terms and subject to
conditions set forth in this Prospectus (the "Prospectus") and the accompanying
Letter of Transmittal (the "Letter of Transmittal"; together with the
Prospectus, the "Exchange Offer"), to exchange up to an aggregate principal
amount of $200,000,000 of its 9 7/8% Series B Senior Subordinated Notes due 2007
(the "New Notes") for (i) up to an aggregate principal amount of $100,000,000 of
its outstanding 9 7/8% Series A Senior Subordinated Notes due 2007 (the "Series
A Notes") and (ii) up to an aggregate principal amount of $100,000,000 of its
outstanding 9 7/8% Series C Senior Subordinated Notes due 2007 (the "Series C
Notes", with the Series A Notes, the "Old Notes", and collectively with the New
Notes, the 'Notes'). The proceeds from the issuance of the Series A Notes were
used to refinance certain bank indebtedness and to pay related fees and expenses
arising from the purchase of the MRS. BUTTERWORTH'S syrup and pancake mix
business on December 31, 1996. The proceeds from the issuance of the Series C
Notes were used by the Company to pay a portion of the purchase price for the
LOG CABIN syrup business which was acquired on July 1, 1997 and to pay related
fees and expenses. The terms of the New Notes are identical in all material
respects to those of the Old Notes, except for certain transfer restrictions,
registration rights and liquidated damages relating to the Old Notes. The New
Notes will be issued pursuant to, and entitled to the benefits of, the
Indentures governing the Old Notes. The New Notes and the Old Notes are
sometimes referred to collectively as the "Notes."
Interest on the New Notes is payable semi-annually on February 15 and August 15
of each year, commencing on August 15, 1997. The New Notes will mature on
February 15, 2007. Except as described below, the Company may not redeem the New
Notes prior to February 15, 2002. On or after such date, the Company may redeem
the New Notes, in whole or in part, at any time 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
February 15, 2000, the Company may, subject to certain requirements, redeem up
to $70.0 million of the aggregate principal amount of Notes with the cash
proceeds received from one or more Equity Offerings at a redemption price equal
to 109.875% of the principal amount to be redeemed, together with accrued and
unpaid interest, if any, to the date of redemption, provided that at least
$130.0 million of the aggregate principal amount of Notes remain outstanding
immediately after each such redemption. The New Notes will not be subject to any
sinking fund requirement. Upon the occurrence of a Change of Control, (i) the
Company will have the option, at any time on or prior to February 15, 2002, 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 plus accrued
and unpaid interest 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 February 15,
2002, 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
Notes -- Optional Redemption."
The New Notes will be unsecured and will be subordinated to all existing and
future Senior Indebtedness of the Company and will be effectively subordinated
to all obligations of any subsidiaries of the Company as may exist from time to
time. On the date of issuance of the New Notes, the Company will not have any
subsidiaries; however the Indentures will not restrict the ability of the
Company to create, acquire or capitalize subsidiaries in the future. 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. As of March 31, 1997, the Company had $86.0 million of Senior
Indebtedness outstanding (excluding unused commitments of $14.0 million under
the Revolving Facility) and the Company had no Senior Subordinated Indebtedness
outstanding other than the Notes. See "Description of Notes -- Ranking."
(CONTINUED ON NEXT PAGE)
- --------------------------------------------------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
(CONTINUED FROM COVER)
The Series A Notes were originally issued and sold on February 10, 1997 in a
transaction not registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the exemptions provided in Rule 144A and
Regulation D under the Securities Act. The Series C Notes were originally issued
and sold on July 1, 1997 in a transaction not registered under the Securities
Act in reliance on the exemption provided in Rule 144A under the Securities Act.
Accordingly, the Old Notes may not be reoffered, resold or otherwise pledged,
hypothecated or transferred in the United States unless so registered or unless
an applicable exemption from the registration requirements of the Securities Act
is available.
The 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 , 1997, unless extended by the Company in its sole discretion (the
"Expiration Date"). The Expiration Date will not in any event be extended to a
date later than , 1997. Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date. In the
event the Company terminates the Exchange Offer and does not accept for exchange
any Old Notes with respect to the Exchange Offer, the Company will promptly
return the Old Notes to the holders thereof. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange, but is otherwise subject to certain customary conditions. The Old
Notes may be tendered only in integral multiples of $1,000.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in (i) the Exchange and Registration Rights
Agreement dated as of February 10, 1997 (the "Series A Exchange and Registration
Rights Agreement") by and between the Company and Chase Securities Inc., as the
initial purchaser (the "Series A Notes Initial Purchaser"), with respect to the
initial sale of the Series A Notes and (ii) the Exchange and Registration Rights
Agreement dated as of July 1, 1997 (the "Series C Exchange and Registration
Rights Agreement", with the Series A Exchange and Registration Rights Agreement,
the "Exchange and Registration Rights Agreements"), by and between the Company
and Chase Securities Inc. and Credit Suisse First Boston, as the initial
purchasers (the "Series C Notes Initial Purchasers", with the Series A Notes
Initial Purchaser, the "Initial Purchasers"), with respect to the initial sale
of the Series C Notes. Based on interpretations by the staff of the Securities
and Exchange Commission (the "Commission") rendered to third parties in similar
transactions, the New Notes issued pursuant to the Exchange Offer in exchange
for Old Notes may be offered for resale, resold and otherwise transferred by
respective holders thereof (other than any such holder which is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that the New Notes are acquired in the ordinary course
of such holder's business and such holder has no arrangement with any person to
participate in the distribution of such New Notes and is not engaged in and does
not intend to engage in a distribution of the New Notes. Only broker-dealers who
acquired the Old Notes as a result of market-making activities or other trading
activities may participate in the Exchange Offer. 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. 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 the New Notes received in exchange
for Old Notes if such New Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
There has not previously been any public market for the New Notes. The
Company does not intend to list the New Notes on any securities exchange or to
seek approval for quotation through any
ii
<PAGE>
automated quotation system. There can be no assurance that an active market for
the New Notes will develop. To the extent that an active market for the New
Notes does develop, the market value of the New Notes will depend on market
conditions (such as yields on alternative investments), general economic
conditions, the Company's financial condition, and other factors. Such
conditions might cause the New Notes, to the extent that they are actively
traded, to trade at a significant discount from face value. See "Risk Factors --
Absence of Public Market."
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to pay the expenses incident to the Exchange Offer.
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THE PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE NEW NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION TO SUCH PERSON.
------------------------
Until , 1997 (90 days after commencement of this offering), all
dealers effecting transactions in the New Notes, whether or not participating in
this offering, may be required to deliver a Prospectus.
AVAILABLE INFORMATION
The Company has filed with the Commission a registration statement on Form
S-4 (the "Registration Statement") under the Securities Act, with respect to the
New Notes. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain items of which are contained in schedules and exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. Items of information omitted from this Prospectus but contained in
the Registration Statement may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the following regional offices of
the Commission: Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material can be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 at prescribed rates. Electronic filings filed through the
Commission's Electronic Data Gathering, Analysis and Retrieval system ("EDGAR")
are publicly available through the Commission's home page on the Internet at
http://www.sec.gov.
As a result of this offering, the Company will become subject to the
periodic reporting and other informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In the event that the
Company ceases to be subject to the informational requirements of the Exchange
Act, the Company has agreed to file with the Commission and provide to the
Trustee and the holders of Notes annual reports and the information, documents
and other reports otherwise required pursuant to Sections 13 and 15(d) of the
Exchange Act. See "Description of Notes -- Certain Covenants -- SEC Reports."
iii
<PAGE>
GLOSSARY
<TABLE>
<S> <C>
Additional Assets........................ Description of Notes--Certain Definitions
Adjusted Eurodollar Rate................. Description of Senior Credit Facilities
Affiliate................................ Description of Notes--Certain Definitions
Affiliate Transaction.................... Description of Notes--Certain Covenants
Agent's Message.......................... The Exchange Offer--Procedures for Tendering
Applicable Eurodollar Rate Margin........ Description of Senior Credit Facilities
Applicable Premium....................... Description of Notes--Optional Redemption
Asset Disposition........................ Description of Notes--Certain Definitions
ATOP..................................... Prospectus Summary--The Exchange Offer
Attributable Indebtedness................ Description of Notes--Certain Definitions
Average Life............................. Description of Notes--Certain Definitions
Bank Indebtedness........................ Description of Notes--Certain Definitions
bankruptcy provisions.................... Description of Notes--Events of Default
Base Rate................................ Description of Senior Credit Facilities
beneficial ownership..................... Security Ownership
Blockage Notice.......................... Description of Notes--Ranking
Board of Directors....................... Description of Notes--Certain Definitions
Book-Entry Confirmation.................. The Exchange Offer--Procedures for Tendering
Book-Entry Transfer Facility............. The Exchange Offer--Procedures for Tendering
Business................................. Plan of Distribution--Experts
Business Day............................. Description of Notes--Certain Definitions
Capital Stock............................ Description of Notes--Certain Definitions
Capitalized Lease Obligations............ Description of Notes--Certain Definitions
Cash Equivalents......................... Description of Notes--Certain Definitions
CD&R..................................... Management--Directors and Executive Officers
Change of Control........................ Description of Notes--Change of Control
Chase Manhattan.......................... Prospectus Summary--The Acquisitions, Financings
and Related Transactions
Code..................................... Description of Notes--Certain Definitions
Collateral Account Agreement............. Collateral Account Agreement means the
Collateral Account Agreement executed and
delivered by Company (as defined in the Senior
Credit Agreement) and Administrative Agent (as
defined in the Senior Credit Agreement) on the
Closing Date (as defined in the Senior Credit
Agreement), substantially in the form of EXHIBIT
XVIII annexed to the Senior Credit Agreement,
pursuant to which Company (as defined in the
Senior Credit Agreement) may pledge cash to
Administrative Agent (as defined in the Senior
Credit Agreement) to secure the obligations of
Company (as defined in the Senior Credit
Agreement) to reimburse Issuing Lenders (as
defined in the Senior Credit Agreement) for
payments made under one or more Letters of
Credit (as defined in the Senior Credit
Agreement) as such Collateral Account Agreement
may hereafter be amended, restated, supplemented
or otherwise modified from time to time.
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Commission............................... Cover
Company.................................. Cover
Conopco.................................. Prospectus Summary
Consolidated Cash Flow................... Description of Notes--Certain Definitions
Consolidated Coverage Ratio.............. Description of Notes--Certain Definitions
Consolidated Excess Cash Flow............ Consolidated Excess Cash Flow means, for any
period, an amount (if positive) equal to (i) the
sum, without duplication, of the amounts for
such period of (a) Consolidated EBITDA (as
defined in the Senior Credit Agreement), (b) to
the extent deducted from Consolidated EBITDA (as
defined in the Senior Credit Agreement) by
virtue of clause (ii)(b) of the definition
thereof, extraordinary and unusual cash gains,
and (c) the Consolidated Working Capital
Adjustment (as defined in the Senior Credit
Agreement) MINUS (ii) the sum, without
duplication, of the amounts for such period of
(a) voluntary and scheduled cash repayments of
Consolidated Total Debt (as defined in the
Senior Credit Agreement) (excluding repayments
of Revolving Loans (as defined in the Senior
Credit Agreement) except to the extent the
Revolving Loan Commitments (as defined in the
Senior Credit Agreement) are permanently reduced
in connection with such repayments), (b)
Consolidated Capital Expenditures (as defined in
the Senior Credit Agreement) (net of any
proceeds of any related financing with respect
to such expenditures), (c) expenditures made in
connection with any Permitted Acquisition (as
defined in the Senior Credit Agreement) pursuant
to subsection 7.7(vii) of the Senior Credit
Agreement (net of any proceeds of any related
financing with respect to such acquisitions),
including without limitation transaction fees
paid in cash to the MDC Entities (as defined in
the Senior Credit Agreement) and/or Dartford (as
defined in the Senior Credit Agreement) and/or
Fenway (as defined in the Senior Credit
Agreement) in connection with such acquisitions,
so long as such transaction fees are paid in
accordance with the terms of the MDC Advisory
Services Agreement (as defined in the Senior
Credit Agreement), the Dartford Management
Agreement (as defined in the Senior Credit
Agreement) and the Fenway Agreement (as defined
in the Senior Credit Agreement), (d)
Consolidated Interest Expense (as defined in the
Senior Credit Agreement), (e) to the extent
added back to Consolidated EBITDA (as defined in
the Senior Credit Agreement) by virtue of clause
(i)(b)(9) of the definition thereof,
extraordinary and unusual cash losses, (f) to
the extent added
</TABLE>
v
<PAGE>
<TABLE>
<S> <C>
back to Consolidated EBITDA (as defined in the
Senior Credit Agreement) by virtue of clause
(i)(b)(7) of the definition thereof,
non-recurring charges paid in cash incurred
prior to June 30, 1998, and (g) the provision
for current taxes based on income of Holdings
(as defined in the Senior Credit Agreement) and
its Subsidiaries (as defined in the Senior
Credit Agreement) and payable in cash with
respect to such period.
Consolidated Interest Expense............ Description of Notes--Certain Definitions
Consolidated Net Income.................. Description of Notes--Certain Definitions
Consolidated Net Worth................... Description of Notes--Certain Definitions
Contingent Payments...................... Certain United States Federal Income Tax
Considerations -Contingent Payments
covenant defeasance...................... Description of Notes--Defeasance
cross acceleration provision............. Description of Notes--Events of Default
CSI...................................... Prospectus Summary--The Acquisitions, Financings
and Related Transactions
Currency Agreement....................... Description of Notes--Certain Definitions
Dartford................................. Prospectus Summary--Ownership and Management
Dartford Acquisition..................... Dartford Acquisition means any transaction in
which the Company (as defined in the Dartford
Management Services Agreement), MBW Holdings
Inc. (the Company's (as defined in the Dartford
Management Services Agreement) parent) or MBW
Investors LLC (the parent of MBW Holdings Inc.)
or any direct or indirect subsidiary of MBW
Investors LLC consummates an acquisition of the
stock or assets of another entity (including,
without limitation, by way of merger or
consolidation), enters into a joint venture with
another entity, or effects any similar
investment or business combination during the
Term (as defined in the Dartford Management
Services Agreement)
Dartford Acquisition Price............... Dartford Acquisition Price means the sum of (A)
the cash purchase price (including any
installment payments), (B) the value of any
equity securities issued to the seller in
connection with the Acquisition (as defined in
the Dartford Management Services Agreement), (C)
the face value of any promissory note or other
debt instrument issued to the seller in
connection with such Acquisition (as defined in
the Dartford Management Services Agreement), (D)
the amount of any liabilities assumed by the MBW
Investors LLC group in connection with such
Acquisition (as defined in the Dartford
Management Services Agreement) (other than
ordinary course of business trade payables).
Dartford Management Services Agreement... Certain Related Transactions--Dartford
Management Services Agreement
Default.................................. Description of Notes--Certain Definitions
</TABLE>
vi
<PAGE>
<TABLE>
<S> <C>
defeasance trust......................... Description of Notes--Defeasance
Designated Senior Indebtedness........... Description of Notes--Certain Definitions
disposition.............................. Description of Notes--Certain Definitions
Disqualified Stock....................... Description of Notes--Certain Definitions
DTC...................................... The Exchange Offer--Procedures for Tendering
EDGAR.................................... Available Information
Eligible Institution..................... The Exchange Offer--Procedures for Tendering
Equity Investors......................... Prospectus Summary--The Acquisitions, Financings
and Related Transactions
Equity Offering.......................... Description of Notes--Certain Definitions
Event of Default (Indenture)............. Description of Notes--Event of Default
Exchange Act............................. Available Information
Exchange and Registration Rights......... Cover
Agreements
Exchange Offer........................... Cover
Exchange Offer Registration Statement.... Old Notes Exchange and Registration Rights
Agreements
Exchange Registration Statement.......... Old Notes Exchange and Registration Rights
Agreements
Excluded Products........................ The Acquisitions, Financing and Related
Transactions
Expiration Date.......................... Cover
Expiration Date.......................... The Exchange Offer--Expiration Date; Extensions;
Amendments
FDA...................................... Business--Certain Legal and Regulatory Matters--
Public Health
Fenway................................... Prospectus Summary--Ownership and Management
Fenway Agreement......................... Certain Related Transactions--Fenway Agreement
Fenway Acquisition....................... Fenway Acquisition means any transaction in
which during the Term (as defined in the Fenway
Agreement) the Company, MBW Holdings Inc. or MBW
Investors LLC either (i) consummates an
acquisition of the stock or assets of another
entity (including, without limitation, by way of
merger or consolidation), enters into a joint
venture with another entity, or effects any
similar investment or business combination
Fenway Acquisition Price................. Fenway Acquisition Price means the sum of (A)
the cash purchase price (including any
installment payments), (B) the value of any
equity securities issued to the seller in
connection with the Acquisition (as defined in
the Fenway Agreement), (C) the face value of any
promissory note or other debt instrument issued
to the seller in connection with such
Acquisition, (D) the amount of any liabilities
assumed by the MBW Investors LLC group in
connection with such Acquisition (as defined in
the Fenway Agreement) (other than ordinary
course of business trade payables).
Ferraro Employment Agreement............. Management--Executive Compensation
Flavor Supply Agreement.................. The Acquisitions--The MBW Acquisition
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GAAP..................................... Description of Notes--Certain Definitions
Global Note.............................. Description of Notes--Book-Entry; Delivery and
Form
Governmental Authority................... Description of Notes--Certain Definitions
Guarantee................................ Description of Notes--Certain Definitions
Guarantors............................... Description of Senior Credit Facilities
Holdings................................. Cover
Holdings Guaranty........................ Holdings Guaranty means the Holdings Guaranty
executed and delivered by Holdings (as defined
in the Senior Credit Agreement) on the Closing
Date (as defined in the Senior Credit
Agreement), substantially in the form of EXHIBIT
VIII to the Senior Credit Agreement, as such
Holdings Guaranty may thereafter be amended,
restated, supplemented or otherwise modified
from time to time.
Incur.................................... Description of Notes--Certain Definitions
Indebtedness............................. Description of Notes--Certain Definitions
Indentures............................... Description of Notes--General
Indirect Participants.................... Description of Notes--Book-Entry; Delivery and
Form
Initial Purchasers....................... Cover
Interest Rate Agreement.................. Description of Notes--Certain Definitions
Investment............................... Description of Notes--Certain Definitions
Issue Date............................... Description of Notes--Certain Definitions
judgement default provision.............. Description of Notes--Events of Default
Kraft.................................... Prospectus Summary
LC Acquisition........................... Prospectus Summary--The Acquisitions, Financings
and Related Transactions
LC Acquisition Closing Date.............. Prospectus Summary--The Acquisitions, Financings
and Related Transactions
LC Asset Purchase Agreement.............. Prospectus Summary--The Acquisitions, Financings
and Related Transactions
LC Business.............................. Prospectus Summary
LC Co-Pack Agreement..................... The Acquisitions--The LC Acquisition
LC Excluded Products Co-Pack Agreement... The Acquisitions--The LC Acquisition
LC Transition Services Agreement......... The Acquisitions--The LC Acquisition
legal defeasance......................... Description of Notes--Defeasance
Lenders.................................. Description of Senior Credit Facilities
Letter of Transmittal.................... Cover
Lien..................................... Description of Notes--Certain Definitions
Management Services Agreement............ Description of Notes--Certain Definitions
MBW Acquisition.......................... Prospectus Summary--The Acquisitions, Financings
and Related Transactions
MBW Acquisition Closing Date............. Prospectus Summary--The Acquisitions, Financings
and Related Transactions
MBW Asset Purchase Agreement............. The Acquisitions--The MBW Acquisition
MBW Co-Pack Agreement.................... The Acquisitions--The MBW Acquisition
MBW Predecessor.......................... Prospectus Summary
MBW Transitions Services Agreement....... The Acquisitions--The MBW Acquisition
MBW Common LLC Securities................ Security Ownership
MBW LLC.................................. Cover
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MBW Refinancing.......................... Prospectus Summary--The Acquisitions, Financings
and Related Transactions
MDC...................................... Prospectus Summary--Ownership and Management
MDC Acquisition.......................... MDC Acquisition means any transaction in which
the Company (as defined in the MDC Advisory
Services Agreement), MBW Holdings Inc. (the
Company's (as defined in the MDC Advisory
Services Agreement) parent) or MBW Investors LLC
(the parent of MBW Holdings Inc.) or any direct
or indirect subsidiary of MBW Investors LLC
consummates an acquisition of the stock or
assets of another entity (including, without
limitation, by way of merger or consolidation),
enters into a joint venture with another entity,
or effects any similar investment or business
combination during the Term (as defined in the
MDC Advisory Services Agreement)
MDC Acquisition Price.................... MDC Acquisition Price means the sum of (A) the
cash purchase price (including any installment
payments), (B) the value of any equity
securities issued to the seller in connection
with the Acquisition (as defined in the MDC
Advisory Services Agreement), (C) the face value
of any promissory note or other debt instrument
issued to the seller in connection with such
Acquisition (as defined in the MDC Advisory
Services Agreement), (D) the amount of any
liabilities assumed by the MBW Investors LLC
group in connection with such Acquisition (as
defined in the MDC Advisory Services Agreement)
(other than ordinary course of business trade
payables).
MDC Advisory Services Agreement.......... Certain Related Transactions--MDC Advisory
Services Agreement
MDC Management........................... Certain Related Transactions--MDC Advisory
Services Agreement
MDC III.................................. Security Ownership
MDC IIIA................................. Security Ownership
Mintz Employment Agreement............... Management--Executive Compensation
Net Available Cash....................... Description of Notes--Certain Definitions
Net Cash Proceeds........................ Description of Notes--Certain Definitions
New Note Issue Date...................... Prospectus Summary--The Exchange Offer
New Notes................................ Cover
Note Guarantee........................... Description of Notes--Certain Definitions
Note Guarantor........................... Description of Notes--Certain Definitions
Notes.................................... Cover
Officer.................................. Description of Notes--Certain Definitions
Officers' Certificate.................... Description of Notes--Certain Definitions
Old Notes................................ Cover
Opinion of Counsel....................... Description of Notes--Certain Definitions
parent corporation....................... Description of Notes--Change of Control
Participants............................. Description of Notes--Book-Entry; Delivery and
Form
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Participating Broker-Dealers............. Plan of Distribution
Patent and Trademark Security Patent and Trademark Security Agreement means
Agreement.............................. the Patent and Trademark Security Agreement
entered into by and among Company (as defined in
the Senior Credit Agreement), the Subsidiary
Guarantors (as defined in the Senior Credit
Agreement) and Administrative Agent (as defined
in the Senior Credit Agreement) dated as of the
date of the Senior Credit Agreement,
substantially in the form of EXHIBIT XI annexed
to the Senior Credit Agreement, as such Patent
and Trademark Security Agreement may thereafter
be amended, restated, supplemented or otherwise
modified from time to time.
pay the Notes............................ Description of Notes--Ranking
Payment Blockage Period.................. Description of Notes--Ranking
Permitted Holders........................ Description of Notes--Certain Definitions
Permitted Investment..................... Description of Notes--Certain Definitions
Person................................... Description of Notes--Certain Definitions
Pledge Agreement......................... Pledge Agreement means that certain Pledge
Agreement by and among Company (as defined in
the Senior Credit Agreement), Holdings (as
defined in the Senior Credit Agreement), the
Subsidiary Guarantors (as defined in the Senior
Credit Agreement) and Administrative Agent (as
defined in the Senior Credit Agreement) dated as
of the date of the Senior Credit Agreement and
substantially in the form of EXHIBIT IX annexed
to the Senior Credit Agreement, as such Pledge
Agreement may be amended, restated, supplemented
or otherwise modified from time to time.
Preferred Stock.......................... Description of Notes--Certain Definitions
principal................................ Description of Notes--Certain Definitions
Pro Forma Financial Statements........... Pro Forma Financial Information
Prospectus............................... Cover
Quest.................................... The Acquisitions--The MBW Acquisition
Red Wing................................. Prospectus Summary--The Company
Red Wing Co-Pack Agreement............... Prospectus Summary--The Company
Redemption Date.......................... Description of Notes--Optional Redemption
refinanced............................... Description of Notes--Certain Definitions
refinances............................... Description of Notes--Certain Definitions
Refinancing Indebtedness................. Description of Notes--Certain Definitions
Registration Default..................... Old Notes Exchange and Registration Rights
Agreements
Registration Statement................... Available Information
Related Business......................... Description of Notes--Certain Definitions
Representative........................... Description of Notes--Certain Definitions
Restricted Payment....................... Description of Notes--Certain Covenants
Revolving Facility....................... Prospectus Summary--The Acquisitions, Financings
and Related Transactions
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Rule 144A................................ Old Notes Exchange and Registration Rights
Agreements
Sale/Leaseback Transaction............... Description of Notes--Certain Definitions
SEC...................................... Description of Notes--Certain Definitions
Secured Indebtedness..................... Description of Notes--Certain Definitions
Securities Act........................... Cover
Security Agreement....................... Security Agreement means the Security Agreement
entered into by and among Company (as defined in
the Senior Credit Agreement), Holdings (as
defined in the Senior Credit Agreement), the
Subsidiary Guarantors (as defined in the Senior
Credit Agreement) and Administrative Agent (as
defined in the Senior Credit Agreement) dated as
of the date of the Senior Credit Agreement and
substantially in the form of EXHIBIT X annexed
to the Senior Credit Agreement, as such Security
Agreement may be amended, restated, supplemented
or otherwise modified from time to time.
Senior Credit Agreement.................. Description of Notes--Certain Definitions
Senior Credit Documents.................. Description of Notes--Certain Definitions
Senior Credit Facilities................. Prospectus Summary--The Acquisitions, Financings
and Related Transactions
Senior Indebtedness...................... Description of Notes--Ranking
Senior Subordinated Indebtedness......... Description of Notes--Certain Definitions
Series A Notes........................... Cover
Series A Exchange and Registration Rights
Agreement.............................. Cover
Series A Indenture....................... Description of Notes--General
Series A Notes Initial Purchaser......... Cover
Series A Notes Offering.................. Prospectus Summary--The Acquisitions, Financings
and Related Transactions
Series C Exchange and Registration Rights
Agreement.............................. Cover
Series C Indenture....................... Description of Notes--General
Series C Notes Initial Purchasers........ Cover
Series C Notes Offering.................. Prospectus Summary--The Acquisitions, Financings
and Related Transactions
Service.................................. Certain United States Federal Income Tax
Considerations
Shelf Registration Statement............. The Exchange Offer--Purpose and Effect of the
Exchange Offer
Shelf Registration Statement............. Old Notes Exchange and Registration Rights
Agreements
Significant Subsidiary................... Description of Notes--Certain Definitions
SKU...................................... Business--Products and Markets
specified corporation.................... Description of Notes--Change of Control
Stated Maturity.......................... Description of Notes--Certain Definitions
Subordinated Obligation.................. Description of Notes--Certain Definitions
Subsidiary............................... Description of Notes--Certain Definitions
Subsidiary Guaranty...................... Subsidiary Guaranty means the Subsidiary
Guaranty, substantially in the form of EXHIBIT
VII
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annexed to the Senior Credit Agreement, executed
and delivered by each Subsidiary Guarantor (as
defined in the Senior Credit Agreement) from
time to time after the Closing Date (as defined
in the Senior Credit Agreement) pursuant to
subsection 6.9 of the Senior Credit Agreement,
as such Subsidiary Guaranty may be amended,
restated, supplemented or otherwise modified
from time to time.
Successor Company........................ Description of Notes--Certain Covenants
Temporary Cash Investments............... Description of Notes--Certain Definitions
Term Facility............................ Prospectus Summary--The Acquisitions, Financings
and Related Transactions
TIA...................................... The Exchange Offer--Certain Conditions to the
Exchange Offer
TIN...................................... Certain United States Federal Income Tax
Considerations--Backup Withholding
Trade Payables........................... Description of Notes--Certain Definitions
Transactions............................. Prospectus Summary--Summary Pro Forma Financial
Data
Transfer Restricted Securities........... Old Notes Exchange and Registration Rights
Agreements
Treasury Rate............................ Description of Notes--Optional Redemption
Trustee.................................. Description of Notes--General
Unilever................................. Prospectus Summary
U.S. Government Obligations.............. Description of Notes--Certain Definitions
U.S. Holder.............................. Certain United States Federal Income Tax
Considerations--Payment of Interest
Van de Kamp's............................ Prospectus Summary--Ownership and Management
VDB...................................... The Acquisition--Co-Pack Agreement
Voting Stock............................. Description of Notes--Certain Definitions
Wholly-Owned Subsidiary.................. Description of Notes--Certain Definitions
Willett Employment Agreement............. Management--Executive Compensation
Windmill................................. Prospectus Summary--Ownership and Management
Windy Hill............................... Prospectus Summary--Ownership and Management
Wyndham.................................. Prospectus Summary--Ownership and Management
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL DATA, INCLUDING
THE FINANCIAL STATEMENTS AND NOTES THERETO, APPEARING ELSEWHERE IN THIS
PROSPECTUS. UNLESS OTHERWISE STATED IN THIS PROSPECTUS, REFERENCES TO (I) THE
"COMPANY" SHALL MEAN AURORA FOODS INC. (FORMERLY MBW FOODS INC.), A DELAWARE
CORPORATION; (II) "HOLDINGS" SHALL MEAN AURORA HOLDINGS INC. (FORMERLY MBW
HOLDINGS INC.), A DELAWARE CORPORATION; (III) "MBW LLC" SHALL MEAN MBW INVESTORS
LLC, A DELAWARE LIMITED LIABILITY COMPANY; AND (IV) THE "MBW PREDECESSOR" SHALL
MEAN THE MRS. BUTTERWORTH'S SYRUP AND PANCAKE MIX BUSINESS WHICH THE COMPANY
ACQUIRED FROM CONOPCO, INC. ("CONOPCO") A SUBSIDIARY OF UNILEVER UNITED STATES,
INC. ("UNILEVER") ON DECEMBER 31, 1996; AND (V) THE "LC BUSINESS" SHALL MEAN THE
LOG CABIN SYRUP BUSINESS WHICH THE COMPANY ACQUIRED FROM KRAFT FOODS, INC.
("KRAFT") ON JULY 1, 1997. EXCEPT AS OTHERWISE INDICATED, (I) ALL REFERENCES TO
MARKET, CATEGORY AND SEGMENT SALES AND TO MARKET SHARE PERCENTAGES AND MARKET
POSITIONS REFLECT THE 52-WEEK PERIOD ENDED MAY 17,1997 AS GATHERED BY A.C.
NIELSEN FOR U.S. RETAIL GROCERY SALES; (II) ALL REFERENCES TO THE COMPANY'S
SALES REFER TO NET SALES AS REPORTED IN THE HISTORICAL FINANCIAL STATEMENTS OF
THE COMPANY, THE MBW PREDECESSOR AND THE LC BUSINESS, AS APPLICABLE; (III) ALL
REFERENCES TO "REGULAR SYRUP" REFER TO FULL-CALORIE TABLE SYRUP; AND (IV) ALL
REFERENCES TO "SYRUP" REFER TO REGULAR SYRUP, LITE SYRUP AND PURE MAPLE/
SPECIALTY SYRUPS. Mrs. Butterworth's-Registered Trademark-, Log
Cabin-Registered Trademark-, Country Kitchen-Registered Trademark-, AND
Wigwam-Registered Trademark- ARE REGISTERED TRADEMARKS OF THE COMPANY. THIS
PROSPECTUS ALSO INCLUDES TRADEMARKS OF COMPANIES OTHER THAN THE COMPANY.
THE COMPANY
OVERVIEW
The Company markets and sells MRS. BUTTERWORTH'S, the number one brand of
regular syrup in the United States. Originally introduced in 1960, MRS.
BUTTERWORTH'S syrup is well known for its unique buttery flavor and distinctive
grandmother-shaped bottle and enjoys 100% aided brand awareness among syrup
consumers. In addition to its strong national presence, MRS. BUTTERWORTH'S is
the number one brand of syrup in the Central and Mid-Central United States, the
two regions of the country with the highest per capita syrup consumption. MRS.
BUTTERWORTH'S strong market position in syrup is complemented by its pancake mix
products, in which it is the fourth leading brand. MRS. BUTTERWORTH'S leading
market positions and strong brand recognition have enabled it to realize a long
history of high operating margins, stable sales and growth in operating profit.
On July 1, 1997, the Company acquired substantially all of the assets of the
LOG CABIN syrup business from Kraft. The LOG CABIN syrup business consists of
the retail syrup business marketed under the LOG CABIN and COUNTRY KITCHEN
brands and the foodservice syrup business marketed under the LOG CABIN and
WIGWAM brands. The LOG CABIN trademark dates back to 1888 and is one of the
oldest and most widely recognized trademarks in the United States. LOG CABIN
syrup products have the number one market share overall in the United States.
LOG CABIN'S premium maple heritage, together with its geographic strength on the
east and west coasts, complements MRS. BUTTERWORTH'S buttery flavor and strength
in the central United States. Further extending the Company's customer base is
the addition of the COUNTRY KITCHEN and WIGWAM trademarks. Introduced in 1954,
COUNTRY KITCHEN is an economy-priced syrup targeted towards the price conscious
consumer and has the leading market share in that segment.
The Company plans to combine the manufacture and distribution of LOG CABIN
syrup products with its MRS. BUTTERWORTH'S products and as a result expects to
realize approximately $3.0 million in annual cost savings. LOG CABIN products
will be sold by the Company's independent food brokers and will be marketed and
administered by the Company, which will expand its corporate organization from
22 to 34 persons. For the twelve months ended March 31, 1997, the Company's
combined pro forma sales and EBITDA were $192.1 million and $54.5 million
(excluding expected manufacturing and distribution cost savings discussed
above), respectively. MRS. BUTTERWORTH'S and LOG CABIN products represented
46.6% and 53.4%, respectively, of the Company's pro forma sales for the same
period.
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In order to effect the transition to an independent operating company, the
Company has organized itself into three operational groups. In addition, the
Company has expanded its corporate organization from 22 to 34 persons.
Furthermore, in connection with the Red Wing Co-Pack Agreement, the Company is
in the process of transferring the production of MRS. BUTTERWORTH'S syrup from
Conopco's facilities to Red Wing's facilities. The total costs of the transition
are expected to be approximately $5.8 million.
The syrup and pancake mix categories in the United States are stable and are
characterized by broad household penetration and steady growth. Sales of syrup
products are driven by the consumption of host foods, including frozen waffles
and pancake mix, product innovation and consumers' desire for traditional "home
style" meals. From 1993 to 1996, the syrup and pancake mix categories grew at
compound annual rates of approximately 1.4% and 3.5%, respectively. The
Company's products are sold nationally through an independent broker network to
retail grocery stores, mass merchandisers, military exchanges and foodservice
distributors. The Company's syrups and pancake mixes are sold in nearly 100% and
63%, respectively, of all retail grocery stores in the United States. For the
twelve months ended March 31,1997, the Company's syrup and pancake mix sales
represented approximately 95% and 5% of pro forma sales, respectively.
The Company believes that its brands provide an attractive platform upon
which to build a focused, branded dry grocery products company. The Company
believes that the performance of certain dry grocery categories and brands has
suffered in recent years as a result of declining levels of marketing support
and little or no new product innovation by the major food companies.
Consequently, the Company believes that many of these undermanaged brands are
likely candidates for divestiture from their corporate parents. While these
categories and brands tend to be mature, there are expanding segments within the
categories and growth opportunities that have not been realized. As a result,
the Company believes that an attractive opportunity exists for building a
branded dry grocery products company through strategic acquisitions of
established, well-recognized national and regional brands that have been
undermanaged in recent years. The Company's objective is to renew the growth of
the brands it acquires by providing them the focus, strategic direction,
marketing resources and dedicated sales and marketing organizations that they
have lacked.
MRS. BUTTERWORTH'S GROWTH STRATEGY
The Company believes that MRS. BUTTERWORTH'S has significant growth
potential which has not been realized due to a lack of corporate support and
marketing resources from Unilever in recent years. The Company plans to improve
MRS. BUTTERWORTH'S performance by increasing management attention to the brand
and by devoting the marketing resources necessary to exploit opportunities in
the syrup and pancake mix categories. The Company intends to implement its
strategy through the following initiatives:
- POSITION BRAND AS BEST VALUE. The Company plans to position MRS.
BUTTERWORTH'S as the best value among the three leading national syrup brands by
continuing to provide its distinctive, premium quality product at prices which
are moderately below those of the other national brands. In May 1996, MRS.
BUTTERWORTH'S lowered the everyday prices of its syrup products. To offset the
cost of lowering everyday prices, MRS. BUTTERWORTH'S also reduced its costly and
relatively ineffective buy-one-get-one-free promotions. The Company believes
that full implementation of MRS. BUTTERWORTH'S value pricing strategy will
result in continued increases in sales and market share.
- REFORMULATE LITE PRODUCT. MRS. BUTTERWORTH'S LITE has not been
reformulated or improved since its introduction in 1985. Over the last five
years, competitors have focused their research and development efforts on the
lite syrup segment, taking advantage of newly developed ingredients and
formulations. While MRS. BUTTERWORTH'S is the leading brand in the regular syrup
segment, MRS. BUTTERWORTH'S share of the lite syrup segment is 15.0% and is
significantly below AUNT JEMIMA'S leading 32.6% share of the segment. The
Company plans to reformulate and improve the taste of MRS. BUTTERWORTH'S LITE.
Management believes that this reformulation, coupled with MRS. BUTTERWORTH'S
leading position in the
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regular syrup segment and increased marketing support, can expand the Company's
share of the lite segment and further strengthen the Company's overall syrup
market share.
- ROLL OUT PRODUCT LINE EXTENSIONS. Management believes MRS. BUTTERWORTH'S
strong brand equity and leading market shares in the syrup category present
considerable opportunities for product line extensions. For example, an
opportunity exists to develop a product which is directed at children and
packaged in plastic, as compared to the current glass packaging. Opportunities
also exist for MRS. BUTTERWORTH'S in the flavored syrup segment, as none of the
major national brands currently offer these specialty products. In addition,
management believes that opportunities exist for growth in the Company's pancake
mix business with increased marketing and sales support for its recently
redesigned and updated packaging.
- ADOPT CONSUMER BASED MARKETING STRATEGY. Over the next two years, the
Company plans to reduce its reliance on costly and relatively inefficient trade
spending and periodic price discounting and increase its advertising and
consumer promotional events. The Company plans to reduce or eliminate
buy-one-get-one-free promotions and its heavy reliance on coupons in free
standing inserts. The Company will reallocate those marketing dollars to
advertising and more focused consumer promotions such as cross-promotions with
host foods. In addition, the Company will direct its advertising expenditures to
support the introduction of new or improved products and reinforce MRS.
BUTTERWORTH'S unique brand equity and positioning as the best value among the
national brands.
LOG CABIN GROWTH STRATEGY
LOG CABIN'S overall share of the retail syrup category has decreased from
35% in 1972 to 19%. The Company attributes the decrease to declining levels of
corporate support and marketing resources over this period of time. The Company
plans to undertake the following initiatives to revitalize the LOG CABIN brand
and profitably grow the business:
- RESTORE LOG CABIN'S PREMIUM IMAGE. Historically, the LOG CABIN brand has
been perceived by the consumer as a premium, real maple syrup. In recent
years, LOG CABIN'S premium image has eroded due to a lack of marketing
support. For example, packaging of LOG CABIN syrup products has been
downgraded from glass to clear plastic to opaque plastic. Advertising
support for the brand was eliminated in 1994. The Company plans to restore
LOG CABIN'S premium image by upgrading LOG CABIN'S packaging and renewing
advertising support for the brand that promotes its premium, real maple
heritage and warm, homespun image.
- RETURN TO CONSUMER BASED MARKETING STRATEGY. Over the last four years,
LOG CABIN'S marketing program has consisted almost entirely of trade
spending and price discounting. Little or no money was spent promoting LOG
CABIN products to the consumer through coupons or advertising. In order to
bring consumers back to the LOG CABIN brand, the Company plans to increase
advertising support for the brand and implement focused consumer
promotional activities such as point-of-sale coupons and cross-promotions
with host foods. The Company expects to fund these programs in part
through the elimination of certain inefficient trade programs.
- BENEFIT FROM GROWTH IN HOST FOODS. Sales of syrup products are related to
sales of host foods, which include pancakes, waffles and french toast.
Over the last six months, following little or no growth over the last
three years, sales of frozen breakfast products have grown at
approximately a 10% annual rate as a result of increased marketing
activity by host food manufacturers. The Company believes that sales of
syrup products will benefit from renewed growth in host foods.
- EXPAND DISTRIBUTION CHANNELS. The Company plans to expand distribution of
the economy-priced COUNTRY KITCHEN brand into the mass merchandise and
drugstore channels of trade. The Company also plans to leverage its WIGWAM
brand and expand its foodservice business.
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CO-PACK AGREEMENTS
MRS. BUTTERWORTH'S syrup is currently contract manufactured and distributed
under the transitional MBW Co-Pack Agreement which terminates on or prior to
December 31, 1997. See "The Acquisitions-- The MBW Acquisition--MBW Co-Pack
Agreement." The Company entered into a co-pack agreement (the "Red Wing Co-Pack
Agreement") with The Red Wing Company, Inc. ("Red Wing"), dated as of June 9,
1997, pursuant to which Red Wing will contract manufacture MRS. BUTTERWORTH'S
syrup for a period of five years. Founded in 1912, Red Wing is a contract
manufacturer of preserves, jellies, syrups, sauces, dressings and other food
products. Subject to certain conditions, the Company may terminate the Red Wing
Co-Pack Agreement after two years with 180 days prior written notice. The Red
Wing Co-Pack Agreement is non-exclusive and does not restrict the Company from
entering into additional co-pack agreements with third parties.
Red Wing will contract manufacture MRS. BUTTERWORTH'S syrup for conversion
fees which are less than those the Company has paid under the MBW Co-Pack
Agreement. Because Red Wing is one of the largest purchasers of corn syrup in
the United States, the Company believes that its raw material costs under the
Red Wing Co-Pack Agreement will be less than those incurred by the MBW
Predecessor. Under the Red Wing Co-Pack Agreement, MRS. BUTTERWORTH'S syrup will
be produced and distributed from Red Wing's San Jose, California and Streator,
Illinois facilities. The Company intends to begin transferring production of
MRS. BUTTERWORTH'S syrup from Conopco to Red Wing in August 1997 and to complete
the transition by December 1997. See "The Acquisitions--The Red Wing Co-Pack
Agreement."
LOG CABIN syrups initially will be contract manufactured and distributed by
Kraft for up to nine months under the LC Co-Pack Agreement. See "The
Acquisitions--The LC Acquisition--LC Co-Pack Agreement." Prior to the end of the
term of the LC Co-Pack Agreement, the Company will enter into a co-packing
agreement with Red Wing or another third party for the manufacture of LOG CABIN
syrup products.
OWNERSHIP AND MANAGEMENT
The Company, a wholly-owned subsidiary of Holdings, which in turn is a
wholly-owned subsidiary of MBW LLC, was organized in November 1996 by Dartford
Partnership L.L.C. ("Dartford"), majority owner McCown De Leeuw & Co. ("MDC")
and Fenway Partners Capital Fund, L.P. ("Fenway") to acquire the MRS.
BUTTERWORTH'S syrup and pancake mix business from Conopco. The Company is
organized into three operational groups which report to the President: the
product management group, the financial/ administrative group and the sales
group. Dartford provides day-to-day operational oversight to the Company. MDC
provides strategic advice to the Company, particularly in connection with the
Company's financing needs, and identifies potential acquisition targets. Fenway
also provides strategic advice to the Company and identifies potential
acquisition targets.
Dartford was formed by Managing Partner Ian R. Wilson, former Vice Chairman
of The Coca-Cola Company and former Chairman and Chief Executive Officer of
Castle & Cooke, Inc. (Dole Food Company, Inc.), to make investments in the
consumer food and beverage categories. Dartford's five partners have extensive
experience in building and managing leveraged investments in the food and
beverage industries. Over the past ten years, Dartford has successfully built
and managed a number of food companies including Wyndham Foods Inc. ("Wyndham"),
which Dartford grew to become the fourth largest cookie company in the United
States, Windmill Holding Corp. ("Windmill"), a branded baking products company,
Windy Hill Pet Food Company, Inc. ("Windy Hill"), a national supplier of branded
and private label pet food products, and Van de Kamp's Inc. ("Van de Kamp's"), a
leading frozen convenience food company.
In September 1995, Dartford and Fenway organized Van de Kamp's to acquire
the VAN DE KAMP'S frozen seafood product line from The Pillsbury Company and to
serve as the foundation upon which to build a branded frozen convenience food
company. In May 1996, Van de Kamp's acquired MRS. PAUL'S frozen seafood business
from Campbell Soup Company and in July 1996 acquired the AUNT JEMIMA
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frozen breakfast (waffles, pancakes and french toast) and CELESTE frozen pizza
businesses from The Quaker Oats Company. Van de Kamp's, under the direction of
Dartford, has assembled a 100 person sales, marketing and administrative
organization, moved and consolidated manufacturing facilities and reinvigorated
its brands with new product introductions and increased marketing support. Under
Dartford's management, Van de Kamp's has grown into a diversified branded frozen
convenience food company, with annual revenues increasing from approximately
$150 million at September 30, 1995 to approximately $400 million at December 31,
1996.
MDC is a private equity investment firm organized in 1984 to buy middle
market companies in partnership with management and build them through strategic
acquisition and internal growth. MDC currently manages three generations of
funds totaling approximately $500 million of contributed and committed capital.
MDC has developed, and committed itself to, an investment process that
identifies and then backs top managers in industries that are undergoing
consolidation or rapid internal growth. Over the past 13 years, MDC has made 30
separate acquisitions, of which 21 have been acquisition-oriented "buy and
builds" similar to the strategy contemplated by the Company, including DIMAC
Corporation, Eastman, Inc. and Outsourcing Solutions Inc.
Fenway is a second generation direct investment firm formed by Peter Lamm,
Richard Dresdale and Andrea Geisser. Together, the firm's principals have 50
years of experience building and managing direct investment portfolios. The
partners of Fenway have acquired and overseen investments in several food
processing and food distribution businesses, most recently as the majority owner
of Van de Kamp's in partnership with Dartford. Fenway focuses its investment
activities on acquiring interests in middle market companies with revenues
between $50 million and $500 million which offer leading market shares, strong
franchises, multiple profit centers and underlying growth.
Mr. Ferraro has over 23 years of grocery products experience, and Mr.
Willett has over 19 years of grocery products experience. Prior to joining MRS.
BUTTERWORTH'S, Messrs. Ferraro and Willett managed Heritage Brands, leading the
leveraged buyout and build-up of Campfire, Inc. Prior to joining Heritage
Brands, Mr. Ferraro spent 11 years with Borden, Inc., most recently as Vice
President of Sales for the Niche Grocery division. His experience with niche
grocery products extends back to his early career with RJR Nabisco Inc. and
Drackett Products, where he held a variety of marketing and sales positions.
Prior to joining Heritage Brands, Mr. Willett held a variety of senior
management positions at Borden, Inc. and The Kellogg Company.
THE ACQUISITIONS, FINANCINGS AND RELATED TRANSACTIONS
THE LC ACQUISITION
Pursuant to an Asset Purchase Agreement between the Company and Kraft, dated
as of May 7, 1997 (the "LC Asset Purchase Agreement"), on July 1, 1997 (the "LC
Acquisition Date") the Company purchased substantially all of the assets of the
LOG CABIN syrup business from Kraft for approximately $220.0 million. The assets
acquired by the Company include (i) the LOG CABIN U.S. and foreign trademarks
(except for those held in Mexico), (ii) the equipment for the manufacture of
syrup, (iii) inventories (raw materials, packaging and finished goods), (iv)
proprietary formulations for LOG CABIN syrups, (v) other product specifications
and customer lists and (vi) rights under certain contracts, licenses, purchase
orders and other arrangements and permits. Additionally, the Company entered
into (i) the LC Transition Services Agreement with Kraft, under which Kraft will
provide certain marketing, transactions processing, accounting and other
services for a period of up to six months from the LC Acquisition Closing Date;
(ii) the LC Co-Pack Agreement, under which Kraft will contract manufacture and
distribute syrup for the Company for a period of up to nine months from the LC
Acquisition Closing Date; and (iii) the LC Excluded Products Co-Pack Agreement
under which the Company will be obligated until February 13, 2000 to contract
manufacture and distribute syrup for that part of Kraft's syrup businesses not
disposed of pursuant to the LC Asset Purchase Agreement (the "Excluded
Products"). See "The Acquisitions--The LC Acquisition."
5
<PAGE>
Financing for the acquisition of the LOG CABIN syrup business and the
related expenses consisted of (i) $28.3 million of additional equity capital
provided by Dartford, certain affiliates of MDC, Fenway and certain other
investors (the "Equity Investors"); (ii) $40.0 million of term loans (the "Term
Facility") and $46.0 million of revolving loans (the "Revolving Facility")
borrowed under a senior secured credit facility among the Company, Holdings, the
lenders named therein, The Chase Manhattan Bank ("Chase Manhattan"), as
administrative agent, and Chase Securities Inc. ("CSI"), as arranging agent (the
"Senior Credit Facilities"); (iii) $102.5 million in proceeds received from the
offering of the Series C Notes (the "Series C Notes Offering"); and (iv) $12.0
million of cash on hand at the Company. The acquisition of the LOG CABIN syrup
business, the borrowings under the Term Facility and the Revolving Facility, the
Series C Notes Offering and the payment of transaction fees and expenses related
thereto are referred to herein as the "LC Acquisition." See "Use of Proceeds,"
"Description of Notes," "Security Ownership" and "Description of Senior Credit
Facilities."
The sources and uses of funds for the LC Acquisition were as follows:
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
<S> <C>
SOURCES:
Cash on hand............................................................. $ 12.0
Senior Credit Facilities:
Revolving Facility(1).................................................. 46.0
Term Facility.......................................................... 40.0
The Series C Notes Offering(2)........................................... 102.5
Equity proceeds.......................................................... 28.3
-------
Total sources...................................................... $ 228.8
-------
-------
USES:
Purchase price........................................................... $ 220.0
Fees and expenses........................................................ 8.8
-------
Total uses......................................................... $ 228.8
-------
-------
</TABLE>
- ------------------------------
(1) Reflects borrowings under the $60.0 million Revolving Facility after giving
effect to the LC Acquisition. The Revolving Facility is available for
working capital and general corporate purposes and includes up to $5.0
million for letters of credit. See "Description of Senior Credit
Facilities."
(2) Includes a $2.5 million premium received in connection with the Series C
Notes Offering.
THE MBW ACQUISITION
On December 31, 1996 (the "MBW Acquisition Closing Date"), the Company
acquired substantially all of the assets of the MRS. BUTTERWORTH'S syrup and
pancake mix business from a subsidiary of Unilever for approximately $114.1
million See "The Acquisitions--The MBW Acquisition". Financing for this
acquisition and the related fees and expenses consisted of (i) $33.8 million of
equity capital provided by Equity Investors and; (ii) $95.0 million of bank
indebtedness. The acquisition of the Mrs Butterworth's syrup and pancake mix
business, the financing thereof (not including the offering of the Series A
Notes) and the payment of related transaction fees and expenses are referred to
herein as the "MBW Acquisition". See "Security Ownership" and "Description of
Senior Credit Facilities." On February 10,1997, the Company issued the Series A
Notes (the "Series A Notes Offering") to repay a total of approximately $95.0
million of bank indebtedness, to pay accrued and unpaid interest with respect to
such bank indebtedness being repaid and to pay certain fees and expenses
incurred in connection with the Series A Notes Offering. The Series A Notes
Offering together with the payment of such bank indebtedness is referred to
herein as the "MBW Refinancing."
6
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
The New Notes....................... The forms and terms of the New Notes are identical in
all material respects to the terms of the Old Notes
for which they may be exchanged pursuant to the
Exchange Offer, except for certain transfer
restrictions, registration rights and liquidated
damages provisions relating to the Old Notes
described below under "Description of Notes" and "Old
Notes Exchange and Registration Rights Agreements."
In addition, the terms of the New Notes will differ
from the terms of the Series A Notes in that the
proceeds of an Asset Disposition will be shared
ratably amongst the holders of the Series A Notes and
the holders of the Series C Notes instead of such
proceeds being applied to the repurchase of the
Series A Notes prior to any repurchase of Series C
Notes. See "The Exchange Offer -- Terms of the
Exchange Offer."
The Exchange Offer.................. The Company is offering to exchange up to
$200,000,000 aggregate principal amount of the New
Notes for (i) up to $100,000,000 aggregate principal
amount of Series A Notes and (ii) up to $100,000,000
aggregate principal amount of Series C Notes. Old
Notes may be exchanged only in integral multiples of
$1,000.
Expiration Date; Withdrawal of The Exchange Offer will expire at 5:00 p.m., New York
Tender............................ City time, on , 1997, or such later date
and time to which it is extended by the Company (the
"Expiration Date"). The tender of Old Notes pursuant
to the Exchange Offer may be withdrawn at any time
prior to the Expiration Date. The Expiration Date
will not in any event be extended to a date later
than , 1997. 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.
Certain Conditions to the Exchange
Offer............................. The Exchange Offer is subject to customary
conditions, which may be waived by the Company. See
"The Exchange Offer -- Certain Conditions to the
Exchange Offer."
Procedures for Tendering Old Each holder of Old Notes wishing to accept the
Notes............................. Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein and
therein, and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with such
Old Notes and any other required documentation to the
Exchange Agent at the address set forth herein. By
executing the Letter of Transmittal, each holder will
represent to the Company that, among other things,
(i) any New Notes to be received by it will be
acquired in the ordinary course of its business, (ii)
it has no arrangement
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
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, if it is an affiliate, it will comply
with the registration and prospectus delivery
requirements of the Securities Act to the extent
applicable. Each Holder whose Old Notes are held
through DTC and wishes to participate in the Exchange
Offer may do so through DTC's Automated Tender Offer
Program ("ATOP") by which each tendering participant
will agree to be bound by the Letter of Transmittal
as though each Holder had executed such Letter of
Transmittal.
Interest on the New Notes........... Interest on the New Notes will accrue from the date
of issuance (the "New Note Issue Date") at the rate
of 9 7/8% per annum, and will be payable
semi-annually in arrears on each February 15 and
August 15, commencing on August 15, 1997. Holders of
the New Notes will also on August 15, 1997 receive an
amount equal to the accrued interest on the Old
Notes. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the
New Notes.
Special Procedures for Beneficial
Owners............................ 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 such Old Notes in the Exchange Offer should
contact such registered holder promptly and instruct
such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to
tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of
Transmittal and delivering his Old Notes, either make
appropriate arrangements to register ownership of the
Old Notes in such owner's name or obtain a properly
completed bond power from the registered holder. The
transfer of registered ownership may take
considerable time and may not be able to be completed
prior to the Expiration Date.
Guaranteed Delivery Procedure....... Holders of Notes who wish to tender their Old Notes
and whose Old Notes are not immediately available or
who cannot deliver their Old Notes, the Letter of
Transmittal or any other documents required by the
Letter of Transmittal to the Exchange Agent, prior to
the Expiration Date, must tender their Old Notes
according to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery
Procedures."
Registration Requirements........... The Company has agreed to use its best efforts to
consummate on or prior to 180 days after the
respective dates of original issuance of the Series A
Notes and the Series C Notes the registered Exchange
Offer pursuant to which holders of the Old Notes will
be offered an opportunity to exchange their Old Notes
for the New Notes which will be
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
issued without legends restricting the transfer
thereof. In the event that applicable interpretations
of the staff of the Commission do not permit the
Company to effect the Exchange Offer or in certain
other circumstances, the Company has agreed to file a
Shelf Registration Statement covering resales of the
Old Notes and to use its best efforts to cause such
Shelf Registration Statement to be declared effective
under the Securities Act and, subject to certain
exceptions, keep such Shelf Registration Statement
effective until three years after the relevant issue
date. If the Company fails to consummate the Exchange
Offer on or prior to 180 days after the relevant
issue date or, in the event that the Company is not
in compliance with certain obligations under the
Exchange and Registration Rights Agreements, the
Company shall be obligated to pay liquidated damages
to holders of the Old Notes. See "Old Notes Exchange
and Registration Rights Agreements."
Certain Federal Income Tax
Considerations.................... For a discussion of certain federal income tax
considerations relating to the exchange of the New
Notes for the Old Notes, see "Certain United States
Federal Income Tax Considerations."
Use of Proceeds..................... There will be no proceeds to the Company from the
exchange of Notes pursuant to the Exchange Offer.
Exchange Agent...................... Wilmington Trust Company is the Exchange Agent. The
address and telephone number of the Exchange Agent
are set forth in "The Exchange Offer -- Exchange
Agent."
</TABLE>
TERMS OF THE NOTES
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 are registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof and will not contain the registration rights and liquidated damages
provisions relating to the Old Notes. See "Description of Notes" and "Exchange
and Registration Rights Agreements." In addition, the terms of the New Notes
will differ from the terms of the Series A Notes in that the proceeds of an
Asset Disposition will be shared ratably amongst the holders of the Series A
Notes and the holders of the Series C Notes instead of such proceeds being
applied to the repurchase of the Series A Notes prior to any repurchase of
Series C Notes. See "The Exchange Offer -- Terms of the Exchange Offer."
The New Notes are subordinated in right of payment to all existing and
future Senior Indebtedness of the Company, including the Revolving Facility
under the Senior Credit Facilities which mature on December 31, 2003. A default
under the Senior Credit Facilities or other indebtedness of the Company for any
reason, including after a Change of Control, which results in acceleration of
such indebtedness in an amount in excess of $5 million is an Event of Default
under the Indentures.
The occurrence of certain of the events that would constitute a Change of
Control under the Indentures would also constitute a default under the Senior
Credit Facilities. Future Senior Indebtedness of the Company and its
Subsidiaries may 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
9
<PAGE>
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 Senior Credit Facilities generally prohibit the
Company's prepayment of the Notes prior to their scheduled maturity.
Consequently, if the Company is not able to prepay the Senior Credit Facilities
and any other Senior Indebtedness containing similar restrictions or obtain
requisite consents or waivers, 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
Indentures. However, the Indentures permit the provisions and protections
pertaining to Change of Control payments to be amended with the consent of the
Holders of at least a majority in principal amount of the Notes.
Upon an Asset Disposition, the indentures and the Senior Credit Facilities
require the Company to make certain prepayments or payments due under the Senior
Credit Facilities or other Senior Indebtedness before it is required to offer to
purchase a portion of the Notes. Further the terms of the Senior Credit
Facilities generally prohibit the Company's prepayment of the Notes prior to
their scheduled maturity.
Under the provisions of the Indentures, Holders of the Notes waive and
release directors officers, employees or stockholders of the Company from any
liability or claims arising under the Notes or the Indentures or in connection
therewith. To the extent that such waiver and release may be deemed to apply to
liability under the Securities Act, the Company has been advised that in the
opinion of the Commission, any such waiver and release would be against public
policy as expressed in the Securities Act and would, therefore, be
unenforceable.
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered by participants in the Exchange Offer.
10
<PAGE>
SUMMARY PRO FORMA FINANCIAL DATA
The following table sets forth certain unaudited summary pro forma financial
data of the Company for the periods ended and as of the dates indicated. The
unaudited summary pro forma statement of operations data give effect to the MBW
Acquisition, the MBW Refinancing and the LC Acquisition (collectively, the
"Transactions") as if they had occurred on January 1, 1996 for the year ended
December 31, 1996 and the three months ended March 31, 1996 and give effect to
the MBW Refinancing and the LC Acquisition as if they had occurred on January 1,
1997 for the three months ended March 31, 1997. The unaudited summary pro forma
balance sheet information gives effect to the LC Acquisition as if it had
occurred on March 31, 1997. The unaudited summary pro forma financial data do
not purport to represent what the Company's results of operations or financial
condition would have actually been had the Transactions been consummated as of
such dates or for such periods or project the Company's results of operations or
financial condition for any future period. The unaudited summary pro forma
financial data should be read in conjunction with the Pro Forma Financial
Information and the notes thereto. See "Pro Forma Financial Information" and the
separate historical financial statements of the Company, the MBW Predecessor and
the LC Business and the notes thereto included elsewhere in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
TWELVE
YEAR ENDED MARCH 31, MONTHS ENDED
DECEMBER 31, -------------------- MARCH 31,
1996 1996 1997 1997
-------------- --------- --------- --------------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net sales.................................................... $ 196,047 $ 51,975 $ 48,055 $ 192,127
Cost of products sold........................................ 65,699 15,882 16,369 66,186
-------------- --------- --------- --------------
Gross profit............................................... 130,348 36,093 31,686 125,941
Brokerage, distribution and marketing expenses:
Brokerage and distribution................................. 18,373 5,297 5,055 18,131
Trade promotions........................................... 41,067 10,811 8,636 38,892
Consumer marketing......................................... 14,829 7,251 1,929 9,507
-------------- --------- --------- --------------
Total brokerage, distribution and marketing expenses....... 74,269 23,359 15,620 66,530
Selling, general and administrative expenses................. 5,971 1,493 1,493 5,971
Amortization of goodwill and other intangibles............... 9,901 2,475 2,475 9,901
-------------- --------- --------- --------------
Operating profit........................................... 40,207 8,766 12,098 43,539
Amortization of deferred financing fees...................... 1,277 319 319 1,277
Interest expense............................................. 26,541 6,635 6,635 26,541
-------------- --------- --------- --------------
Income before income taxes................................. 12,389 1,812 5,144 15,721
Provision for income taxes................................... 4,770 698 1,980 6,052
-------------- --------- --------- --------------
Net income................................................. $ 7,619 $ 1,114 $ 3,164 $ 9,669
-------------- --------- --------- --------------
-------------- --------- --------- --------------
OTHER FINANCIAL DATA:
EBITDA(1)(2)................................................. $ 54,465
EBITDA margin(3)............................................. 28.3%
Depreciation and amortization................................ $ 10,926
Inventories.................................................. 7,881
Ratio of EBITDA to interest expense(4)....................... 2.1x
Ratio of earnings to fixed charges(5)........................ 1.6x
</TABLE>
- ------------------------------
(1) EBITDA is defined as net income before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare, on the basis of operating
performance, and to determine a company's ability to service and incur debt.
EBITDA should not be considered in isolation from or as a substitute for net
income, cash flows from operating activities or other consolidated income or
cash flow statement data prepared in accordance with generally accepted
accounting principles or as a measure of profitability or liquidity. EBITDA
presented for the Company may not be comparable to similarly titled measures
reported by other companies.
(2) EBITDA does not include approximately $1.5 million of annual savings the
Company expects to realize from production of its MRS. BUTTERWORTH'S syrup
products under the Red Wing Co-Pack Agreement. The Company also expects to
realize comparable savings on production of its LOG CABIN syrup products
under a similar co-pack arrangement.
(3) EBITDA margin is computed as EBITDA as a percentage of net sales and is
presented because it is commonly used by certain investors and analysts to
analyze and compare operating performance.
(4) The ratio of EBITDA to interest expense is presented because it is commonly
used by certain investors and analysts to determine company's ability to
service and incur debt.
(5) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as net income before provision for income taxes, plus fixed
charges. Fixed charges consist of interest expense on all indebtedness,
amortization of deferred financing fees and one-third of rental expense on
operating leases, representing that portion of rental expense deemed by the
Company to be attributable to interest.
11
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following factors in
addition to the other information set forth in this Prospectus before
participating in the Exchange Offer.
SUBSTANTIAL LEVERAGE
The Company is significantly leveraged. At March 31, 1997, on a pro forma
basis after giving effect to the LC Acquisition, the Company would have had
outstanding $286.0 million in aggregate principal amount of indebtedness
(excluding trade payables and other liabilities) and availability of $14.0
million under the Revolving Facility. The degree to which the Company is
leveraged could have important consequences to holders of the Notes, including
the following: (i) the Company will have significant cash interest expense and
principal repayment obligations with respect to outstanding indebtedness,
including the Senior Credit Facilities and the Notes; (ii) the Company could be
vulnerable to changes in general economic conditions or increases in prevailing
interest rates; (iii) the Company's ability to obtain additional financing for
working capital, capital expenditures, acquisitions, general corporate purposes
or other purposes may be impaired; (iv) the Company may be substantially more
leveraged than certain of its competitors, which may place the Company at a
competitive disadvantage; (v) all of the indebtedness outstanding under the
Senior Credit Facilities will be secured by substantially all the assets of the
Company and matures prior to the maturity of the Notes; 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 Credit Facilities" and "Description of
Notes."
The Company believes that its cash flow from operations will be sufficient
to meet its payment obligations under the Senior Credit Facilities and other
operational requirements. If the Company is unable to generate sufficient cash
flow from operations, it may be required to delay or forego its acquisition
strategy, reduce or delay planned product improvement initiatives or refinance
all or a portion of amounts outstanding under the Senior Credit Facilities at or
prior to their maturity, which is prior to the maturity of the Notes. Other
potential measures to raise cash include the sale of assets or equity. However,
the Company's ability to raise funds by selling assets is restricted by the
Senior Credit Facilities, and its ability to effect equity financings is
dependent on results of operations and market conditions. In the event that the
Company is unable to refinance such indebtedness or raise funds through asset
sales, sales of equity or otherwise, its ability to pay principal of, and
interest on, the Notes would be adversely affected.
RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS
The Indentures restrict, among other things, the Company's ability to incur
additional indebtedness, incur liens, pay dividends or make certain other
restricted payments, enter into certain transactions with affiliates, impose
restrictions on the ability of a subsidiary to pay dividends or make certain
payments to the Company, merge or consolidate with any other person or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of the assets of the Company. In addition, the Senior Credit Facilities contain
other and more restrictive covenants and prohibit the Company from prepaying its
other indebtedness (including the Notes). See "Description of Notes -- Certain
Covenants" and "Description of Senior Credit Facilities." The Senior Credit
Facilities prohibit modification of the terms of any Subordinated Indebtedness,
including the Indentures and the Notes, which would increase the rate of
interest on such indebtedness, change to earlier dates the dates upon which
principal and interest are due or make certain other changes adverse to the
interests of the lenders under the Senior Credit Facilities. Additionally, the
Senior Credit Facilities prohibit prepayment of the New Notes prior to maturity
or refinancing of amounts outstanding under the Senior Credit Facilities. The
Senior Credit Facilities require the Company to maintain specified financial
ratios and satisfy financial condition tests. The financial covenants require
the Company to maintain (i) a minimum interest coverage ratio of 1.35:1.00
12
<PAGE>
until December 31, 1997, increasing to 1.65:1.00 thereafter until December 31,
1998, increasing to 1.90:1.00 thereafter until December 31, 1999, increasing to
2.00:1.00 thereafter until December 31, 2000, increasing to 2.25:1.00 thereafter
until December 31, 2001 and then increasing to 2.50:1.00 thereafter until
termination; (ii) a maximum leverage ratio of 5.85:1.00 until December 31, 1997,
decreasing to 5.50:1.00 thereafter until December 31, 1998, decreasing to
5.00:1.00 thereafter until December 31, 1999, decreasing to 4.50:1.00 thereafter
until December 31, 2000, and then decreasing to 4.00:1.00 thereafter until
termination; (iii) a minimum fixed charge ratio of 1.10:1.00 until December 31,
1997, increasing to 1.25:1.00 until December 31, 1998, increasing to 1.40:1.00
until December 31, 1999, increasing to 1.50:1.00 until December 31, 2000,
increasing to 1.55:1.00 until December 31, 2000, and then increasing to
1.60:1.00 until termination; and (iv) a maximum consolidated maintenance capital
expenditures amount of $2.0 million for the year ending December 31, 1997 and
$2.0 million for each calendar year thereafter.
A breach of any of the above-referenced financial covenants would constitute
an event of default under the Senior Credit Facilities and would entitle the
Lenders under the Senior Credit Facilities to accelerate the indebtedness due
thereunder. If the amount of such indebtedness so accelerated were to be in
excess of $5 million, such acceleration would also constitute an Event of
Default under the Indentures. The Company's ability to meet those financial
ratios and tests can be affected by events beyond its control, and there can be
no assurance that the Company will meet those tests. A breach of any of these
covenants could result in a default under the Senior Credit Facilities and/or
the Indentures. Upon the occurrence of an event of default under the Senior
Credit Facilities, the lenders could elect to declare all amounts outstanding
under the Senior Credit Facilities, together with accrued interest, to be
immediately due and payable. If the Company were unable to repay those amounts,
the lenders could proceed against the collateral granted to them to secure that
indebtedness. If the lenders under the Senior Credit Facilities accelerate the
payment of the indebtedness, there can be no assurance that the assets of the
Company would be sufficient to repay in full such indebtedness and the other
indebtedness of the Company, including the Notes. See "Description of Senior
Credit Facilities."
SUBORDINATION; ASSET ENCUMBRANCES
The Notes are subordinated in right of payment to all existing and future
Senior Indebtedness, including the Senior Credit Facilities, including the
principal of (and premium, if any) and interest on and all other amounts due on
or payable in connection with Senior Indebtedness. As of March 31, 1997, on a
pro forma basis after giving effect to the LC Acquisition, there would have been
$86.0 million of Senior Indebtedness outstanding (excluding unused commitments
of $14.0 million under the Revolving Facility). By reason of such subordination,
in the event of the insolvency, liquidation, reorganization, dissolution or
other winding-up of the Company or upon a default in payment with respect to, or
the acceleration of, any Senior Indebtedness, the holders of such Senior
Indebtedness and any other creditors who are holders of Senior Indebtedness and
creditors of subsidiaries that are not guarantors of the Notes must be paid in
full before the Holders of the Notes may be paid. The Company does not currently
have any subsidiaries, however, the Indentures do not restrict the ability of
the Company to create, acquire or capitalize subsidiaries in the future. The
Indentures permit subsidiaries of the Company to incur debt provided certain
conditions are met and such subsidiaries guarantee the Notes. If the Company
incurs any additional PARI PASSU debt, the holders of such debt would be
entitled to share ratably with the Holders of the Notes in any proceeds
distributed in connection with any insolvency, liquidation, reorganization,
dissolution or other winding-up of the Company. This may have the effect of
reducing the amount of proceeds paid to Holders of the Notes. In addition, no
payments may be made with respect to the principal of (and premium, if any) or
interest on the Notes if a payment default exists with respect to Senior
Indebtedness and, under certain circumstances, no payments may be made with
respect to the principal of (and premium, if any) or interest on the Notes for a
period of up to 179 days if a non-payment default exists with respect to Senior
Indebtedness. See "Description of Notes."
13
<PAGE>
The Company has granted the lenders under the Senior Credit Facilities
security interests in substantially all of the current and future assets of the
Company, including a pledge of all of the issued and outstanding shares of
capital stock of the Company's future domestic subsidiaries. In the event of a
default on such indebtedness (whether as a result of the failure to comply with
a payment or other covenant, a cross-default, or otherwise), the parties granted
such security interests will have a prior secured claim on the capital stock of
the Company and the assets of the Company and any guarantors under the Senior
Credit Facilities. If such parties should attempt to foreclose on their
collateral, the Company's financial condition and the value of the Notes would
be materially adversely affected. See "Description of Senior Credit Facilities."
LIMITATION ON CHANGE OF CONTROL
The Indentures require the Company, in the event of a Change of Control in
respect of which it has not elected to redeem the Notes, to repurchase any Notes
that holders thereof desire to have repurchased at 101% of the principal amount
thereof, plus accrued interest to the Change of Control repurchase date. See
"Description of Notes -- Change of Control."
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. There can be no assurance that the Company will have funds available to
redeem or repurchase the Notes upon the occurrence of a Change of Control. In
particular, a Change of Control may cause an acceleration of the Senior Credit
Facilities and other indebtedness, if any, of the Company, in which case such
indebtedness would be required to be repaid in full before redemption or
repurchase of the Notes. See "Description of Notes -- Change of Control" and
"Description of Senior Credit Facilities." The inability to repay such
indebtedness, if accelerated, or to redeem or repurchase all of the Notes upon
the occurrence of a Change in Control would constitute an event of default under
the Indenture.
COMPETITION
The Company competes in highly competitive markets with a significant number
of companies of varying sizes, including divisions or subsidiaries of larger
companies. A number of these competitors have multiple product lines, have
substantially greater financial and other resources available to them and may be
substantially less leveraged than the Company, and there can be no assurance
that the Company can compete successfully with such other companies. Competitive
pressures or other factors could cause the Company's products to lose market
share or result in significant price erosion, which would have a material
adverse effect on the Company's results of operations. See "Business --
Competition."
RAW MATERIALS
The Company purchases agricultural commodities, flavors, other raw materials
and packaging from growers, commodity processors, importers, other food
companies and packaging manufacturers. While all such materials are available
from numerous independent suppliers, commodity raw materials are subject to
fluctuations in price attributable to, among other things, changes in crop size
and federal and state agricultural programs. Such fluctuations could have a
material adverse effect on the performance of the Company. See "Business -- Raw
Materials."
RISKS RELATING TO THE LC ACQUISITION
The process of integrating the assets acquired pursuant to the LC
Acquisition may result in unforeseen operating difficulties, may require
substantial attention from members of the Company's senior management and may
require significant financial resources that would otherwise be available for
the ongoing development or expansion of the Company's existing operations. In
addition, in connection
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with the LC Acquisition, the Company has entered into the LC Co-Pack Agreement
with Kraft which has agreed to manufacture and distribute syrup for the Company
at prices based on historical manufacturing costs for a period of up to nine
months from the LC Acquisition Closing Date. Thereafter, the Company intends to
enter into a new co-pack agreement with a third party or manufacture the syrup
in a new facility to be acquired or leased by the Company. There can be no
assurance that the Company will be able to enter into a new co-pack agreement on
substantially the same terms as the LC Co-Pack Agreement or will be able to
acquire or lease such facility. LOG CABIN syrup products have historically been
sold directly by Kraft's sales force. The Company intends to sell the LOG CABIN
syrup products through its network of independent food brokers; however, there
can be no assurance that this change in sales channels will be effective. In
addition, Kraft has historically provided computer, accounting, sales and
marketing support. The Company has entered into the LC Transition Services
Agreement pursuant to which Kraft will provide various sales, marketing,
transactions processing, and accounting services to the Company for a period of
up to six months after the LC Acquisition Closing Date. There can be no
assurance that the Company will be able to perform these services at a
comparable cost.
RISKS RELATING TO THE MBW ACQUISITION
The Company was formed for the purpose of the MBW Acquisition. The Company's
business was previously operated as a product line of Unilever. There can be no
assurance that the Company will not encounter unanticipated problems or expenses
in establishing MRS. BUTTERWORTH'S as an independent company. The Company
believes that the costs of building its corporate organization and transferring
the production of MRS. BUTTERWORTH'S syrup from Conopco to Red Wing will be
approximately $5.8 million. In addition, Conopco historically provided computer,
accounting and human resources support, warehouse space, a network of
third-party distribution services and a network of regional food brokers. There
can be no assurance that the Company will be able to perform these services at a
comparable cost. The majority of the existing broker agreements were transferred
to the Company concurrently with the MBW Acquisition. Although the Company
believes that it will be able to continue such broker agreements on
substantially the same terms as those previously negotiated with Conopco, there
can be no assurance that the Company will be able to do so.
RISKS ASSOCIATED WITH ACQUISITION STRATEGY
The Company plans to continue to pursue additional acquisitions of well
recognized national and regional dry grocery brands. There can be no assurance,
however, that the Company will be able to identify additional acquisitions or
that, if consummated, any anticipated benefits will be realized from such
acquisitions. In addition, the availability of additional acquisition financing
cannot be assured and, depending on the terms of such additional acquisitions,
could be restricted by the terms of the Senior Credit Facilities and/or the
Indentures. Furthermore, there can be no assurance that the Company, under
Dartford's management, will be able to achieve results comparable with those of
Van de Kamp's. The process of integrating acquired operations into the Company's
existing operations may result in unforeseen operating difficulties, may require
substantial attention from members of the Company's senior management and may
require significant financial resources that would otherwise be available for
the ongoing development or expansion of the Company's existing operations.
Possible future acquisitions by the Company could result in the incurrence of
additional debt, contingent liabilities and amortization expenses related to
goodwill and other intangible assets, all of which could materially adversely
affect the Company's financial condition and operating results.
IMPACT OF GOVERNMENTAL REGULATION
The Company is subject to numerous federal, state and local laws and
regulations concerning, among other things, health and safety matters, food
manufacture, product labeling, advertising and the environment. Compliance with
existing federal, state and local laws and regulations is not expected to
15
<PAGE>
have a material adverse effect upon the earnings or competitive position of the
Company. However, the Company cannot predict the effect, if any, of laws and
regulations that may be enacted in the future, or of changes in the enforcement
of existing laws and regulations that are subject to extensive regulatory
discretion. See "Business -- Certain Legal and Regulatory Matters."
DEPENDENCE ON KEY MANAGEMENT
The Company's success will depend to a significant extent on Messrs. Ferraro
and Willett and upon Dartford. Although the Company has entered into employment
agreements with these executive officers and a management services agreement
with Dartford, there can be no assurance the Company will be able to retain its
executive officers and key personnel or attract additional qualified management
in the future.
CONTROL BY INVESTOR GROUP
All of the outstanding shares of the Company's Common Stock are beneficially
owned by MBW LLC. Accordingly, MBW LLC and the Equity Investors control the
Company and have the power to elect all of its directors, appoint new management
and approve any action requiring the approval of the holders of the Company's
Common Stock, including adopting amendments to the Company's Certificate of
Incorporation and approving mergers or sales of substantially all of the
Company's assets. See "Management." The directors elected by MBW LLC will have
the authority to make decisions affecting the capital structure of the Company,
including the issuance of additional capital stock, the implementation of stock
repurchase programs and the declaration of dividends. Pursuant to MBW LLC's
Limited Liability Company Agreement, for so long as MDC owns more than 50% of
the voting interests of MBW LLC, MDC will have the right to designate a majority
of the Board of Directors of the Company. See "Security Ownership."
ABSENCE OF PUBLIC MARKET
There has not previously been any public market for the New Notes or the Old
Notes. The Company does not intend to apply for listing of the New Notes on any
securities exchange or any automated dealer quotation system. Although the
Initial Purchasers have informed the Company that they currently intend to make
a market in the New Notes, they are not obligated to do so and any such market
making may be discontinued at any time without notice. There can be no assurance
as to the liquidity of any markets that may develop for the New Notes, the
ability of holders to sell the New Notes, or the price at which holders would be
able to sell 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. Historically,
the market for securities similar to the New Notes, including non-investment
grade debt, has been subject to disruptions that have caused substantial
volatility in the prices of such securities. There can be no assurance that any
market for the New Notes, if such market develops, will not be subject to
similar disruptions.
FRAUDULENT CONVEYANCE
The incurrence of indebtedness (such as the Series C Notes) in connection
with the LC Acquisition and payments to consummate the LC Acquisition 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 Series C 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 incurrence of the
obligations, the Company 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
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<PAGE>
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 Series C Notes, subordinate
the Series C Notes to other indebtedness of the Company or take other action
detrimental to the holders of the Series C Notes. 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 LC Acquisition, the Company
was (i) neither insolvent nor rendered insolvent by the incurrence of
indebtedness in connection with the LC Acquisition, (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 LC Acquisition 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 LC
Acquisition.
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<PAGE>
USE OF PROCEEDS OF THE NEW NOTES
This Exchange Offer is intended to satisfy obligations of the Company under
the Exchange and Registration Rights Agreements. The Company will not receive
any proceeds from the issuance of the New Notes offered hereby. In consideration
for issuing the New Notes as contemplated in this Prospectus, the Company will
receive, in exchange, Old Notes in like principal amount. The form and terms of
the New Notes are identical in all material respects to the form and terms of
the Old Notes, except as otherwise described herein under "The Exchange
Offer--Terms of the Exchange Offer." The Old Notes surrendered in exchange for
the New Notes will be retired and cancelled and cannot be reissued. Accordingly,
issuance of the New Notes will not result in any increase in the outstanding
debt of the Company.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of the
March 31, 1997, reflecting the MBW Acquisition and the MBW Refinancing, and as
adjusted to give effect to the LC Acquisition. This table should be read in
conjunction with the "Pro Forma Financial Information" included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------
<S> <C> <C>
AS ADJUSTED
ACTUAL (UNAUDITED)
--------- -----------
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C> <C>
Cash................................................................................. $ 8.0 $ --
Accounts receivable--other(1)........................................................ 3.6 --
--------- -----------
--------- -----------
Long-term debt (including current maturities):
Revolving Facility(2).............................................................. -- 46.0
Term Facility...................................................................... -- 40.0
Series A Notes..................................................................... 100.0 100.0
Series C Notes(3).................................................................. -- 102.5
--------- -----------
Total long-term debt............................................................. 100.0 288.5
Total stockholder's equity(4)........................................................ 33.1 60.3
--------- -----------
Total capitalization................................................................. $ 133.1 $ 348.8
--------- -----------
--------- -----------
</TABLE>
- ------------------------------
(1) Represents readily available cash of $3.6 million due to the Company from
Conopco which was used for the LC Acquisition.
(2) Reflects borrowings under a $60.0 Revolving Facility. See "Description of
Senior Credit Facilities."
(3) Includes a $2.5 million premium received in connection with the Series C
Notes Offering.
(4) Stockholder's equity, as adjusted, reflects an equity contribution from
Holdings of $27.2 million for the LC Acquisition, which is net of certain
transaction expenses of $1.1 million.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Pursuant to the Exchange and Registration Rights Agreements, the Company has
agreed (i)nb]to file a registration statement with respect to an offer to
exchange the Old Notes for senior debt securities of the Company with terms
substantially identical to the Old Notes (except that the New Notes will not
contain terms with respect to transfer restrictions, registration rights and
liquidated damages) on or prior to 60 days after the relevant issue date and
(ii)nb]to use best efforts to cause such registration statement to become
effective under the Securities Act within 150 days after such issue date. The
Series A Notes were issued on February 10, 1997 and the Series C Notes were
issued on July 1, 1997. In the event that applicable interpretations of the
staff of the Commission do not permit the Company to effect the Exchange Offer
as contemplated thereby, or if certain holders of the Old Notes notify the
Company that they are not eligible to participate in, or would not receive
freely tradeable New Notes in exchange for tendered Old Notes pursuant to, the
Exchange Offer, the Company will use its best efforts to cause to become
effective a shelf registration statement (the "Shelf Registration Statement")
with respect to the resale of the Old Notes and to keep the Shelf Registration
Statement effective until three years after the relevant issue date. In the
event that the Company is not in compliance with certain obligations under the
Series A Exchange and Registration Rights Agreement or the Series C Exchange and
Registration Rights Agreement, the Company shall be obligated to pay liquidated
damages to holders of the Series A Notes or the Series C Notes, as the case may
be. See "Old Notes Exchange and Registration Rights Agreements."
Each holder of the Old Notes that wishes to exchange such Old Notes for New
Notes in the Exchange Offer will be required to make certain representations,
including representations 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 Holdings or if it is an affiliate, it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
RESALE OF NEW NOTES
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third-parties, the Company believes that, except as
described below, New Notes issued pursuant to the Exchange Offer in exchange for
Old Notes may be offered for resale, resold and otherwise transferred by any
holder thereof (other than a holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holder's business and such holder does not intend to participate and has no
arrangement or understanding with any person to participate in the distribution
of such New Notes. Any holder who tenders in the Exchange Offer with the
intention or for the purpose of participating in a distribution of the New Notes
cannot rely on such interpretation by the staff of the Commission and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. Unless an
exemption from registration is otherwise available, any such resale transaction
should be covered by an effective registration statement containing the selling
security holder's information required by Item 507 of Regulation S-K under the
Securities Act. This Prospectus may be used for an offer to resell, resale or
other retransfer of New Notes only as specifically set forth herein. Only
broker-dealers who acquired the Old Notes as a result of market-making
activities or other trading activities may participate in the Exchange Offer.
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."
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<PAGE>
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 for exchange any and
all Old Notes properly 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 surrendered pursuant to the Exchange Offer. Old Notes may be tendered
only in integral multiples of $1,000.
The form and terms of the New Notes will be the same as the form and terms
of the Old Notes except the New Notes will be registered under the Securities
Act and hence will not bear legends restricting the transfer thereof. The New
Notes will evidence the same debt as the Old Notes. The New Notes will be issued
under and entitled to the benefits of the Indentures, which also authorized the
issuance of the Old Notes, such that both series will be treated as a single
class of debt securities under the Indentures. Holders who tender their Series A
Notes in this Exchange Offer will be deemed, in accordance with the provisions
of the Letter of Transmittal, to have consented to the distribution of the
proceeds of any Asset Disposition ratably amongst the Holders of the Notes and
Section 4.6 of the Series A Indenture will be amended accordingly.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered for exchange.
As of the date of this Prospectus, $100.0 million aggregate principal amount
of the Series A Notes and $100.0 million aggregate principal amount of Series C
Notes are outstanding. This Prospectus, together with the Letter of Transmittal,
is being sent to all registered holders of Old Notes. There will be no fixed
record date for determining registered holders of Old Notes entitled to
participate in the Exchange Offer.
The Company intends to conduct the Exchange Offer in accordance with the
provisions of the Exchange and Registration Rights Agreements and the applicable
requirements of the Exchange Act, and the rules and regulations of the
Commission thereunder. Old Notes which are not tendered for exchange in the
Exchange Offer will remain outstanding and continue to accrue interest and will
be entitled to the rights and benefits such holders have under the Indentures
and the Exchange and Registration Rights Agreements.
The Company shall be deemed to have accepted for exchange properly tendered
Notes when, as and if the Company shall have given oral or written notice
thereof to the Exchange Agent and complied with the provisions of Section 1 of
the Exchange and Registration Rights Agreements. The Exchange Agent will act as
agent for the tendering holders for the purposes of receiving the New Notes from
the Company. The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Old Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions specified
below under "-- Certain Conditions to the Exchange Offer."
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 described below, in connection with the
Exchange Offer. See "--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.
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<PAGE>
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders of Old Notes an announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the then Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting for exchange any Old Notes, to extend the Exchange Offer or to
terminate the Exchange Offer if any of the conditions set forth below under
"--Certain Conditions to the Exchange Offer" shall not have been satisfied, by
giving oral or written notice of such delay, extension or termination to the
Exchange Agent or (ii) to amend the terms of the Exchange Offer in any manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders of Old Notes. If the Exchange Offer is amended in a manner
determined by the Company to constitute a material change, the Company will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered holders, and the Company will extend the
Exchange Offer, depending upon the significance of the amendment and the manner
of disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such period.
INTEREST ON THE NEW NOTES
The New Notes will bear interest at a rate of 9 7/8% per annum, payable
semi-annually, on February 15 and August 15 of each year, commencing on August
15, 1997. Holders of New Notes will receive interest on August 15, 1997 from the
date of initial issuance of the New Notes, plus an amount equal to the accrued
interest on the Old Notes. Interest on the Old Notes accepted for exchange will
cease to accrue upon issuance of the New Notes.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or exchange any New Notes for, any Old
Notes, and may terminate the Exchange Offer as provided herein before the
acceptance of any Old Notes for exchange, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the Company's reasonable judgment, might materially impair the
ability of the Company to proceed with the Exchange Offer; or
(b) any law, statute, rule or regulation is proposed, adopted or
enacted, or any existing law, statute, rule or regulation is interpreted by
the staff of the Commission, which, in the Company's reasonable judgment,
might materially impair the ability of the Company to proceed with the
Exchange Offer; or
(c) any governmental approval has not been obtained, which approval the
Company shall, in its reasonable discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving oral or
written notice of such extension to the holders thereof. During any such
extensions, all Old Notes previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the Company. 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.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified above under "--Certain Conditions to the Exchange Offer." The Company
will give oral or written notice of any extension, amendment, non-acceptance or
21
<PAGE>
termination to the holders of the Old Notes as promptly as practicable, such
notice in the case of any extension to be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indentures under the Trust Indenture Act of 1939 (the
"TIA").
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or facsimile thereof, have the signature thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile to the Exchange Agent prior
to 5:00 p.m., New York City time, on the Expiration Date or, in the alternative,
comply with DTC's ATOP procedures described below. In addition, either (i) Old
Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if such procedure is available, into the
Exchange Agent's account at the Depository Trust Company (the "Book-Entry
Transfer Facility" or "DTC") pursuant to the procedure for book-entry transfer
described below or properly transmitted Agent's Message (as defined 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 Letter of Transmittal and other required documents
must be received by the Exchange Agent at the address set forth below under "The
Exchange Offer--Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date.
The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES, 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. 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
OTHER NOMINEES TO EFFECT THE ABOVE 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 such registered
holder of Old Notes to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Notes, either make appropriate arrangements to register ownership of
the Old Notes in such owner's name or obtain a properly completed bond power
from the registered holder of Old Notes. The transfer of registered ownership
may take considerable time and may not be able to be completed prior to the
Expiration Date.
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Signatures on a Letter of Transmittal or a notice of withdrawal described
below, as the case be, must be guaranteed by an Eligible Institution (as defined
below) unless the Old Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantor must be a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act which is a member of one of
the recognized signature guarantee programs identified in the Letter of
Transmittal (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered holder
as such registered holder's name appears on such Old Notes with the signature
thereon guaranteed by an Eligible Institution.
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 unless waived by the Company,
provide evidence satisfactory to the Company of their authority to so act must
be submitted with the Letter of Transmittal.
The Exchange Agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may utilize DTC's ATOP to tender.
Accordingly, participants in DTC's ATOP may, in lieu of physically completing
and signing the Letter of Transmittal and delivering it to the Exchange Agent,
electronically transmit their acceptance of the Exchange Offer by causing the
Depositary to transfer the Old Notes to the Exchange Agent in accordance with
the Depositary's ATOP procedures for transfer. The Depositary will then send an
Agent's Message to the Exchange Agent.
The term "Agent's Message" means a message transmitted by DTC received by
the Exchange Agent and forming part of the Book-Entry Confirmation, which states
that the Depositary has received an express acknowledgement from a participant
in DTC's ATOP that is tendering Old Notes which are the subject of such book
entry confirmation, that such participant has received and agrees to be bound by
the terms of the Letter of Transmittal (or, in the case of an Agent's Message
relating to guaranteed delivery, that such participant has received and agrees
to be bound by the applicable Notice of Guaranteed Delivery), and that the
agreement may be enforced against such participant.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes 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 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 holder, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
23
<PAGE>
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 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 and all other
required documents. If any tendered Old Notes are not accepted for exchange for
any reason set forth in the terms and conditions of the Exchange Offer or if 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 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 financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes 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 Notes may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal or facsimile thereof, with any
required signature guarantees and any other required documents, must, in any
case, be transmitted to and received by the Exchange Agent at the address set
forth below under "--Exchange Agent" on or prior to the Expiration Date or, if
the guaranteed delivery procedures described below are to be complied with,
within the time period provided under such procedures. Delivery of documents to
the Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the registered number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
(3) New York Stock Exchange trading days after the Expiration Date, the
Letter of Transmittal (or facsimile thereof) together with the Old Notes 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
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), or properly transmitted Agent's Message as well as all
tendered 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 three (3) New York
Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
24
<PAGE>
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, 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 to be effective, (i) a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
"--Exchange Agent" or (ii) holders must comply with the appropriate procedures
of DTC's ATOP system. Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes were registered, if different from that of the withdrawing holder. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such holder is an Eligible Institution. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes
and otherwise comply with the procedures of such facility. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company, 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 (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 for the Old Notes) 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 "--Procedures for Tendering" above at any time
on or prior to the Expiration Date.
EXCHANGE AGENT
Wilmington Trust Company has been appointed as Exchange Agent of the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of
25
<PAGE>
Transmittal and requests for Notice of Guaranteed Delivery should be directed to
the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL OR BY BY HAND:
OVERNIGHT COURIER:
Wilmington Trust Company Wilmington Trust Company
Corporate Trust Administration c/o Harris Trust Company of New York,
1100 North Market Street as Agent
Rodney Square North 75 Water Street
Wilmington, Delaware 19890-0001 New York, New York 10004
BY FACSIMILE:
Wilmington Trust Company
Corporate Trust Administration
Facsimile: (302) 651-1079
Confirm by Telephone: (302) 651-8864
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to broker-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 and are estimated in the aggregate to be approximately
$250,000. Such expenses include registration fees, fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs, and
related fees and expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Notes pursuant to the Exchange Offer. If, however, certificates representing
Old Notes for principal amounts not tendered or accepted for exchange are to be
delivered to, or are to be issued in the name of, any person other than the
registered holder of Notes tendered, or if tendered Notes are registered in the
name of any person other than the person signing the Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.
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
26
<PAGE>
other than the registered tendering holder will be responsible for the payment
of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of 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 (i) in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to the exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws and (ii) otherwise set forth in the
Offering Memorandum dated February 10, 1997 distributed in connection with the
Offering. In general, the Old Notes may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register the Old
Notes under the Securities Act. Based on interpretations by the staff of the
Commission, New Notes issued pursuant to the Exchange Offer may be offered for
resale, resold or otherwise transferred by holders thereof (other than any such
holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement or understanding with respect to the distribution of
the New Notes to be acquired pursuant to the Exchange Offer. Any holder who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the New Notes (i) could not rely on the applicable interpretations of the
staff of the Commission and (ii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. In addition, to comply with the securities laws of
certain jurisdictions, if applicable, the New Notes may not be offered or sold
unless they have been registered or such securities laws have been complied
with. The Company has agreed, pursuant to the Exchange and Registration Rights
Agreement and subject to certain specified limitations therein, to register or
qualify the New Notes for offer or sale under the securities or blue sky laws of
such jurisdictions as any holder of the New Notes may request in writing.
27
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA--THE COMPANY AND MBW PREDECESSOR
The following table sets forth selected historical financial data of the MBW
Predecessor for the years ended December 31, 1994, 1995 and 1996 and the three
months ended March 31, 1996 and for the Company for the three months ended March
31, 1997. The selected historical statement of operations data for the years
ended December 31, 1994, 1995 and 1996 are derived from the audited financial
statements of the MBW Predecessor included elsewhere in this Prospectus which
have been audited by Price Waterhouse LLP. The selected historical statement of
operations data for the three months ended March 31, 1996 are derived from the
unaudited financial statements of the MBW Predecessor which are included
elsewhere in this Prospectus which, in the opinion of management, include all
normal, recurring adjustments. The selected historical statement of operations
data for the three months ended March 31, 1997 are derived from the unaudited
financial statements of the Company which are included elsewhere in this
Prospectus and which, in the opinion of management, include all normal,
recurring adjustments. This table should be read in conjunction with the
historical financial statements and related notes thereto of the Company and the
MBW Predecessor included elsewhere in this Prospectus and with "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
MBW PREDECESSOR COMPANY
--------------------------------------------------- ---------------
THREE MONTHS THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED
---------------------------------- MARCH 31, MARCH 31,
1994 1995 1996 1996 1997
---------- ---------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net sales................................................. $ 96,729 $ 91,302 $ 89,541 $ 22,887 $ 21,253
Cost of products sold..................................... 29,930 27,743 28,955 7,057 7,167
---------- ---------- ---------- --------------- ---------------
Gross profit............................................ 66,799 63,559 60,586 15,830 14,086
Brokerage, distribution and marketing expenses:
Brokerage and distribution.............................. 8,662 7,583 8,140 2,487 2,279
Trade promotions........................................ 21,911 19,380 17,672 4,591 3,643
Consumer marketing...................................... 15,297 13,291 10,835 4,497 1,331
---------- ---------- ---------- --------------- ---------------
Total brokerage, distribution and marketing expenses.... 45,870 40,254 36,647 11,575 7,253
Selling, general and administrative expenses.............. 6,829 6,120 6,753 1,688 1,053
---------- ---------- ---------- --------------- ---------------
Amortization of goodwill and other intangibles............ -- -- -- -- 828
Transition costs.......................................... -- -- -- -- 126
---------- ---------- ---------- --------------- ---------------
Operating profit........................................ 14,100 17,185 17,186 2,567 4,826
Amortization of deferred financing fees................... -- -- -- -- 2,322
Interest expense, net..................................... -- -- -- -- 2,622
---------- ---------- ---------- --------------- ---------------
Income (loss) before income taxes....................... 14,100 17,185 17,186 2,567 (118)
Provision (benefit) for income taxes...................... 5,429 6,616 6,616 988 (47)
---------- ---------- ---------- --------------- ---------------
Net income (loss)....................................... $ 8,671 $ 10,569 $ 10,570 $ 1,579 $ (71)
---------- ---------- ---------- --------------- ---------------
---------- ---------- ---------- --------------- ---------------
OTHER FINANCIAL DATA:
Ratio of earnings to fixed charges(1)..................... NA NA NA NA --
</TABLE>
- ------------------------------
(1) For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as net income before provision for income taxes, plus
fixed charges. Fixed charges consist of interest expense on all
indebtedness, amortization of deferred financing fees and one-third of
rental expense on operating leases, representing that portion of rental
expense deemed by the Company to be attributable to interest. Unilever did
not allocate any fixed charges to the MBW Predecessor. For the three months
ended March 31, 1997, fixed charges exceeded earnings before fixed charges
by $4.8 million.
28
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA--LC BUSINESS
The following table sets forth selected historical financial data of the LC
Business for the periods indicated. The selected historical statement of
operations data for the years ended December 31, 1994, December 30, 1995 and
December 28, 1996 are derived from the audited financial statements of the LC
Business included elsewhere in this Prospectus which have been audited by
Coopers & Lybrand L.L.P. The selected historical statement of operations data
for the three months ended March 31, 1996 and 1997 are derived from the
unaudited financial statements of the LC Business which are included elsewhere
in this Prospectus and which, in the opinion of management, include all normal,
recurring adjustments. This information should be read in conjunction with the
historical financial statements and related notes thereto of the LC Business
appearing elsewhere in this Prospectus and with "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
THREE
MONTHS
YEAR ENDED ENDED
------------------------------------------------- MARCH 31,
DECEMBER 31, DECEMBER 30, DECEMBER 28, ----------
1994 1995 1996 1996
--------------- --------------- --------------- ----------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net sales................................................... $ 115,894 $ 106,330 $ 104,466 $ 28,584
Cost of products sold....................................... 35,254 35,804 36,237 8,116
--------------- --------------- --------------- ----------
Gross profit.............................................. 80,640 70,526 68,229 20,468
Brokerage, distribution and marketing expenses:
Brokerage and distribution................................ 7,553 7,620 7,099 1,952
Trade promotions.......................................... 20,898 23,239 21,355 5,716
Consumer marketing........................................ 7,940 5,478 3,994 2,754
--------------- --------------- --------------- ----------
Total brokerage, distribution and marketing expenses...... 36,391 36,337 32,448 10,422
Selling, general and administrative expenses................ 7,863 7,738 7,388 2,277
Amortization of goodwill and other intangibles.............. 1,350 1,350 1,350 338
--------------- --------------- --------------- ----------
Operating profit.......................................... 35,036 25,101 27,043 7,431
Provision for income taxes.................................. 14,391 10,461 11,229 3,047
--------------- --------------- --------------- ----------
Net income................................................ $ 20,645 $ 14,640 $ 15,814 $ 4,384
--------------- --------------- --------------- ----------
--------------- --------------- --------------- ----------
OTHER FINANCIAL DATA:
Ratio of earnings to fixed charges(1)....................... NA NA NA NA
<CAPTION>
1997
----------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................................... $ 26,802
Cost of products sold....................................... 9,305
----------
Gross profit.............................................. 17,497
Brokerage, distribution and marketing expenses:
Brokerage and distribution................................ 1,972
Trade promotions.......................................... 4,993
Consumer marketing........................................ 598
----------
Total brokerage, distribution and marketing expenses...... 7,563
Selling, general and administrative expenses................ 1,887
Amortization of goodwill and other intangibles.............. 338
----------
Operating profit.......................................... 7,709
Provision for income taxes.................................. 3,161
----------
Net income................................................ $ 4,548
----------
----------
OTHER FINANCIAL DATA:
Ratio of earnings to fixed charges(1)....................... NA
</TABLE>
- ------------------------
(1) Kraft did not allocate any fixed charges to the LC Business.
29
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial statements (the "Pro Forma
Financial Statements") for the year ended December 31, 1996 are based on the
audited financial statements of the MBW Predecessor and the LC Business which
are included elsewhere in this Prospectus. The Unaudited Pro Forma Balance Sheet
as of March 31, 1997 is based on unaudited financial information of the Company
and unaudited financial information of the LC Business which are included
elsewhere in this Prospectus, and which, in the opinion of management, include
all normal, recurring adjustments. The Unaudited Pro Forma Statement of
Operations for the three months ended March 31, 1996 is based on the unaudited
financial information of the MBW Predecessor and the LC Business which are
included elsewhere in this Prospectus, and which, in the opinion of management,
include all normal, recurring adjustments. The Unaudited Pro Forma Statement of
Operations for the three months ended March 31, 1997 is based on the unaudited
financial information of the Company and the LC Business, which are included
elsewhere in this Prospectus and which, in the opinion of management, include
all normal, recurring adjustments. The Pro Forma Financial Statements give
effect to the LC Acquisition as if it had occurred as of March 31, 1997 for
balance sheet data. For statement of operations data, the Pro Forma Financial
Statements give effect to the Transactions as if they had each occurred as of
January 1, 1996 for the year ended December 31, 1996 and the three months ended
March 31, 1996 and to the MBW Refinancing and the LC Acquisition as if they had
occurred as of January 1, 1997 for the three months ended March 31, 1997. See
"The Acquisitions, Financings and Related Transactions" on page 5 of the
Registration Statement. In addition, the Pro Forma Financial Statements give
effect to certain reductions in general and administrative expenses. General and
administrative expenses of the MBW Predecessor and the LC Business have
historically consisted of direct and indirect allocations from Conopco and
Kraft, respectively. Based on existing formal and informal arrangements to
operate the Company on a stand-alone basis, as well as thorough analysis of
additional anticipated costs, the Company has developed an operating budget
which reflects substantial selling, general and administrative savings as
compared to the historical financial statements of the MBW Predecessor and the
LC Business which included various corporate expense allocations. See Notes (c)
and (k) to the Pro Forma Statements of Operations below.
The pro forma financial information set forth below reflects pro forma
adjustments that are based upon available information and assumptions that the
Company believes are reasonable. The pro forma financial information does not
purport to represent what the Company's results of operations or financial
condition actually would have been had the Transactions been consummated as of
such dates or for such periods or project the Company's results of operations or
financial condition for any future period. The Pro Forma Financial Statements
and accompanying notes should be read in conjunction with the historical
financial statements of the Company and the Predecessor and other financial
information pertaining to the Company including "Capitalization" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere herein.
30
<PAGE>
AURORA FOODS INC.
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LC BUSINESS
STATEMENT OF COMPANY
COMPANY ASSETS TO BE PRO FORMA PRO FORMA
ACTUAL ACQUIRED(b) ADJUSTMENTS BALANCE SHEET
----------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
ASSETS:
Cash.................................................. $ 8,029 $ -- $ (8,029)(c) $ --
Accounts receivable................................... 5,510 -- -- 5,510
Accounts receivable--other............................ 3,664(a) -- (3,636)(d) 28
Inventories........................................... 1,164 6,717 -- 7,881
Prepaid expenses...................................... 18 -- -- 18
Net current deferred tax asset........................ 177 -- -- 177
----------- ------------- ------------ --------------
Total current assets.............................. 18,562 6,717 (11,665) 13,614
Machinery and equipment............................... 5,169 8,238 -- 13,407
Goodwill and other intangibles assets................. 110,578 -- 206,145(e) 316,723
Deferred financing costs.............................. 6,633 -- 6,265(f) 12,898
----------- ------------- ------------ --------------
Total assets...................................... $ 140,942 $ 14,955 $ 200,745 $ 356,642
----------- ------------- ------------ --------------
----------- ------------- ------------ --------------
LIABILITIES AND STOCKHOLDER'S EQUITY:
Accrued expenses...................................... $ 7,853 $ -- $ 7,853
Revolving Facility.................................... -- 46,000(g) 46,000
Term Facility......................................... -- 40,000(g) 40,000
Series A Notes........................................ 100,000 -- 100,000
Series C Notes........................................ -- 102,500(h) 102,500
----------- ------------ --------------
Total liabilities................................. 107,853 188,500 296,353
Common stock.......................................... 33,160 27,200(i) 60,360
Accumulated deficit................................... (71) -- (71)
----------- ------------ --------------
Total stockholder's equity........................ 33,089 27,200 60,289
----------- ------------ --------------
Total liabilities and stockholder's equity........ $ 140,942 $ 215,700 $ 356,642
----------- ------------ --------------
----------- ------------ --------------
</TABLE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(a) Includes readily available cash of $3,636 due to the Company from Conopco.
(b) Full financial statements, including complete historical balance sheets, of
the LC Business have not been presented as Kraft did not operate the LC
Business as a separate division. Accordingly, it is not practicable to
separate other components of assets, liabilities or cash flows related
specifically to the LC Business.
(c) Reflects the use of cash for the LC Acquisition.
(d) Reflects the distribution of cash to the Company from Conopco and its use
for the LC Acquisition.
(e) Reflects the excess of cost over the fair market value of the net tangible
assets acquired in connection with the LC Acquisition. Goodwill will be
amortized on a straight-line basis over 40 years and other intangibles over
periods ranging from five to 40 years. The Company will evaluate the net
realizable value of intangible assets on an ongoing basis relying on a
number of factors, including operating results and future undiscounted cash
flows.
(f) Reflects deferred financing costs incurred in connection with the LC
Acquisition.
(g) Reflects borrowings under the Senior Credit Facilities.
(h) Reflects issuance of the Notes including a $2.5 million premium received in
connection with the Series C Notes Offering.
(i) Reflects a $27.2 million equity contribution from Holdings, which is net of
certain transaction expenses of $1.1 million.
31
<PAGE>
AURORA FOODS INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MBW MBW INCREMENTAL
PREDECESSOR PRO FORMA MBW LC BUSINESS PRO FORMA COMPANY PRO
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS FORMA
------------- ------------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales....................... $ 89,541 $ 2,040(a) $ 91,581 $ 104,466 $ -- $ 196,047
Cost of products sold........... 28,955 958(b) 29,913(g) 36,237 (451)(i) 65,699(n)
------------- ------------- ----------- ----------- ------------- -----------
Gross profit.................. 60,586 1,082 61,668 68,229 451 130,348
------------- ------------- ----------- ----------- ------------- -----------
Brokerage, distribution and
marketing expenses:
Brokerage and distribution.... 8,140 -- 8,140 7,099 3,134(j) 18,373
Trade promotions.............. 17,672 2,040(a) 19,712 21,355 -- 41,067
Consumer marketing............ 10,835 -- 10,835 3,994 -- 14,829
------------- ------------- ----------- ----------- ------------- -----------
Total brokerage, distribution
and marketing expenses........ 36,647 2,040 38,687 32,448 3,134 74,269
Selling, general and
administrative expenses....... 6,753 (3,042)(c) 3,711(g) 7,388 (5,128)(k) 5,971(n)
Amortization of goodwill and
other intangibles............. -- 3,066(d) 3,066 1,350 5,485(l) 9,901
------------- ------------- ----------- ----------- ------------- -----------
Operating profit.............. 17,186 (982) 16,204 27,043 (3,040) 40,207
Amortization of deferred
financing fees................ -- 856(e) 856 -- 421(m) 1,277
Interest expense................ -- 10,175(e) 10,175 -- 16,366(m) 26,541
------------- ------------- ----------- ----------- ------------- -----------
Income (loss) before taxes.... 17,186 (12,013) 5,173 27,043 (19,827) 12,389
Provision for income taxes...... 6,616 (4,625)(f) 1,991 11,229 (8,450)(f) 4,770
------------- ------------- ----------- ----------- ------------- -----------
Net income.................... $ 10,570 $ (7,388) $ 3,182 $ 15,814 $ (11,377) $ 7,619
------------- ------------- ----------- ----------- ------------- -----------
------------- ------------- ----------- ----------- ------------- -----------
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Statements of Operations
32
<PAGE>
AURORA FOODS INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MBW MBW LC INCREMENTAL
PREDECESSOR PRO FORMA MBW BUSINESS PRO FORMA COMPANY
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
------------- ------------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales................................ $ 22,887 $ 504(a) $ 23,391 $ 28,584 $ -- $ 51,975
Cost of products sold.................... 7,057 324(b) 7,381(g) 8,116 385(i) 15,882(n)
------------- ------------- ----------- ----------- ------------- -----------
Gross profit......................... 15,830 180 16,010 20,468 (385) 36,093
------------- ------------- ----------- ----------- ------------- -----------
Brokerage, distribution and marketing
expenses:
Brokerage and distribution............. 2,487 -- 2,487 1,952 858(j) 5,297
Trade promotions....................... 4,591 504(a) 5,095 5,716 -- 10,811
Consumer marketing..................... 4,497 -- 4,497 2,754 -- 7,251
------------- ------------- ----------- ----------- ------------- -----------
Total brokerage, distribution and
marketing expenses................... 11,575 504 12,079 10,422 858 23,359
Selling, general and administrative
expenses............................... 1,688 (760)(c) 928(g) 2,277 (1,712)(k) 1,493(n)
Amortization of goodwill and other
intangibles............................ -- 767(d) 767 338 1,370(l) 2,475
------------- ------------- ----------- ----------- ------------- -----------
Operating profit..................... 2,567 (331) 2,236 7,431 (901) 8,766
Amortization of deferred financing fees.. -- 214(e) 214 -- 105(m) 319
Interest expense......................... -- 2,544(e) 2,544 -- 4,091(m) 6,635
------------- ------------- ----------- ----------- ------------- -----------
Income before income taxes........... 2,567 (3,089) (522) 7,431 (5,097) 1,812
Provision for income taxes............... 988 (1,189)(f) (201) 3,047 (2,148)(f) 698
------------- ------------- ----------- ----------- ------------- -----------
Net income........................... $ 1,579 $ (1,900) $ (321) $ 4,384 $ (2,949) $ 1,114
------------- ------------- ----------- ----------- ------------- -----------
------------- ------------- ----------- ----------- ------------- -----------
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Statements of Operations.
33
<PAGE>
AURORA FOODS INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MBW LC INCREMENTAL
COMPANY PRO FORMA MBW BUSINESS PRO FORMA COMPANY
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
------------- ------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales....................... $ 21,253 $ -- $ 21,253 $ 26,802 $ -- $ 48,055
Cost of products sold........... 7,167 -- 7,167 9,305 (103)(i) 16,369(n)
------------- ------------ ----------- ----------- ------------ -----------
Gross profit.................. 14,086 -- 14,086 17,497 103 31,686
------------- ------------ ----------- ----------- ------------ -----------
Brokerage, distribution and
marketing expenses:
Brokerage and distribution.... 2,279 -- 2,279 1,972 804(j) 5,055
Trade promotions.............. 3,643 -- 3,643 4,993 -- 8,636
Consumer marketing............ 1,331 -- 1,331 598 -- 1,929
------------- ------------ ----------- ----------- ------------ -----------
Total brokerage, distribution
and marketing expenses...... 7,253 -- 7,253 7,563 804 15,620
Selling, general and
administrative expenses....... 1,053 -- 1,053 1,887 (1,447)(k) 1,493(n)
Transition expenses............. 126 (126) (h) -- -- -- --
Amortization of goodwill and
other intangibles............. 828 -- 828 338 1,309(l) 2,475
------------- ------------ ----------- ----------- ------------ -----------
Operating profit.............. 4,826 126 4,952 7,709 (563) 12,098
Amortization of deferred
financing fees................ 2,322 (2,108)(e) 214 -- 105(m) 319
Interest expense................ 2,622 (78)(e) 2,544 -- 4,091(m) 6,635
------------- ------------ ----------- ----------- ------------ -----------
Income (loss) before taxes.... (118) 2,312 2,194 7,709 (4,759) 5,144
Provision for income taxes...... (47) 890(f) 843 3,161 (2,024)(f) 1,980
------------- ------------ ----------- ----------- ------------ -----------
Net income.................... $ (71) $ 1,422 $ 1,351 $ 4,548 $ (2,735) $ 3,164
------------- ------------ ----------- ----------- ------------ -----------
------------- ------------ ----------- ----------- ------------ -----------
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Statements of Operations.
34
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(a) Represents the reclassification of amounts accounted for as cash discounts
by Conopco to trade promotions by the Company.
(b) Adjustment reflects net additional expenses related to cost of products sold
as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1996
------------------- ---------------------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
COST OF PRODUCTS SOLD:
MBW Predecessor historical expenses....................... $ 28,955 $ 7,057
Less Company expenses:
Co-pack agreements(1)................................... 29,393 7,248
Depreciation(2)......................................... 520 133
-------- -------
MBW pro forma expenses................................ 29,913 7,381
-------- -------
Difference................................................ $ 958 $ 324
-------- -------
-------- -------
</TABLE>
- ------------------------------
(1) These expenses include the MBW Predecessor's historical volumes for
syrup and pancake mix products, as adjusted to give effect to the
contractual rates included in the MBW Co-Pack Agreement with Conopco.
(2) Represents depreciation of the Company's equipment, reflecting an
increase in depreciation expense over the MBW Predecessor's historical
expense as a result of a higher depreciable basis for the acquired
equipment. The equipment will be depreciated over an average life of
10 years.
(c) Represents the difference between corporate expense allocated by Unilever
relating to sales, marketing, general and administrative and research and
development functions and such costs for the stand-alone business. The
Company has formal and informal agreements in place to operate the business
on a stand-alone basis, and at the MBW Acquisition Closing Date had
completed a thorough analysis of anticipated costs going forward. Based on
these agreements and analysis, the Company developed a detailed annual
operating budget which reflected approximately $3.7 million in factually
supportable selling, general and administrative costs, which is
approximately $3.0 million lower than Unilever's corporate allocated costs.
A substantial portion of these savings are attributable to a lower headcount
relative to the headcounts included in the historical allocations from
Unilever. These direct and indirect allocations included multiple layers of
Unilever management which the Company will not need to replicate. At the MBW
Acquisition Date, on a stand-alone basis, the Company budgeted for 22
employees, consisting of seven in executive and finance functions, four in
marketing functions, 10 in sales functions and one in research and
development. The table below reflects cost savings resulting from the new
personnel infrastructure of the Company as compared to the MBW Predecessor's
historical selling, general and administrative expenses. Management of the
Company believed it was appropriate to reflect these amounts in the Pro
Forma Financial Statements as the Company, pursuant to the MBW Asset
Purchase Agreement, acquired no infrastructure or employees from Conopco
and, therefore, the Company will not be operated in the future on a basis
comparable to Conopco.
35
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1996
------------------- ---------------------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
MBW Predecessor historical expenses....................... $ 6,753 $ 1,688
Less MBW pro forma expenses:
Executive and finance(1)................................ 1,568 392
Division management and marketing....................... 302 76
Sales................................................... 1,096 274
Research and development................................ 192 48
Other(2)................................................ 553 138
------- -------
Total MBW pro forma expenses.............................. 3,711 928
------- -------
Difference................................................ $ 3,042 $ 760
------- -------
------- -------
</TABLE>
- ---------------------
(1) Includes aggregate annual and quarterly expenses of $850 and $213,
respectively, related to management and advisory services provided by
Dartford and MDC.
(2) Includes professional fees, facilities expenses and other related
expenses.
(d) Reflects intangible amortization expense as a result of the MBW Acquisition.
Goodwill will be amortized on a straight line basis over a 40-year period
and other intangibles will be amortized over periods ranging from five to 40
years.
(e) Pro forma interest expense has been calculated based upon pro forma debt
levels and the applicable interest rates. The MBW Predecessor was not
allocated any interest expense from Conopco. The pro forma commitment fee on
the unused portion of the Revolving Facility is based on an unused balance
of $60.0 million. The table below presents pro forma interest expense, noted
with the respective interest rates or fee, and pro forma amortization of
deferred financing costs:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
YEAR ENDED ------------------------------
DECEMBER 31, 1996 1996 1997
------------------- -------------- --------------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
PRO FORMA INTEREST EXPENSE:
Historical interest expense........................ $ -- $ -- $ 2,622
MBW pro forma interest expense
Series A Notes (9.875%).......................... 9,875 2,469 2,469
Commitment fee on Revolving Facility (.50%)...... 300 75 75
-------- -------------- --------------
MBW pro forma interest expense................. 10,175 2,544 2,544
-------- -------------- --------------
Difference......................................... $ 10,175 $ 2,544 $ (78)(1)
-------- -------------- --------------
-------- -------------- --------------
MBW Pro forma amortization of deferred
financing costs................................ $ 856 $ 214 $ 214(2)
-------- -------------- --------------
-------- -------------- --------------
</TABLE>
- -------------------
(1) Difference reflects higher interest rates on the debt incurred at the
MBW Acquisition Closing Date than on the Series A Notes.
(2) A pro forma adjustment of $2,108 is required for the difference
between the historical amortization of the deferred financing fees on
the Senior Subordinated Credit Facility incurred on the MBW
Acquisition Closing Date and the pro forma amortization of deferred
financing fees on the Series A Notes.
(f) Reflects a reduction in the provision for income taxes, as a result of the
pro forma decrease in income before income taxes and the effect of the
Company's amortization of goodwill being deductible for income tax purposes.
36
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS (CONTINUED)
(g) Pro forma depreciation expense included in cost of products sold and
selling, general and administrative expenses is $596,000 and $149,000 for
the year ended December 31, 1996 and the three month period ended March 31,
1996, respectively. Pro forma operating lease expense included in selling,
general and administrative expenses is $135,000 and $33,750 for the year
ended December 31, 1996 and the three month period ended March 31, 1996,
respectively.
(h) Represents one-time costs incurred by the Company to establish operations
including broker conversions and orientations, recruiting fees and costs
related to the MBW Transition Services Agreement.
(i) Adjustment to convert cost of products sold from a Last-In, First-Out
inventory basis to a First-In, First-Out basis to be consistent with the
inventory accounting policy of the Company.
(j) Reflects brokerage expense at the contractual rates which the Company will
be charged under its existing contracts with its broker network for the sale
of LOG CABIN syrup products. See note (k) below.
(k) Represents the difference between the Company's pro forma selling, general
and administrative expenses after giving effect to the LC Acquisition and
the sum of MBW pro forma selling, general and administrative expenses plus
the corporate expense allocated by Kraft relating to sales, marketing,
general and administrative and research and development functions. Based on
the Company's operations to date, it has developed a detailed annual
operating budget which reflects approximately $6.0 million in factually
supportable selling, general and administrative costs. The LC Business
historical expenses included multiple layers of Kraft management which the
Company does not have. A substantial portion of the savings the Company will
realize is attributable to a lower headcount relative to the headcounts
included in the historical allocations from Kraft. The Company is budgeting
for an increase from 22 to 34 employees in connection with the LC
Acquisition. Management of the Company believes it is appropriate to reflect
these amounts in the Pro Forma Financial Statements as the Company, pursuant
to the LC Asset Purchase Agreement, acquired no infrastructure or employees
from Kraft and, therefore, the Company will not operate in the future on a
basis comparable to Kraft.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
YEAR ENDED ------------------------------
DECEMBER 31, 1996 1996 1997
------------------- -------------- --------------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
MBW pro forma expenses.............................. $ 3,711 $ 928 $ 1,053
LC Business historical expenses..................... 7,388 2,277 1,887
------- -------------- --------------
11,099 3,205 2,940
Less Company pro forma expenses:
Executive and finance(1).......................... 2,551 638 638
Division management and marketing................. 746 187 187
Sales and marketing............................... 1,953 488 488
Other(2).......................................... 721 180 180
------- -------------- --------------
Total Company pro forma expenses.................... 5,971 1,493 1,493
------- -------------- --------------
Difference.......................................... $ 5,128 $ 1,712 $ 1,447
------- -------------- --------------
------- -------------- --------------
</TABLE>
------------------------------
(1) Includes aggregate annual and quarterly expenses of $850 and $213,
respectively, related to management and advisory services provided by
Dartford and MDC.
(2) Includes professional fees, facilities expenses and other related
expenses.
37
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS (CONTINUED)
(l) Reflects intangible amortization expense as a result of the LC Acquisition.
Goodwill will be amortized on a straight line basis over a 40 year period
and other intangibles will be amortized over periods ranging from five to 40
years.
(m) Pro forma interest expense has been calculated based upon pro forma debt
levels and the applicable interest rates. The LC Business was not allocated
any interest expense from Kraft. The pro forma commitment fee on the unused
portion of the Revolving Facility is based on an unused balance of $14.0
million. The pro forma amortization of deferred financing costs is based on
the terms of the respective debt facilities. The table below presents pro
forma net interest expense noted with the respective interest rate or fee,
and pro forma amortization of deferred financing costs:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, -------------------------------
1996 1996 1997
-------------- --------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
COMPANY PRO FORMA INTEREST EXPENSE:
Incremental interest expense adjustments:
Revolving Facility (8.0%)............................ $ 3,680 $ 920 $ 920
Term Facility (8.0%)................................. 3,200 800 800
Series C Notes(1).................................... 9,716 2,429 2,429
Commitment fee on Revolving Facility (0.50%)......... 70 17 17
Reduction in commitment fee on Revolving Facility
(0.50%)(2)......................................... (300) (75) (75)
-------------- ------- -------
Incremental interest expense......................... 16,366 4,091 4,091
MBW pro forma interest expense......................... 10,175 2,544 2,544
-------------- ------- -------
Total Company pro forma interest expense............... $ 26,541 $ 6,635 $ 6,635
-------------- ------- -------
-------------- ------- -------
Incremental pro forma amortization of deferred
financing costs...................................... $ 421 $ 105 $ 105
-------------- ------- -------
-------------- ------- -------
</TABLE>
----------------------------
(1) Interest expense on a principal amount of the Series C Notes reflects an
interest rate of 9.875% on a principal amount of $100.0 million, offset
by amortization of the bond premium of $2.5 million received in
connection with the Series C Notes Offering.
(2) Reflects a decrease in commitment fees payable as set forth in note (e)
above as a result of the use of the Revolving Facility for the LC
Acquisition.
(n) Pro forma depreciation expense for the total Company included in cost of
products sold and selling, general and administrative expenses is
$1,025,000, $256,000 and $256,000 for the year ended December 31, 1996 and
each of the three month periods ended March 31, 1996 and 1997, respectively.
Pro forma operating lease expense included in selling, general and
administrative expenses is $135,000, $33,750, and $33,750 for the year ended
December 31, 1996 and each of the three month periods ended March 31, 1996
and 1997, respectively.
38
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE COMPANY AND MBW PREDECESSOR
The Company markets and sells the MRS. BUTTERWORTH'S brand of syrup and
pancake mix products. As product lines of Unilever, MRS. BUTTERWORTH'S was not
accounted for as a separate legal entity or division. The discussion which
follows is based on the historical financial information of the Company and the
MBW Predecessor.
The MBW Predecessor's selling, general and administrative expenses have
consisted solely of corporate allocations from Conopco. As a result, the level
of these expenses does not reflect the actual expenses required to operate the
Company on a stand-alone basis. Management has established a new corporate
infrastructure to operate the Company on a stand-alone basis and has staffed
approximately 90% of its sales and marketing functions. See "Pro Forma Financial
Information."
Under Conopco's ownership, MRS. BUTTERWORTH'S aggregate marketing
expenditures were reduced consistently over the last several years and
emphasized a trade-oriented marketing strategy. Management intends to maintain
aggregate marketing expenditures at a level consistent with recent experience,
but to reallocate those expenditures by placing a greater emphasis on
advertising and consumer marketing. See "Business--MRS. BUTTERWORTH'S Growth
Strategy."
In May 1996, MRS. BUTTERWORTH'S adopted a "value pricing" strategy to
position its brand as the best value among the three national syrup brands. MRS.
BUTTERWORTH'S began the implementation of this strategy by reducing the
wholesale list prices of certain of its products, resulting in lower everyday
shelf prices to the consumer. This strategy was adopted to decrease MRS.
BUTTERWORTH'S reliance on price discounting and to reduce costly
buy-one-get-one-free promotions and was intended to increase sales volume and
decrease overall marketing expenditures. The initial results of this strategy
are reflected in MRS. BUTTERWORTH'S performance for the year ended December 31,
1996 and the three months ended March 31, 1997 and the related discussion below.
39
<PAGE>
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
MBW PREDECESSOR
----------------------------------------------------------------------------------------------
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------------------------------------------------- MARCH 31,
1994 1995 1996 1996
---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AMOUNT % AMOUNT % AMOUNT % AMOUNT %
----------- --------- ----------- --------- ----------- --------- ----------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales.................... $ 96,729 100.0% $ 91,302 100.0% $ 89,541 100.0% $ 23,391(1) 100.0%
Cost of products sold........ 29,930 30.9 27,743 30.4 28,955 32.3 7,057 30.2
----------- --------- ----------- --------- ----------- --------- ----------- ---------
Gross profit............... 66,799 69.1 63,559 69.6 60,586 67.7 16,334 69.8
Brokerage, distribution and
marketing expenses:
Brokerage and
distribution............. 8,662 8.9 7,583 8.3 8,140 9.1 2,487 10.6
Trade promotions......... 21,911 22.7 19,380 21.2 17,672 19.7 5,095(1) 21.8
Consumer marketing....... 15,297 15.8 13,291 14.6 10,835 12.1 4,497 19.2
----------- --------- ----------- --------- ----------- --------- ----------- ---------
Total brokerage,
distribution and
marketing expenses....... 45,870 47.4 40,254 44.1 36,647 40.9 12,079 51.6
Selling, general and
administrative expenses.... 6,829 7.1 6,120 6.7 6,753 7.6 1,688 7.2
Transition costs............. -- -- -- -- -- -- -- --
Amortization of goodwill and
other intangibles.......... -- -- -- -- -- -- -- --
----------- --------- ----------- --------- ----------- --------- ----------- ---------
Operating profit........... 14,100 14.6 17,185 18.8 17,186 19.2 2,567 11.0
Amortization of deferred
financing fees............. -- -- -- -- -- -- -- --
Interest expense, net........ -- -- -- -- -- -- -- --
----------- --------- ----------- --------- ----------- --------- ----------- ---------
Income (loss) before income
taxes.................... 14,100 14.6 17,185 18.8 17,186 19.2 2,567 11.0
Provision (benefit) for
income taxes............... 5,429 5.6 6,616 7.2 6,616 7.4 988 4.2
----------- --------- ----------- --------- ----------- --------- ----------- ---------
Net income (loss).......... $ 8,671 9.0% $ 10,569 11.6% $ 10,570 11.8% $ 1,579 6.8%
----------- --------- ----------- --------- ----------- --------- ----------- ---------
----------- --------- ----------- --------- ----------- --------- ----------- ---------
<CAPTION>
COMPANY
----------------------
THREE MONTHS
ENDED
MARCH 31,
1997
----------------------
<S> <C> <C>
AMOUNT %
----------- ---------
<S> <C> <C>
Net sales.................... $ 21,253 100.0%
Cost of products sold........ 7,167 33.7
----------- ---------
Gross profit............... 14,086 66.3
Brokerage, distribution and
marketing expenses:
Brokerage and
distribution............. 2,279 10.7
Trade promotions......... 3,643 17.1
Consumer marketing....... 1,331 6.3
----------- ---------
Total brokerage,
distribution and
marketing expenses....... 7,253 34.1
Selling, general and
administrative expenses.... 1,053 5.0
Transition costs............. 126 .6
Amortization of goodwill and
other intangibles.......... 828 3.9
----------- ---------
Operating profit........... 4,826 22.7
Amortization of deferred
financing fees............. 2,322 10.9
Interest expense, net........ 2,622 12.3
----------- ---------
Income (loss) before income
taxes.................... (118) --
Provision (benefit) for
income taxes............... (47) --
----------- ---------
Net income (loss).......... $ (71) --
----------- ---------
----------- ---------
</TABLE>
- ------------------------
(1) Net sales and trade promotions for the MBW Predecessor for the three months
ended March 31, 1996 and 1997 reflect the reclassification of cash discounts
to provide consistency with the Company's presentation and accounting policy
and to facilitate comparison between periods. However, net sales and trade
promotions for the years ended December 31, 1994, 1995 and 1996 reflect the
MBW Predecessor's historical presentation of these amounts.
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
NET SALES decreased 9.1% to $21.3 million for the three months ended March
31, 1997 from $23.4 million for the three months ended March 31, 1996 while
sales volume was flat at 23.2 million pounds. Net sales declined due to the
value pricing strategy adopted in May 1996.
Syrup sales decreased $2.5 million to $18.6 million in the 1997 period from
$21.1 million in the 1996 period. Syrup volume decreased 2.9% to 19.2 million
pounds in the 1997 period from 19.8 million pounds in the 1996 period. The
decrease in syrup volume was attributable to decreases in the Company's COUNTRY
BEST RECIPE and LITE brands, which were partially offset by increases in sales
of ORIGINAL and food service products.
Pancake mix sales increased 17.4% to $2.7 million in the 1997 period from
$2.3 million in the 1996 period, and pancake mix volume improved 16.1% to 4.0
million pounds from 3.4 million pounds in the 1996 period. Pancake mix results
improved primarily due to expanded distribution of pancake mix products in the
retail grocery channel.
40
<PAGE>
GROSS PROFIT as a percentage of net sales was 66.3% for the 1997 period as
compared to 69.8% for the 1996 period. The decrease in gross margin was
primarily due to the value pricing strategy. Increased sales of pancake mix and
foodservice syrup also contributed to the decline.
OPERATING PROFIT as a percentage of net sales improved to 22.7% in the 1997
period as compared to 11.0% in the 1996 period. The improvement in the operating
margin was primarily due to lower marketing expenses and lower selling, general
and administrative expenses. Total marketing expense in the 1997 period was
lower than the comparable 1996 period due to lower trade spending in the 1997
period under the value pricing strategy and the inclusion in the 1996 period of
a high-value coupon program. Selling, general and administrative expense was
$1.1 million in the 1997 period under the Company's stand-alone structure as
compared to $1.7 million allocated to the business by Unilever in the prior year
period. Operating profit for the 1997 period also includes $0.8 million of
goodwill amortization and $0.1 million of transition expenses related to the MBW
Acquisition.
PROVISION FOR INCOME TAXES. The Company anticipates a combined federal and
state tax rate of 40%.
NET LOSS was $0.1 million in the 1997 period compared to net income of $1.6
million in the 1996 period. The loss in the 1997 period reflects interest
expense and amortization of deferred financing costs associated with the MBW
Acquisition.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
NET SALES declined 1.9% to $89.5 million for the year ended December 31,
1996 as compared to $91.3 million for the year ended December 31, 1995. Sales
volume increased 2.7% to 94.7 million pounds in 1996 from 92.2 million pounds in
1995.
Syrup sales decreased $1.8 million to $79.1 million in 1996 from $80.9
million in 1995. Syrup volume increased 3.4% to 78.6 million pounds in 1996 from
76.0 million pounds in 1995. In May 1996, MRS. BUTTERWORTH'S adopted a value
pricing strategy to position its brand as the best value among the three
national syrup brands. This pricing strategy has benefitted the brand through
higher volumes and savings on consumer marketing expenses, but resulted in a net
decrease in syrup sales during 1996. Management does not believe that this
decrease represents a continuing material declining trend.
Pancake mix sales remained constant at $10.4 million in 1996, the same as in
1995. Pancake mix was flat at 16.1 million pounds in 1996 which was the same
volume achieved in 1995.
GROSS PROFIT as a percentage of net sales was 67.7% for the year ended
December 31, 1996 as compared to 69.6% for the year ended December 31, 1995. The
decrease in gross profit margin was primarily due to lower wholesale prices
related to the Company's value pricing strategy.
OPERATING PROFIT as a percentage of net sales improved to 19.2% for the year
ended December 31, 1996 as compared to 18.8% for the year ended December 31,
1995. The operating margin improvement was primarily the result of a reduction
in consumer marketing expense as a percentage of net sales to 12.1% in 1996 from
14.6% in 1995 due to a reduction in costly buy-one-get-one-free promotions.
PROVISION FOR INCOME TAXES. The provision for income taxes of $6.6 million
in 1996 represented an effective tax rate of 38.5%, the same as in 1995.
NET INCOME was $10.6 million in 1995 and 1996 due to the factors discussed
above.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
NET SALES decreased 5.6% to $91.3 million in the year ended December 31,
1995 from $96.7 million in the year ended December 31, 1994. Sales volume
decreased 10.1% to 92.2 million pounds in 1995 from 102.6 million pounds in
1994.
41
<PAGE>
Syrup sales decreased $3.0 million to $80.9 million in 1995 from $83.9
million in 1994, and syrup volume declined 8.4% to 76.1 million pounds from 83.1
million pounds in 1994. Syrup sales and volume declines were primarily due to
the phasing out of the MAPLE VALLEY syrup brand, one of the MBW Predecessor's
lower priced brands, and an overall decrease in promotional support for MRS.
BUTTERWORTH'S. The declines were partially offset by the impact during 1995 of
an industry-wide price increase in August 1994.
Pancake mix sales declined $2.4 million to $10.4 million in 1995 from $12.8
million in 1994. Pancake mix volume decreased 17.0% to 16.1 million pounds from
19.4 million pounds in 1994. Increased competition in MRS. BUTTERWORTH'S key
Central and Mid-Central regions was the primary cause of the decrease in sales
and volume.
GROSS PROFIT as a percentage of net sales was 69.6% in 1995 as compared to
69.1% in 1994. The increase in gross profit margin was primarily a result of the
impact during 1995 of the August 1994 price increase, which resulted in the
average price of retail syrup increasing from 1994 to 1995 while raw materials
costs as a percentage of net sales remained essentially unchanged. Also
contributing to the gross margin increase during 1995 was the phasing out of the
MAPLE VALLEY brand, one of the MBW Predecessor's lower margin brands.
OPERATING PROFIT as a percentage of net sales increased to 18.8% in 1995 as
compared to 14.6% in 1994. This increase was primarily the result of the August
1994 price increase and reductions in trade promotions, consumer marketing and
brokerage and distribution expense as a percentage of net sales.
PROVISION FOR INCOME TAXES. The provision for income taxes of $6.6 million
in 1995 represented an effective tax rate of 38.5%, the same as in 1994.
NET INCOME increased to $10.6 million in 1995 compared to $8.7 million in
1994 due to the factors discussed above.
LC BUSINESS
The Company markets and sells the LOG CABIN, COUNTRY KITCHEN and WIGWAM
brands of syrup. As product lines of Kraft, LOG CABIN, COUNTRY KITCHEN and
WIGWAM were not accounted for as separate legal entities or divisions. The LOG
CABIN label is positioned as a premium syrup and the COUNTRY KITCHEN label is
positioned as an economy syrup. For the year ended December 31, 1996, the LOG
CABIN brand accounted for 69% and 74% of LOG CABIN'S net sales and product
profit, respectively. The discussion which follows is based on the historical
financial information of the LC Business.
42
<PAGE>
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------------------- ----------------------
1994 1995 1996 1996
-------------------- -------------------- -------------------- ----------------------
AMOUNT % AMOUNT % AMOUNT % AMOUNT %
--------- --------- --------- --------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Net sales.......................... $ 115,894 100.0 $ 106,330 100.0 $ 104,466 100.0 $ 28,584 100.0
Cost of products sold.............. 35,254 30.4 35,804 33.7 36,237 34.7 8,116 28.4
--------- --------- --------- --------- --------- --------- ----------- ---------
Gross profit..................... 80,640 69.6 70,526 66.3 68,229 65.3 20,468 71.6
Brokerage, distribution and
marketing expenses:
Brokerage and distribution....... 7,553 6.5 7,620 7.1 7,099 6.8 1,952 6.8
Trade promotions................. 20,898 18.0 23,239 21.9 21,355 20.5 5,716 20.0
Consumer marketing............... 7,940 6.9 5,478 5.2 3,994 3.8 2,754 9.6
--------- --------- --------- --------- --------- --------- ----------- ---------
Total brokerage, distribution and
marketing expenses............. 36,391 31.4 36,337 34.2 32,448 31.1 10,422 36.4
Selling, general and administrative
expenses......................... 7,863 6.8 7,738 7.2 7,388 7.0 2,277 8.0
Amortization of goodwill........... 1,350 1.2 1,350 1.3 1,350 1.3 338 1.2
--------- --------- --------- --------- --------- --------- ----------- ---------
Operating Profit................. 35,036 30.2 25,101 23.6 27,043 25.9 7,431 26.0
Provision for income taxes......... 14,391 12.4 10,461 9.8 11,229 10.7 3,047 10.7
--------- --------- --------- --------- --------- --------- ----------- ---------
Net income....................... $ 20,645 17.8 $ 14,640 13.8 $ 15,814 15.1 $ 4,384 15.3
--------- --------- --------- --------- --------- --------- ----------- ---------
--------- --------- --------- --------- --------- --------- ----------- ---------
<CAPTION>
1997
----------------------
AMOUNT %
----------- ---------
<S> <C> <C>
Net sales.......................... $ 26,802 100.0
Cost of products sold.............. 9,305 34.7
----------- ---------
Gross profit..................... 17,497 65.3
Brokerage, distribution and
marketing expenses:
Brokerage and distribution....... 1,972 7.4
Trade promotions................. 4,993 18.6
Consumer marketing............... 598 2.2
----------- ---------
Total brokerage, distribution and
marketing expenses............. 7,563 28.2
Selling, general and administrative
expenses......................... 1,887 7.0
Amortization of goodwill........... 338 1.3
----------- ---------
Operating Profit................. 7,709 28.8
Provision for income taxes......... 3,161 11.8
----------- ---------
Net income....................... $ 4,548 17.0
----------- ---------
----------- ---------
</TABLE>
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
NET SALES decreased 6.2% to $26.8 million for three months ended March 31,
1997, as compared to $28.6 million for the comparable period in 1996.
Retail syrup sales decreased $1.6 million to $25.2 million in the 1997
period from $26.8 million in the 1996 period. The sales decline was primarily
attributable to a decline in LOG CABIN sales, which was partially offset by an
increase in COUNTRY KITCHEN sales. Sales of LOG CABIN syrup decreased $2.5
million to $17.9 million in the 1997 period from $20.4 million in the 1996
period due to reduced promotional activity on the brand. COUNTRY KITCHEN sales
increased $0.8 million to $7.2 million in the 1997 period from sales of $6.4
million in the 1996 period due to increased consumer demand in the economy price
segment.
Foodservice sales declined $0.1 million to $1.0 million in the 1997 period
from $1.1 million in the 1996 period.
GROSS PROFIT as a percentage of net sales was 65.3% for the 1997 period as
compared to 71.6% for the 1996 period. In the 1997 period, the allocation of
fixed manufacturing expense to the LC Business increased by approximately $0.8
million relative to the 1996 period. The 1996 period also included a LIFO
inventory adjustment which resulted in a $0.4 million reduction in cost of
products sold. Adjusting for these two factors, the gross margin in the 1997
period was 68.3% compared to 70.0% in the 1996 period. The decline in gross
margin was due to a shift in the sales mix between the LOG CABIN and COUNTRY
KITCHEN brands and higher corn syrup prices.
OPERATING PROFIT as a percentage of net sales improved to 28.8% in the 1997
period as compared to 26.0% in the 1996 period. The improvement in the operating
profit margin was primarily the result of an overall decrease in marketing
expenditures. Total marketing expense as a percent of net sales was reduced to
20.8% in the 1997 period from 29.6% in the 1996 period.
43
<PAGE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
NET SALES decreased 1.7% to $104.5 million for the year ended 1996, as
compared to $106.3 million for the year ended 1995.
Retail syrup sales declined $2.0 million to $96.3 million in 1996 from $98.3
million in 1995. The sales decline was primarily attributable to decreases in
the COUNTRY KITCHEN brand. COUNTRY KITCHEN sales decreased $1.7 million to $24.0
million in 1996 from sales of $25.7 million in 1995 due to a decline in
promotional support from 1995 levels. LOG CABIN sales were $72.3 million in 1996
as compared to $72.6 million in 1995. LOG CABIN brand sales stabilized in 1996,
after declines in 1994 and 1995, primarily as the result of a refocusing of the
LOG CABIN brand through increased marketing support.
Foodservice sales decreased $0.2 million to $5.1 million in 1996 from $5.3
million in 1995.
GROSS PROFIT as a percentage of net sales was 65.3% in 1996 as compared to
66.3% in 1995 primarily due to increased prices for corn syrup.
OPERATING PROFIT as a percentage of net sales improved to 25.9% in 1996 as
compared to 23.6% in 1995. The improvement in the operating profit margin was
the result of a reduction in total trade promotions and advertising. Total
marketing spending as a percentage of net sales was reduced to 24.3% in 1996
from 27.1% in 1995.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
NET SALES declined 8.3% to $106.3 million for the year ended 1995, as
compared to $115.9 million for the year ended 1994.
Retail syrup sales decreased $11.5 million to $98.3 million in 1995 from
$109.8 million in 1994. The decrease in sales was principally due to a decrease
in sales of the LOG CABIN brand. Sales of COUNTRY KITCHEN increased by $2.9
million to $25.7 million in 1995 from $22.8 million in 1994 due to increased
trade promotions in response to increased competition from COUNTRY RICH, AUNT
JEMIMA'S comparable economy brand. Sales of LOG CABIN decreased $14.4 million to
$72.6 million 1995 from $87.0 million in 1994. LOG CABIN sales level declined
primarily due to two factors: (i) a shift in trade promotions and consumer
marketing support from LOG CABIN to COUNTRY KITCHEN, and (ii) an organizational
re-alignment within Kraft which resulted in decreased management focus on the
LOG CABIN brand. During 1995, the LOG CABIN brand was transitioned into a new
salesforce and marketing support team.
Foodservice sales increased $2.0 million to $5.3 million in 1995 from $3.3
million in 1994. The increase in sales was the result of increased sales of LOG
CABIN gallon jugs and an increase in private label sales.
GROSS PROFIT as a percentage of net sales was 66.3% in 1995 as compared to
69.6% in 1994. The decrease in the gross profit margin was the result of higher
product costs, specifically increased corn syrup prices and packaging costs,
that were unable to be absorbed by the industry-wide price increase that was
taken in June 1994.
OPERATING PROFIT as a percentage of net sales decreased to 23.6% in 1995
from 30.2% in 1994. The operating profit margin decrease was the result of lower
gross margins, higher freight costs and an increase in marketing expenses. While
there was an allocation shift in dollars spent from advertising and consumer
marketing to trade promotions, total marketing as a percent of net sales
increased to 27.1% in 1995 from 24.9% in 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company incurred substantial indebtedness in connection with the MBW
Refinancing and the LC Acquisition. Interest payments on the Notes and the
Senior Credit Facilities represent significant cash
44
<PAGE>
requirements for the Company. As of March 31, 1997, on a pro forma basis, after
giving effect to the LC Acquisition, the Company would have had $200.0 million
in aggregate principal amount of indebtedness outstanding under the Old Notes,
$40.0 million outstanding under the Term Facility and $46.0 million under the
Revolving Facility. The Company will be required to make periodic payments of
interest on the Notes and the Senior Credit Facilities. See "Description of
Notes" and "Description of Senior Credit Facilities."
In addition to its debt service obligations, the Company's liquidity needs
will be for working capital, capital expenditures and acquisitions. The assets
of the Mrs. Butterworth's Business capitalized relating to machinery and
equipment acquired in the MBW Acquisition, and referred to elsewhere herein as
capital expenditures, were $21,000, $64,000 and $470,000 for the years ended
December 31, 1994, 1995 and 1996, respectively. The Company believes the costs
of building its corporate organization and transferring the production of MRS.
BUTTERWORTH'S syrup from Conopco to Red Wing will be approximately $5.8 million.
The assets of the Log Cabin business capitalized relating to machinery and
equipment acquired in the LC Acquisition, and referred to elsewhere herein as
capital expenditures, were $800,000, $1,200,000 and $500,000 for the years ended
December 31, 1994, 1995 and 1996, respectively. Capital expenditure requirements
have historically been financed with internally generated funds and have been
primarily related to refurbishments and improvements of manufacturing equipment.
The Company's primary sources of liquidity are cash flows from operations
and borrowings under the Revolving Facility. After consummation of the LC
Acquisition, $14.0 million is available to the Company for borrowing under the
Revolving Facility. See "Description of the Senior Credit Facilities."
The Company anticipates that its working capital requirements and capital
expenditures for 1997 will be satisfied through a combination of available cash
and cash flow generated from operations.
INFLATION
The Company does not believe that inflation has had a material impact on its
financial position or results of operations during the periods covered by the
Financial Statements included herein.
45
<PAGE>
THE ACQUISITIONS
THE LC ACQUISITION
LC ASSET PURCHASE AGREEMENT
Pursuant to the LC Asset Purchase Agreement, the Company acquired
substantially all of the assets of the LOG CABIN syrup business for a cash
purchase price of $220.0 million. The purchase price to be paid on the LC
Acquisition Closing Date is subject to adjustment within 45 days of the LC
Acquisition Closing Date on a dollar-for-dollar basis to the extent that the
book value of the finished goods inventory is less than or greater than $3.8
million. The assets acquired by the Company include (i) the LOG CABIN U.S. and
foreign trademarks, patents, copyrights and other intellectual property rights
relating to LOG CABIN products (except for those intellectual property rights
held in Mexico), (ii) the machinery, equipment and spare parts used in the
manufacture of LOG CABIN syrups, (iii) inventories held by Kraft on the LC
Acquisition Closing Date, including raw materials, packaging and finished goods,
(iv) proprietary formulations for LOG CABIN syrups, (v) other product
specifications and customer lists and (vi) rights under certain contracts,
licenses, purchase orders and other arrangements and permits. The Company did
not assume any pre-closing liabilities or obligations of Kraft except for
liabilities for refunds, adjustments, exchanges, returns and warranty and
merchantability claims, provided, however, that the Company will have no
liability for returns of defective products sold prior to the LC Acquisition
Closing Date and returned within 60 days after the LC Acquisition Closing Date
to the extent the value of such products exceeds $100,000. The LC Asset Purchase
Agreement contains customary representations, covenants and indemnification
provisions.
LC CO-PACK AGREEMENT
The Company and Kraft entered into a co-pack agreement dated July 1, 1997
(the "LC Co-Pack Agreement") pursuant to which Kraft will contract manufacture
and distribute all of the Company's requirements for specified syrup, subject to
certain minimum supply limits. Prices for the products will be based upon
historical manufacturing costs and will be fixed as specified in the LC Co-Pack
Agreement, with certain scheduled increases, and will be subject to adjustment
based upon purchase price variances for raw materials and packaging supplies and
fluctuations in monthly production volumes below certain monthly minimum levels.
The LC Co-Pack Agreement will remain in effect for nine months from the LC
Acquisition Closing Date, unless earlier terminated by the Company with 60 days
prior written notice. In addition, pursuant to the LC Co-Pack Agreement, the
Company licenses Kraft to use certain equipment acquired by the Company and
located in Kraft's manufacturing facilities for the purpose of manufacturing,
processing and packaging Excluded Products. This license commenced on the LC
Acquisition Closing Date and will terminate 30 days before the date on which the
Company elects to remove such equipment.
THE LC EXCLUDED PRODUCTS CO-PACK AGREEMENT
The Company and Kraft entered into a co-pack agreement relating to the
Excluded Products dated July 1, 1997 (the "LC Excluded Products Co-Pack
Agreement") pursuant to which the Company will provide manufacturing, processing
and packaging for the Excluded Products. The Company will commence providing
these services on the date that the relevant equipment used to make the Excluded
Products is removed from Kraft's manufacturing facility and begins operating at
the Company's facility or that of a third-party co-packer engaged by the
Company. The Excluded Products consist of individual syrup portion packs
manufactured, marketed, distributed and sold by Kraft pursuant to an agreement
with Alliant Food Services, Inc. Sales of the Excluded Products were
approximately $4.9 million in 1996. During the term of the LC Excluded Products
Co-Pack Agreement, Kraft will pay the Company prices for the Excluded Products
based upon the Company's fully allocated costs, without a margin, calculated in
46
<PAGE>
the same manner as Kraft's prices that will be set forth in the LC Co-Pack
Agreement, and subject to the same type and frequency of adjustments as the
prices set forth in the LC Co-Pack Agreement. The Company's obligation under the
LC Excluded Products Co-Pack Agreement will terminate on February 13, 2000,
unless earlier terminated pursuant to the terms of the LC Excluded Products
Co-Pack Agreement.
LC TRANSITION SERVICES AGREEMENT
The Company and Kraft entered into a transition services agreement dated
July 1, 1997 (the "LC Transition Services Agreement"), pursuant to which Kraft
will provide to the Company marketing services, transactions processing
services, accounting services and other related services. Such services will
generally be provided at the cost historically allocated to the LOG CABIN syrup
business for such services, adjusted to reflect any changes in the nature or
level of services. The LC Transition Services Agreement will continue for a
period of six months from the date thereof, unless earlier terminated pursuant
to its terms.
THE MBW ACQUISITION
MBW ASSET PURCHASE AGREEMENT
On the MBW Acquisition Closing Date, pursuant to the Asset Purchase
Agreement between Conopco and the Company, dated as of December 18, 1996 (the
"MBW Asset Purchase Agreement"), the Company acquired substantially all of the
assets of the MRS. BUTTERWORTH'S syrup and pancake mix business for a cash
purchase price of $114.6 million. The purchase price paid on the MBW Acquisition
Closing Date was subsequently reduced by $483,000 pursuant to the purchase price
adjustment mechanism set forth in the MBW Asset Purchase Agreement. The assets
acquired by the Company include (i) the MRS. BUTTERWORTH'S trademarks for the
United States, Canada and Puerto Rico and patents, copyrights and other
intellectual property rights relating to MRS. BUTTERWORTH'S products, (ii) the
machinery, equipment and spare parts used in the manufacture of MRS.
BUTTERWORTH'S syrups, (iii) inventories held by Conopco on the MBW Acquisition
Closing Date, including raw materials, packaging and finished goods, (iv)
proprietary formulations for MRS. BUTTERWORTH'S syrups and pancake mixes, (v)
other product specifications and customer lists and (vi) rights under certain
contracts, licenses, purchase orders and other arrangements and permits. Except
for warranty and related claims not to exceed $150,000, the Company did not
assume any pre-closing liabilities or obligations of Conopco. The MBW Asset
Purchase Agreement contains customary representations, covenants and
indemnification provisions.
MBW CO-PACK AGREEMENT
Pursuant to a co-pack agreement between Van den Bergh Foods Company ("VDB"),
a division of Conopco, and the Company dated as of December 31, 1996 (the "MBW
Co-Pack Agreement"), VDB will contract manufacture and package all of the
Company's requirements for specified syrup and pancake mix products, subject to
certain minimum and maximum supply limits. Prices for the products are fixed
based on the Conopco's actual 1996 costs, with certain scheduled increases, and
are subject to adjustment based upon purchase price variances for raw materials
and packaging supplies and fluctuations in monthly production volumes below
certain monthly minimum or above certain monthly maximum levels. The Co-Pack
Agreement terminates on December 31, 1997, subject to earlier termination with
respect to one or more products by mutual agreement of the parties. The Company
has entered into the Red Wing Co-Pack Agreement pursuant to which Red Wing will
contract manufacture MRS. BUTTERWORTH'S syrup for a period of five years
See."--The Red Wing Co-Pack Agreement."
47
<PAGE>
MBW TRANSITION SERVICES AGREEMENT
Pursuant to a transition services agreement between the Company and Conopco
dated as of December 31, 1996 (the "MBW Transition Services Agreement"), Conopco
provided the Company with certain operational and financial services which it
performed prior to the MBW Acquisition for a period not to exceed six months
from the MBW Acquisition Closing Date. The Company initially paid Conopco a
weekly fee of up to $17,000 for Conopco's sales services and a monthly fee of
$82,800 for all other services provided by Conopco under the MBW Transition
Services Agreement. The fees the Company pays to Conopco were reduced
proportionately as the Company assumed responsibility for the functions
described above. The MBW Transition Services Agreement terminated on June 30,
1997.
OTHER AGREEMENTS
Pursuant to a Shared Technology License Agreement dated as of December 31,
1996 between Conopco and the Company, Conopco granted the Company a
nonexclusive, perpetual and royalty-free right and license to use any
proprietary and/or confidential trade secrets, know-how, processes and other
technology used in connection with the MRS. BUTTERWORTH'S business.
Pursuant to a Flavor Supply Agreement dated as of December 31, 1996 (the
"Flavor Supply Agreement") between Quest International Flavors & Food
Ingredients Company ("Quest"), an affiliate of Unilever, and the Company, Quest
has agreed to provide the Company with certain flavor mixtures used in the
production of MRS. BUTTERWORTH'S syrups for a period of twelve years, subject to
certain minimum and maximum order limits. The Flavor Supply Agreement may be
terminated by either Quest or the Company upon written notice of a time period
specified therein.
THE RED WING CO-PACK AGREEMENT
The Company entered into the Red Wing Co-Pack Agreement pursuant to which
Red Wing will contract manufacture and package all of the Company's requirements
for MRS. BUTTERWORTH'S syrup. Prices for the products are specified in the Red
Wing Co-Pack Agreement and are subject to adjustment based upon purchase price
variances for raw materials, packaging supplies and other production related
costs. Under the Red Wing Co-Pack Agreement, MRS. BUTTERWORTH'S syrup will be
produced and distributed from Red Wing's San Jose, California and Streator,
Illinois facilities. In consideration of certain additions made to Red Wing's
Streator, Illinois facility, the Company will pay additional charges on each
case of products produced up to an aggregate amount that is the lesser of the
actual construction costs of such additions or $1,850,000. During the initial
five year term, the Company will be subject to certain annual minimum purchase
requirements. The Company intends to begin transferring production of MRS.
BUTTERWORTH'S syrup from Conopco to Red Wing in August 1997 and expects to
complete the transition by December 1997. The Company may terminate in whole or
in part the Red Wing Co-Pack Agreement on or after two years from the date
thereof with 180 days written notice. In the event the Company so terminates, it
will be obligated to pay within 30 days of such termination the charges that
would have been paid in connection with the additions to the Streator facility.
In addition, if the Company fails to fulfill the minimum annual purchase
requirements, an additional 180 days will be added to the two year period for
each year such purchase requirements are not met. Unless earlier terminated, the
Red Wing Co-Pack Agreement will expire five years from the date thereof, but is
subject to automatic renewal for additional one year terms unless either party
gives 180 days written notice of its intent not to renew.
48
<PAGE>
BUSINESS
COMPANY OVERVIEW
The Company markets and sells MRS. BUTTERWORTH'S, the number one brand of
regular syrup in the United States. Originally introduced in 1960, MRS.
BUTTERWORTH'S syrup is well known for its unique buttery flavor and distinctive
grandmother-shaped bottle and enjoys 100% aided brand awareness among syrup
consumers. In addition to its strong national presence, MRS. BUTTERWORTH'S is
the number one brand of syrup in the Central and Mid-Central United States, the
two regions of the country with the highest per capita syrup consumption. MRS.
BUTTERWORTH'S strong market position in syrup is complemented by the Company's
pancake mix products in which it is the fourth leading brand. MRS. BUTTERWORTH'S
leading market positions and strong brand recognition have enabled it to realize
a long history of high operating margins, stable sales and growth in operating
profit.
On July 1, 1997, the Company acquired substantially all the assets of the
LOG CABIN syrup business from Kraft. THE LOG CABIN syrup business consists of
the retail syrup business marketed under the LOG CABIN and COUNTRY KITCHEN
brands and the foodservice syrup business marketed under the LOG CABIN and
WIGWAM brands. The LOG CABIN trademark dates back to 1888 and is one of the
oldest and most widely recognized trademarks in the United States. LOG CABIN
syrup products have the number one market share overall in the United States.
LOG CABIN'S premium maple heritage, together with its geographic strength on the
east and west coasts, complements MRS. BUTTERWORTH'S buttery flavor and strength
in the central United States. Further extending the Company's customer base is
the addition of the COUNTRY KITCHEN and WIGWAM trademarks. Introduced in 1954,
COUNTRY KITCHEN is an economy-priced syrup targeted towards the price conscious
consumer and has the leading market share in that segment.
The Company plans to combine the manufacture and distribution of LOG CABIN
syrup products with its MRS. BUTTERWORTH'S products and as a result expects to
realize $3.0 million in annual cost savings. LOG CABIN products will be sold by
the Company's independent food brokers and will be marketed and administered by
the Company, which will expand its corporate organization from 22 to 34 persons.
For the twelve months ended March 31, 1997, the Company's combined pro forma
sales and EBITDA were $192.1 million and $54.5 million (excluding expected
manufacturing and distribution cost savings discussed above), respectively. MRS.
BUTTERWORTH'S and LOG CABIN products represented 46.6% and 53.4%, respectively,
of the Company's pro forma sales for the same period.
In order to effect the transition to an independent operating company, the
Company has organized itself into three operational groups. In addition, the
Company has expanded its corporate organization from 22 to 34 persons.
Furthermore, in connection with the Red Wing Co-Pack Agreement, the Company is
in the process of transferring the production of MRS. BUTTERWORTH'S syrup from
Conopco's facilities to Red Wing's facilities. The total costs of the transition
are expected to be approximately $5.8 million.
The syrup and pancake mix categories in the United States are stable and are
characterized by broad household penetration and steady growth. Sales of syrup
products are driven by the consumption of host foods, product innovation and
consumers' desire for more traditional "home style" meals. From 1993 to 1996,
the syrup and pancake mix categories grew at compound annual rates of
approximately 1.4% and 3.5%, respectively. The Company's products are sold
nationally through an independent broker network to retail grocery stores, mass
merchandisers, military exchanges and foodservice distributors. The Company's
syrups and pancake mixes are sold in nearly 100% and 63%, respectively, of all
retail grocery stores in the United States. For the year ended December 31,
1996, the Company's syrup and pancake mix sales represented approximately 95%
and 5% of pro forma sales, respectively.
The Company believes that its brands provide an attractive platform upon
which to build a focused, branded dry grocery products company. The Company
believes that the performance of certain dry grocery categories and brands has
suffered in recent years as a result of declining levels of marketing support
and little or no new product innovation by the major food companies.
Consequently, the
49
<PAGE>
Company believes that many of these undermanaged brands are likely candidates
for divestiture from their corporate parents. While these categories and brands
tend to be mature, there are expanding segments within the categories and growth
opportunities that have not been realized. As a result, the Company believes
that an attractive opportunity exists for building a branded dry grocery
products company through strategic acquisitions of established, well-recognized
national and regional brands that have been undermanaged in recent years. The
Company's objective is to renew the growth of the brands it acquires by
providing them the focus, strategic direction, marketing resources and dedicated
sales and marketing organizations that they have lacked.
The Company's principal executive office is located at Community Corporate
Center, 445 Hutchinson Avenue, Columbus, Ohio 43235. The Company's telephone
number is (614) 436-8600.
MRS. BUTTERWORTH'S GROWTH STRATEGY
The Company believes that MRS. BUTTERWORTH'S has significant growth
potential which has not been realized due to a lack of corporate support and
marketing resources from Unilever in recent years. The Company plans to improve
MRS. BUTTERWORTH'S performance by increasing management attention to the brand
and by devoting the marketing resources necessary to exploit opportunities in
the syrup and pancake mix categories. The Company intends to implement its
strategy through the following initiatives:
- POSITION BRAND AS BEST VALUE. The Company plans to position MRS.
BUTTERWORTH'S as the best value among the three leading national syrup brands by
continuing to provide its distinctive, premium quality product at prices which
are moderately below those of the other national brands. In May 1996, MRS.
BUTTERWORTH'S lowered the everyday prices of its syrup products. To offset the
cost of lowering everyday prices, MRS. BUTTERWORTH'S also reduced its costly and
relatively ineffective buy-one-get-one-free promotions. The Company believes
that full implementation of MRS. BUTTERWORTH'S value pricing strategy will
result in continued increases in sales and market share.
- REFORMULATE LITE PRODUCT. MRS. BUTTERWORTH'S LITE has not been
reformulated or improved since its introduction in 1985. Over the last five
years, competitors have focused their research and development efforts on the
lite syrup segment, taking advantage of newly developed ingredients and
formulations. While MRS. BUTTERWORTH'S is the leading brand in the regular syrup
segment, MRS. BUTTERWORTH'S share of the lite syrup segment is 15.0% and is
significantly below AUNT JEMIMA'S leading 32.6% share of the segment. The
Company plans to reformulate and improve the taste of MRS. BUTTERWORTH'S LITE.
Management believes that this reformulation, coupled with MRS. BUTTERWORTH'S
leading position in the regular syrup segment and increased marketing support,
can expand the Company's share of the lite segment and further strengthen the
Company's overall syrup market share.
- ROLL OUT PRODUCT LINE EXTENSIONS. Management believes MRS. BUTTERWORTH'S
strong brand equity and leading market shares in the syrup category present
considerable opportunities for product line extensions. For example, an
opportunity exists to develop a product which is directed at children and
packaged in plastic, as compared to the current glass packaging. Opportunities
also exist for MRS. BUTTERWORTH'S in the flavored syrup segment, as none of the
major national brands currently offer these specialty products. In addition,
management believes that opportunities exist for growth in the Company's pancake
mix business with increased marketing and sales support for its recently
redesigned and updated packaging.
- ADOPT CONSUMER BASED MARKETING STRATEGY. Over the next two years, the
Company plans to reduce its reliance on costly and relatively inefficient trade
spending and periodic price discounting and increase its advertising and
consumer promotional events. The Company plans to reduce or eliminate
buy-one-get-one-free promotions and its heavy reliance on coupons in free
standing inserts. The Company will reallocate those marketing dollars to
advertising and more focused consumer promotions
50
<PAGE>
such as cross-promotions with host foods. In addition, the Company will direct
its advertising expenditures to support the introduction of new or improved
products and reinforce MRS. BUTTERWORTH'S unique brand equity and positioning as
the best value among the national brands.
LOG CABIN GROWTH STRATEGY
LOG CABIN'S overall share of the retail syrup category has decreased from
35% in 1972 to 19% in 1996. The Company attributes the decrease to declining
levels of corporate support and marketing resources from Kraft over this period
of time. The Company plans to undertake the following initiatives to revitalize
the LOG CABIN brand and profitably grow the business:
- RESTORE LOG CABIN'S PREMIUM IMAGE. Historically, the LOG CABIN brand has
been perceived by the consumer as a premium, real maple syrup. In recent
years, LOG CABIN'S premium image has eroded due to a lack of marketing
support. For example, packaging of LOG CABIN syrup products has been
downgraded from glass to clear plastic to opaque plastic. Advertising
support for the brand was eliminated in 1994. The Company plans to restore
LOG CABIN'S premium image by upgrading LOG CABIN'S packaging and renewing
advertising support for the brand that promotes its premium, real maple
heritage and warm, homespun image.
- RETURN TO CONSUMER BASED MARKETING STRATEGY. Over the last four years, LOG
CABIN'S marketing program has consisted almost entirely of trade spending
and price discounting. Little or no money was spent promoting LOG CABIN
products to the consumer through coupons or advertising. In order to bring
consumers back to the LOG CABIN brand, the Company plans to increase
advertising support for the brand and implement focused consumer
promotional activities such as point-of-sale coupons and cross-promotions
with host foods. The Company expects to fund these programs in part
through the elimination of certain inefficient trade programs.
- BENEFIT FROM GROWTH IN HOST FOOD. Sales of syrup products are related to
sales of host foods, which include pancakes, waffles and french toast.
Over the last six months, following little or no growth over the last
three years, sales of frozen breakfast products have grown at
approximately a 10% annual rate as a result of increased marketing
activity by host food manufacturers. The Company believes that sales of
syrup products will benefit from renewed growth in host foods.
- EXPAND DISTRIBUTION CHANNELS. The Company plans to expand distribution of
the economy-priced COUNTRY KITCHEN brand into the mass merchandise and
drugstore channels of trade. The Company also plans to leverage its WIGWAM
brand and expand its foodservice business.
INDUSTRY
The U.S. syrup category is approximately $463 million. Sales of syrup are
driven by the consumption of host foods, product innovation and consumers'
desire for traditional "home style" meals. Sales in the syrup category increased
in 1991 and 1992 due to the increased consumption of host foods, which was
driven primarily by new product introductions of host foods. Growth in the syrup
category has also been driven by product innovation, such as the development of
lite and specialty flavored syrups. Syrup is widely consumed across the United
States and has a 60% household penetration rate. Approximately 95% of syrup is
consumed with pancakes, waffles and french toast, and syrup is consumed with 7%
of all U.S. breakfasts, equal in frequency of consumption to hot cereals and
baked goods. On average, syrup users consume the product once every two weeks
and purchase syrup approximately once every three months. The most common
purchase size is 24 ounces. Consumption increases slightly during the winter
months.
The syrup category has three major segments: regular, lite and pure
maple/specialty flavored, which represent approximately 59%, 29% and 12% of
syrup sales, respectively. Regular syrup is a full-calorie, corn syrup based
product. Lite syrup is also a corn syrup based product, but has only half the
calories of regular syrup. Pure maple, diet and other specialty syrups, all of
which are non-corn syrup
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based products, occupy market niches and are not currently offered by any of the
major national syrup manufacturers.
The three leading brands of syrup (AUNT JEMIMA, MRS. BUTTERWORTH'S and LOG
CABIN) account for approximately 53% of total syrup sales in the United States.
The remaining 47% is fragmented, with private label accounting for approximately
20% of sales and numerous other national and regional brands accounting for the
remainder. Management believes that private label's share of the syrup market
will remain relatively flat due to the lack of opportunity for growth in
distribution of private label syrup and the relatively high level of private
label syrup which is currently sold on promotion. Private label syrup currently
has approximately 96% distribution to retail grocery stores, leaving little room
for growth in distribution. In addition, approximately 35% of private label
syrup is sold on promotion, a relatively high percentage of promoted sales for a
private label product. Finally, since 1988 private label syrup prices have
increased at nearly double the rate of the three leading syrup brands, reducing
the premium for branded syrups from approximately 80% to 55%.
The U.S. retail grocery pancake mix category had sales of $145 million in
1996 and grew at a compound annual rate of 3.5% from 1993 to 1996, largely due
to a trend among consumers to return to traditional meals and the perceived
value offered by pancake mix compared with substitute products. Pancake mix has
a household penetration rate of 30%. The purchase cycle is once every three
months, similar to syrup. The pancake mix category is less fragmented than the
syrup category with the four leading brands (AUNT JEMIMA, HUNGRY JACK, KRUSTEAZ
and MRS. BUTTERWORTH'S) accounting for approximately 70% of sales. Private label
and smaller national and regional competitors account for the remainder. See
"--Competition."
PRODUCTS AND MARKETS
MRS. BUTTERWORTH'S (47% of pro forma Company sales)
The Company markets and sells the MRS. BUTTERWORTH'S brand of syrup and
pancake mix. The retail grocery channel is the primary market for the Company's
products and accounted for approximately 85% of MRS. BUTTERWORTH'S sales for the
year ended December 31, 1996. In this channel, the MRS. BUTTERWORTH'S syrup
products are primarily sold in 12, 24 and 36 ounce bottles and pancake mix
products are primarily sold in two pound paperboard boxes. The remaining 15% of
the MRS. BUTTERWORTH'S sales are in other channels, including membership
warehouses, convenience stores, mass merchandisers, foodservice and the U.S.
military. In these channels, MRS. BUTTERWORTH'S syrup products are also sold in
gallon and portion pack units and pancake mix products are also sold in five
pound polybags.
SYRUPS (89% of MRS. BUTTERWORTH'S sales). MRS. BUTTERWORTH'S syrup products
include regular syrup, which is a full-calorie corn syrup based product, and
lite syrup, which is a half-calorie corn syrup based product. MRS. BUTTERWORTH'S
syrups are primarily sold in highly recognizable grandmother-shaped glass
bottles. MRS. BUTTERWORTH'S is the leading brand of regular syrup in the United
States with an 18.1% share of the regular syrup segment. MRS. BUTTERWORTH'S
produces and sells regular syrup under its ORIGINAL label, which was introduced
in 1960, and its COUNTRY BEST RECIPE label, a cinnamon-vanilla flavor introduced
in 1994. MRS. BUTTERWORTH'S ORIGINAL 24 ounce stock keeping unit ("SKU") is the
number two ranked SKU in the syrup category and sales of all MRS. BUTTERWORTH'S
ORIGINAL sizes accounted for approximately 47% of the Company's sales for the
year ended December 31, 1996. MRS. BUTTERWORTH'S LITE, introduced in 1985, is
the third leading brand in the lite syrup segment, with a 15.0% share of that
segment.
PANCAKE MIXES (11% of MRS. BUTTERWORTH'S sales). MRS. BUTTERWORTH'S pancake
mixes include add-in mixes, to which the user adds eggs and vegetable oil, and
complete mixes, to which the user adds only water. The Company's add-in mix is
sold under the MRS. BUTTERWORTH'S OLD-FASHIONED label. The Company's complete
mixes are sold under its MRS. BUTTERWORTH'S BUTTERMILK COMPLETE and
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MRS. BUTTERWORTH'S ORIGINAL COMPLETE labels. The Company's pancake mixes are
manufactured by Cereal Food Processors, Inc. and Gooch Milling and Elevator Co.,
Inc.
LOG CABIN (53% of pro forma Company sales)
The Company also markets and sells the LOG CABIN and COUNTRY KITCHEN brands
of syrup. The retail grocery channel is the primary market for LOG CABIN'S
products and accounted for approximately 84% of LOG CABIN'S sales for the year
ended December 31, 1996. In this channel, LOG CABIN'S retail products are
primarily sold in 12, 24, and 36 ounce sizes. In addition, approximately 11% of
LOG CABIN'S sales are in other channels including mass merchandisers, club
stores and the U.S. military. The remaining 5% of LOG CABIN'S sales are in
foodservice. The Company's foodservice products are sold in portion-control
packs and gallon jugs under the LOG CABIN, LOG CABIN LITE and WIGWAM labels and
under private label arrangements to the restaurant and institution channels.
LOG CABIN'S product lines include LOG CABIN, which is a premium priced
syrup, and COUNTRY KITCHEN, which is an economy syrup. Together, the two brands
have a 19.3% share of the syrup category.
LOG CABIN has a 16.3% market share of the regular syrup segment. The
heritage of the LOG CABIN brand dates back to 1887 and enjoys a strong consumer
awareness. Additionally, LOG CABIN LITE was introduced in 1985 and is the second
leading brand in the lite syrup segment with a 15.7% share of that segment.
COUNTRY KITCHEN has an 8.9% market share of the regular syrup segment.
Introduced in 1954, the product is positioned to target the economy segment of
the syrup category, providing a lower cost alternative for price conscious
consumers. Of this economy segment, COUNTRY KITCHEN has the highest share
amongst its competitors such as AUNT JEMIMA'S COUNTRY RICH and numerous regional
brands. COUNTRY KITCHEN is marketed under both a regular and lite version.
MARKETING, SALES AND DISTRIBUTION
MRS. BUTTERWORTH'S
The MRS. BUTTERWORTH'S trademark has been developed over 36 years and has
been supported through a mix of trade promotions, consumer marketing and
advertising. In addition, MRS. BUTTERWORTH'S unique grandmother-shaped bottle
provides strong brand identification at the point of sale. MRS. BUTTERWORTH'S
products are sold by a network of independent brokers and are distributed on a
national basis from Conopco's Olathe, Kansas facility.
Originally introduced in 1960, MRS. BUTTERWORTH'S is a well-recognized
trademark in the United States. MRS. BUTTERWORTH'S warm, homespun and
"grandmotherly" image appeals to young and old consumers alike. According to a
1995 Nielsen Brandbuilder study, MRS. BUTTERWORTH'S has 100% aided brand
awareness among syrup consumers. MRS. BUTTERWORTH'S also has significantly
higher Nielsen scores than its competitors in key consumer areas including "rich
tasting", "attractive packaging" and "attractive advertising". Consumer
awareness and attraction to the MRS. BUTTERWORTH'S brand is reinforced through
MRS. BUTTERWORTH'S unique grandmother-shaped glass bottle, which provides
customers with strong point-of-purchase brand identification.
MRS. BUTTERWORTH'S trade promotions have consisted of price discounting,
in-store advertising and couponing in retailer flyers. In the second quarter of
1996, MRS. BUTTERWORTH'S adopted a strategy to position its syrup products as
the best value among the three leading national brands. MRS. BUTTERWORTH'S
reduced its wholesale prices, resulting in lower everyday shelf prices to the
consumer for MRS. BUTTERWORTH'S regular syrup products. This strategy was
adopted to decrease reliance on price discounting.
MRS. BUTTERWORTH'S consumer marketing has relied heavily on coupons in free
standing inserts, which historically have had low average redemption rates, and
costly buy-one-get-one-free promotions. The pricing strategy implemented in the
second quarter of 1996 was adopted to decrease reliance on buy-one-get-one-free
promotions and has resulted in a reduction in MRS. BUTTERWORTH'S consumer
marketing expenditures. The Company intends to shift the focus of its consumer
marketing to targeted couponing, such as cross-promotions with host food
products.
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MRS. BUTTERWORTH'S advertising has been limited in recent years.
Historically, MRS. BUTTERWORTH'S advertising consisted primarily of television
advertising which was aimed at promoting MRS. BUTTERWORTH'S unique brand image.
The Company's advertising emphasized the old-fashioned "grandmotherly" image
associated with the brand and its homemade quality and wholesome taste.
Additionally, MRS. BUTTERWORTH'S advertising campaign, which used a "talking
syrup bottle," appeals to both children and adults. MRS. BUTTERWORTH'S
advertising has a strong recall score and has been highly effective in
motivating the purchase of MRS. BUTTERWORTH'S products and the Company intends
to continue this advertising.
The majority of MRS. BUTTERWORTH'S syrup and pancake mix products are sold
through a network of approximately 60 independent brokers to retail grocery
stores, membership warehouses, convenience stores and mass merchandisers. Retail
grocery sales account for approximately 85% of MRS. BUTTERWORTH'S sales of
syrups and pancake mixes. The Company also uses a separate broker network of
approximately 40 independent brokers which sells syrups and pancake mixes to the
foodservice distributors and operators. The Company's food brokers do not
distribute its products. They perform the sales and merchandising functions
necessary for the business. Distribution to retail outlets is done by the trade
classes who purchase the product. MRS. BUTTERWORTH'S syrups and pancake mixes
are distributed on a national basis from Conopco's Olathe, Kansas facility. None
of the Company's customers account for more than 10% of the Company's sales.
LOG CABIN
The LOG CABIN brand has a heritage dating back over a century and is widely
recognized as the "real" maple syrup people "grew up with." While LOG CABIN
remains the number one brand of syrup overall, a significant reduction in
corporate marketing support for the brand combined with aggressive marketing
programs by its principal national competitors have led to an erosion in its
market share from 35% in 1972 to 19%. LOG CABIN'S number one market position has
endured primarily on the basis of the brand's longevity in the market and strong
consumer awareness.
LOG CABIN'S marketing activities over the last four years have principally
consisted of trade promotions and price discounting. During this period, the
brand also developed an "animated cabin" television advertisement which achieved
above average consumer enjoyment, brand rating and memorability. However, in
response to heavy price promotions from MRS. BUTTERWORTH'S, AUNT JEMIMA and
HUNGRY JACK during the 1993 through 1995 period, LOG CABIN redirected its
advertising spending to price discounting and buy-one-get-one free promotions.
The Company intends to revitalize the LOG CABIN brand by reducing the
brand's reliance on inefficient trade spending and increasing consumer-based
promotional events and advertising. The shift from trade spending will refocus
LOG CABIN'S marketing emphasis on the consumer.
LOG CABIN'S products have historically been sold through Kraft's direct
sales force to retail grocery stores, mass merchandisers, club stores,
foodservice and the U.S. military. The Company intends to transition LOG CABIN
sales to its existing broker network shortly after the LC Acquisition is
completed.
COMPETITION
The three major national brands of syrup are AUNT JEMIMA, MRS. BUTTERWORTH'S
and LOG CABIN. Sales of these three brands account for approximately 53% of
total syrup sales in the United States. Smaller national and regional brands,
including MAPLE GROVE FARMS, GOLDEN GRIDDLE and VERMONT MAID, and private label
syrups also compete in the syrup category. Competition is based primarily on
price and consumer positioning.
LOG CABIN (including the COUNTRY KITCHEN brand) is the number one national
brand of syrup overall with a 19.3% market share, followed by AUNT JEMIMA and
MRS. BUTTERWORTH'S with market shares of 18.5% and 15.0%, respectively. MRS.
BUTTERWORTH'S is the number one brand of regular syrup in the United States,
with an 18.1% share of the regular syrup segment, followed by LOG CABIN
(excluding the COUNTRY
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KITCHEN brand) and AUNT JEMIMA with regular segment shares of 16.3% and 13.6%,
respectively. In addition, COUNTRY KITCHEN is the leading national brand of
economy-priced syrup with the highest market share among its economy-priced
competitors, which include Aunt Jemima's COUNTRY RICH and numerous regional
brands.
MRS. BUTTERWORTH'S is also the leading brand of syrup in the Central
(Chicago, Denver, Kansas City) and Mid-Central (Detroit, Indianapolis,
Pittsburgh) regions of the United States, the two regions of the country with
the highest per capita syrup consumption. LOG CABIN sales are strongest in the
eastern and western regions of the United States.
The U.S. pancake mix category is more concentrated than the syrup category,
with four major brands representing approximately 70.0% of the total market.
AUNT JEMIMA is the leader in the pancake mix category, with a 31.0% market
share, followed by HUNGRY JACK, KRUSTEAZ and MRS. BUTTERWORTH'S, with market
shares of 15.5%, 15.0% and 6.3%, respectively.
RAW MATERIALS
The Company utilizes a variety of basic raw materials in the manufacture of
its syrup and pancake mix products, including corn syrup, liquid sucrose, flour,
sugar, maple sugar and flavorings. The Company also utilizes significant
quantities of glass, plastic and cardboard for its packaging requirements.
Supplies of ingredients and packaging requirements are readily available from a
number of sources and are purchased based on price. See "The Acquisitions."
PRODUCTION AND EQUIPMENT
MRS. BUTTERWORTH'S syrup is manufactured and packaged at Conopco's Olathe,
Kansas facility under the MBW Co-Pack Agreement between the Company and Conopco
pursuant to which Conopco has agreed to contract manufacture syrup for the
Company for a period of up to one year from the MBW Acquisition Closing Date at
prices which are based on historical manufacturing costs. The Company has
entered into the Red Wing Co-Pack Agreement pursuant to which Red Wing will
contract manufacture MRS. BUTTERWORTH'S syrup products. See "The
Acquisitions--The Red Wing Co-Pack Agreement." Raw materials, packaging supplies
and finished goods related to the MRS. BUTTERWORTH'S syrup business are also
warehoused at Conopco's Olathe, Kansas facility.
The Company owns all of the equipment used in each stage of the production
of MRS. BUTTERWORTH'S syrup, including batching, filling and case-packing the
products. The equipment was purchased by the Company in the MBW Acquisition and
has the capacity to produce approximately two times the number of cases of syrup
as has been produced historically. All of the equipment is located in Conopco's
Olathe, Kansas facility.
MRS. BUTTERWORTH'S retail pancake mixes are manufactured and packaged by two
third parties under co-packing agreements. The Company assumed these agreements
at their historical prices at the MBW Acquisition Closing Date. MRS.
BUTTERWORTH'S foodservice pancake mixes, which account for approximately 1% of
the Company's sales, are manufactured at a separate facility owned by Conopco.
LOG CABIN syrup products are manufactured and packaged at Kraft's Chicago,
Illinois and Lehigh Valley, Pennsylvania facilities under the LC Co-Pack
Agreement between the Company and Kraft pursuant to which Kraft has agreed to
contract manufacture syrup for the Company for a period of up to nine months
from the LC Acquisition Closing Date at prices which are based on historical
manufacturing costs. Prior to the end of the term of the LC Co-Pack Agreement,
the Company will either enter into a co-packing agreement with Red Wing or
another third party for the manufacture of LOG CABIN syrup products. Raw
materials, packaging supplies and finished goods related to the syrup business
are also warehoused at Kraft's Chicago and Lehigh Valley facilities.
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TRADEMARKS
In the MBW Aquisition, the Company acquired a number of registered
trademarks in the United States, Canada and Puerto Rico. In the LC Acquisition,
the Company acquired the U.S. and foreign trademarks (excluding Mexico) of the
LC Business, including LOG CABIN and COUNTRY KITCHEN. Management is not aware of
any fact that would negatively impact the continued use of any of its trademarks
and trade names.
EMPLOYEES
The Company's labor requirements related to the manufacturing of MRS.
BUTTERWORTH'S syrup and foodservice pancake mix will be covered under the MBW
Co-Pack Agreement until December 31, 1997 and thereafter under the Red Wing
Co-Pack Agreement. The Company's labor requirements related to the manufacturing
of LOG CABIN syrup products will be covered under the LC Co-Pack Agreement for a
period of up to nine months from the LC Acquisition Closing Date. The Company
has filled substantially all senior management positions and has staffed
approximately ninety percent of its sales, marketing and administrative
functions. The Company has completed the transition of all services previously
provided by Conopco under the MBW Transition Services Agreement, which expires
on June 30, 1997. In connection with the LC Acquisition, the Company entered
into the LC Transition Services Agreement, pursuant to which Kraft will provide
the Company with marketing services, transaction processing services, accounting
services and other services related to the LOG CABIN syrup products for a period
of up to six months from the LC Acquisition Closing Date. The Company will
increase its corporate staff from 22 to 34, primarily in the sales and marketing
areas to accomodate the additional volume and products of the LOG CABIN syrup
business.
CERTAIN LEGAL AND REGULATORY MATTERS
LITIGATION
The Company did not assume any litigation relating to the MBW Predecessor or
the LC Business that was pending as of the MBW Acquisition Closing Date or the
LC Acquisition Closing Date. Conopco and Kraft have agreed to indemnify, subject
to certain limitations, the Company with respect to any litigation that may
arise in the future to the extent such litigation relates to the conduct of the
MBW Predecessor prior to the MBW Acquisition Closing Date and the LC Business
prior to the LC Acquisition Closing Date, respectively. See "The Acquisitions."
Historically, each of Conopco and Kraft has been the defendant in various legal
actions related to its respective businesses, none of which had, or were
expected to have, a material adverse effect on the operations or financial
condition of the MBW Predecessor or the LC Business, respectively.
PUBLIC HEALTH
The Company is subject to the Federal 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," called standards of identity, for certain foods. In addition, the
Nutrition Labeling and Education Act of 1990, as amended, 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.
The operations and the 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 the
facilities. Enforcement actions for violations of federal, state and local
regulations may include seizure and condemnation of violative products, cease
and desist orders,
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injunctions and/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.
ENVIRONMENTAL
The Company did not assume any liabilities for environmental matters
relating to the operation of the MBW Predecessor prior to the MBW Acquisition
Closing Date or the LC Business prior to the LC Acquisition Closing Date. Like
all other businesses, the Company is subject to a full range of federal, state
and local laws and regulations pertaining to the environment, including the
discharge of materials into the environment and the handling and disposal of
wastes (including solid and hazardous wastes). However, because of the nature of
its business, the Compnay does not expect the costs of compliance with, or any
liability under, such laws and regulations to have a material adverse effect on
its operations or financial condition.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------------------- --------- ----------------------------------------------------
<S> <C> <C>
Ian R. Wilson....................................... 67 Chairman of the Board of Directors
Thomas J. Ferraro................................... 48 President and Director
James B. Ardrey..................................... 39 Executive Vice President and Director
Ray Chung........................................... 48 Executive Vice President and Director
C. Gary Willett..................................... 42 Executive Vice President
Alan Mintz.......................................... 54 Vice President, Sales
M. Laurie Cummings.................................. 33 Vice President and Secretary
David E. De Leeuw................................... 52 Director
Charles Ayres....................................... 37 Director
Tyler T. Zachem..................................... 31 Director
Peter Lamm.......................................... 45 Director
Richard C. Dresdale................................. 40 Director
</TABLE>
IAN R. WILSON, Chairman of the Board of Directors of the Company since
December 1996. Mr. Wilson is the Managing Partner of Dartford. Mr. Wilson
currently serves as Chairman of the Board of Directors of Van de Kamp's and
Windy Hill. Prior to forming Dartford, Mr. Wilson served as Chairman and Chief
Executive Officer of Windmill. Prior to that, Mr. Wilson was Chairman and Chief
Executive Officer of Wyndham. From 1983 to 1984 Mr. Wilson was the Chairman and
Chief Executive Officer of Castle & Cooke, Inc. (now known as Dole Food Company,
Inc.), an international food and real estate concern. Prior to Castle & Cooke,
Inc., Mr. Wilson spent 25 years with The Coca-Cola Company in a series of
management positions, most recently as Vice Chairman of The Coca-Cola Company
and President of the Pacific Group. Mr. Wilson's past and present service as a
director includes membership on the boards of Novell, Inc., Revlon, Inc., Crown
Zellerbach Corporation, Castle & Cooke, Inc., Wilson Bottling Corporation,
Golden State Foods, New Age Beverages, Ltd., Van de Kamp's and Windy Hill.
THOMAS J. FERRARO, President and Director of the Company since December
1996. Prior to joining the Company, Mr. Ferraro served as President of Campfire,
Inc., which recently merged into International Home Foods, Inc. Prior to joining
Campfire, Inc. he was Vice President of Sales for the Niche Grocery division of
Borden, Inc. Mr. Ferraro's experience with niche grocery products extends back
to his early career with RJR Nabisco Inc. and Drackett Products, a division of
Bristol-Meyers Squibb Company, where he held a variety of marketing and sales
positions.
JAMES B. ARDREY, Executive Vice President and Director of the Company since
December 1996. Mr. Ardrey is a Partner in Dartford. From January 1993 to
February 1995, Mr. Ardrey was a consultant to Windmill, conducting its
divestiture program. From 1984 to 1992, Mr. Ardrey was an investment banker with
Paine Webber Incorporated, serving as Managing Director from 1990 to 1992. Prior
to joining Paine Webber Incorporated, Mr. Ardrey was a consultant with Booz,
Allen & Hamilton. Mr. Ardrey currently serves as a Director of Van de Kamp's.
RAY CHUNG, Executive Vice President and Director of the Company since
December 1996. Mr. Chung is a Partner in Dartford. Mr. Chung has previously
served as a Director, Executive Vice President and Chief Financial Officer of
Windmill from 1989 to 1995 and as a Director, Executive Vice President and Chief
Financial Officer of Wyndham from 1985 to 1990. From May 1984 to September 1985,
Mr. Chung served as Vice President--Finance for the Kendall Company, a
subsidiary of the Colgate-Palmolive Company. Between 1981 and 1984, Mr. Chung
served as Vice President--Finance for Riviana Foods, Inc. Mr. Chung currently
serves as a Director of Windy Hill and VDK Holdings, Inc.
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C. GARY WILLETT, Executive Vice President of the Company since December
1996. Prior to joining the Company, Mr. Willett served as Executive Vice
President/General Manager of Campfire, Inc., which recently merged into
International Home Foods, Inc. Prior to Campfire, Inc., Mr. Willett spent 12
years with Borden, Inc. in a series of marketing and general management
positions, most recently as a Vice President/G.M. of Elmer's. Before joining
Borden, Inc., Mr. Willett spent six years with The Kellogg Company in various
marketing and sales positions.
ALAN MINTZ, Vice President, Sales of the Company since January 1997. Prior
to joining the Company in January 1997, Mr. Mintz spent twelve years with
Borden, Inc., as General Manager of the BAMA foods division and as the Area Vice
President of the Signature Flavors division. Prior to joining Borden, Inc., Mr.
Mintz held various sales positions at General Foods Corp.
M. LAURIE CUMMINGS, Vice President and Secretary of the Company since
December 1996. Ms. Cummings is a partner in Dartford. Ms. Cummings was Vice
President, Controller and Treasurer of Windmill from 1989 to 1995. Between 1987
and 1990, Ms. Cummings was the Controller and Assistant Treasurer of Wyndham.
Ms. Cummings currently serves as Vice President of Windy Hill and Van de Kamp's.
DAVID E. DE LEEUW, Director of the Company since December 1996. Mr. De Leeuw
is a managing general partner of MDC Management Company III, L.P., which is the
general partner of McCown De Leeuw & Co. III, L.P. and McCown De Leeuw & Co. III
(Europe), L.P., a managing general partner of MDC Management Company IIIA, L.P.,
which is the general partner of McCown De Leeuw & Co. III (Asia), L.P. and a
member of Gamma Fund, LLC. Prior to founding McCown De Leeuw & Co. with George
E. McCown in 1984, Mr. De Leeuw was Manager of the Leveraged Acquisition Unit
and Vice President in the Capital Markets Group at Citibank, N.A. Mr. De Leeuw
also worked with W.R. Grace & Co. where he was Assistant Treasurer and Manager
of Corporate Finance. Mr. De Leeuw began his career as an investment banker with
Paine Webber Incorporated. He currently serves as a director of Vans, Inc., DEC
International Inc., Nimbus CD International, Inc., Pelican Companies, Inc.,
Tiara Motorcoach Corporation, Papa Gino's Inc. and Outsourcing Solutions Inc.
CHARLES AYRES, Director of the Company since December 1996. Mr. Ayres is a
general partner of MDC Management Company III, L.P., which is the general
partner of McCown De Leeuw & Co. III, L.P. and McCown De Leeuw & Co. III
(Europe), L.P., a general partner of MDC Management Company IIIA, L.P., which is
the general partner of McCown De Leeuw & Co. III (Asia), L.P. and a member of
Gamma Fund, LLC. Mr. Ayres has been associated with McCown De Leeuw & Co. since
1991. Prior to joining McCown De Leeuw & Co., Mr. Ayres was a founding partner
of HMA Investments, Inc., a private investment firm focused on middle market
management buyouts. Mr. Ayres began his career as an investment banker with
Lazard Freres & Co. He currently serves as a director of Nimbus CD
International, Inc., ASC Network Corp., Tiara Motorcoach Corporation and Papa
Gino's, Inc.
TYLER T. ZACHEM, Director of the Company since December 1996. Mr. Zachem is
a principal of MDC Management Company III, L.P., which is the general partner of
McCown De Leeuw & Co. III, L.P., and McCown De Leeuw & Co. III (Europe), L.P.,
and a principal of MDC Management Company IIIA, L.P., which is the general
partner of McCown De Leeuw & Co. III (Asia), L.P. Mr. Zachem has been associated
with McCown De Leeuw & Co. since July 1993. Mr. Zachem previously worked as a
consultant with McKinsey & Co. and as an investment banker with McDonald &
Company. He currently serves as a director of Outsourcing Solutions Inc.
PETER LAMM, Director of the Company since December 1996. Mr. Lamm is
President of Fenway Partners, Inc., the management company for Fenway, a New
York based direct investment firm for institutional investors with a primary
objective of acquiring controlling positions in leading middle-market companies.
From February 1982 to April 1994, Mr. Lamm was employed by Butler Capital
Corporation, most recently as Senior Direct Investment Officer and a Managing
Director. Until April 1994, Mr. Lamm was also a general partner of the five
limited partnerships managed by Butler Capital Corporation. Mr.
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Lamm currently serves as a director of Van de Kamp's, MW Manufacturers Inc.,
National School Supply Company, Inc., Brown Moulding Company, Inc., Valley
Recreation Products Inc., Teters Floral Products, Inc. and Bear Archery, Inc.
RICHARD C. DRESDALE, Director of the Company since December 1996. Mr.
Dresdale is a Managing Director of Fenway Partners, Inc. Prior to founding
Fenway with Mr. Lamm and Andrea Geisser, Mr. Dresdale was a principal at
Clayton, Dubilier and Rice, Inc. ("CD&R"). Mr. Dresdale also served as a limited
partner of the general partner of three of the investment partnerships managed
by CD&R. Mr. Dresdale previously worked as an Investment Officer with
Manufacturers Hanover Venture Capital Corporation. Mr. Dresdale currently serves
as a director of MW Manufacturers Inc., Brown Moulding Company, Inc., Teters
Floral Products, Inc., Bear Archery, Inc., Nu-kote Holdings, Inc. and Remington
Arms Company.
EXECUTIVE COMPENSATION
As described below, the Company entered into employment agreements with
Thomas J. Ferraro, C. Gary Willett and Alan Mintz. The Company employed no other
executive officers on March 31, 1997.
Pursuant to the Employment Agreement between the Company and Thomas J.
Ferraro dated as of December 31, 1996 (the "Ferraro Employment Agreement"), Mr.
Ferraro shall serve as President of the Company and a director of the Company.
Mr. Ferraro shall receive a base salary of $175,000 per year and is eligible to
receive a bonus of up to 70% of his base salary depending upon the Company's
earnings. Additionally, Mr. Ferraro received 30 Class D Units in MBW LLC (which
are non-voting) on December 31, 1996. The Ferraro Employment Agreement provides
for a two-year term, commencing on the MBW Acquisition Closing Date; however, on
each anniversary of the MBW Acquisition Closing Date the term will automatically
be extended for one additional year so that the term ends two years after the
latest anniversary of the MBW Acquisition Closing Date. If the Company
terminates Mr. Ferraro's employment without cause, the Company is required to
pay him an amount equal to the base salary he would have been entitled to
receive through the end of the current term of the Ferraro Employment Agreement.
The Ferraro Employment Agreement also provides that until the later of the first
anniversary of his termination and the end of the current term of the employment
agreement, Mr. Ferraro may not compete with or solicit employees from the
Company.
Pursuant to the Employment Agreement between the Company and C. Gary Willett
dated as of December 31, 1996 (the "Willett Employment Agreement"), Mr. Willett
shall serve as Executive Vice President of the Company. Mr. Willett shall
receive a base salary of $140,000 per year and is eligible to receive a bonus of
up to 60% of his base salary depending upon the Company's earnings. The Willett
Employment Agreement provides for a two-year term, commencing on the MBW
Acquisition Closing Date; however, on each anniversary of the MBW Acquisition
Closing Date the term will be automatically extended for one additional year so
that the term ends two years after the latest anniversary of the MBW Acquisition
Closing Date. If the Company terminates Mr. Willett's employment without cause,
the Company is required to pay him an amount equal to the base salary he would
have been entitled to receive through the end of the current term of the Willett
Employment Agreement. The Willett Employment Agreement also provides that until
the later of the first anniversary of his termination and the end of the current
term of the employment agreement, Mr. Willett will not compete with or solicit
employees from the Company.
Pursuant to the Employment Agreement between the Company and Alan Mintz
dated as of January 20, 1997 (the "Mintz Employment Agreement"), Mr. Mintz
serves as Vice President of Sales of the Company. Mr. Mintz receives a base
salary of $120,000 per year and is eligible to receive a bonus of up to 60% of
his base salary based upon the Company's earnings. The Mintz Employment
Agreement provides for a one-year term, commencing on January 20, 1997. On July
20, 1997 and each day thereafter, the term will automatically be extended for an
additional day so that the term remaining under
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the Mintz Employment Agreement will always be six months. If the Company
terminates Mr. Mintz's employment without cause, the Company is required to pay
him an amount equal to the base salary he would have been entitled to receive
through the end of the current term of the Mintz Employment Agreement. The Mintz
Employment Agreement also provides that until the later of the first anniversary
of his termination and the end of the current term of the employment agreement,
Mr. Mintz may not compete with or solicit employees from the Company.
DIRECTOR COMPENSATION
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 will be 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 prior to the date of this Prospectus.
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<PAGE>
SECURITY OWNERSHIP
All of the outstanding capital stock of the Company is held by Holdings and
all of the outstanding capital stock of Holdings is held by MBW LLC. The Class A
and Class B common limited liability company interests ("MBW Common LLC
Securities") are the only classes of MBW LLC's limited liability company
interests that currently possess voting rights. As of July 1, 1997, there were
64,875 membership units of MBW Common LLC Securities. The following table sets
forth certain information regarding the beneficial ownership of MBW Common LLC
Securities by each person who beneficially owns more than 5% of such securities,
by directors and certain executive officers of the Company, individually, and by
the directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
MBW COMMON LLC MBW COMMON LLC
NAME AND ADDRESS OF BENEFICIAL OWNER SECURITIES(1) SECURITIES(1)
- -------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
5% STOCKHOLDERS:
McCown De Leeuw & Co. III, L.P.(2).............................................. 43,250 66.7%
c/o McCown De Leeuw & Co.
3000 Sand Hill Road, Building 3, Suite 290
Menlo Park, California 94025
McCown De Leeuw & Co. III (Europe), L.P.(2)..................................... 43,250 66.7%
c/o McCown De Leeuw & Co.
McCown De Leeuw & Co. III (Asia), L.P.(2)....................................... 43,250 66.7%
c/o McCown De Leeuw & Co.
Gamma Fund, LLC(2).............................................................. 43,250 66.7%
c/o McCown De Leeuw & Co.
Fenway Partners Capital Fund, L.P.(3)........................................... 16,250 25.0%
152 West 57th Street
New York, New York 10019
Dartford Partnership L.L.C.(4).................................................. 3,750 5.8%
456 Montgomery Street, Suite 2200
San Francisco, California 94104
OFFICERS AND DIRECTORS OF THE COMPANY:
Ian R. Wilson(4)................................................................ 3,750 5.8%
James B. Ardrey(4).............................................................. 3,750 5.8%
Ray Chung(4).................................................................... 3,750 5.8%
M. Laurie Cummings(4)........................................................... 3,750 5.8%
David E. De Leeuw(2)............................................................ 43,250 66.7%
Charles Ayres(2)................................................................ 43,250 66.7%
Tyler T. Zachem(2).............................................................. 43,250 66.7%
Peter Lamm(3)................................................................... 16,250 25.0%
Richard C. Dresdale(3).......................................................... 16,250 25.0%
Thomas J. Ferraro............................................................... 200 0.3%
Alan Mintz...................................................................... 100 0.2%
C. Gary Willett................................................................. 100 0.2%
All directors and executive officers as a group................................. 63,650 98.1%
</TABLE>
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- ------------------------
(1) As used in this table, beneficial ownership means the sole or shared power
to vote, or to direct the voting of a security, or the sole or shared power
to dispose, or direct the disposition, of a security.
(2) Includes 38,989.9 membership units owned by McCown De Leeuw & Co. III, L.P.,
an investment partnership whose general partner is MDC Management Company
III, L.P. ("MDC III"), 2,768.0 membership units held by McCown De Leeuw &
Co. III (Europe), L.P., an investment partnership whose general partner is
MDC Management Company IIIA, L.P. ("MDC IIIA"), 648.7 membership units held
by McCown De Leeuw & Co. III (Asia), L.P., an investment partnership whose
general partner is MDC IIIA, and 843.4 membership units owned by Gamma Fund,
LLC, a California limited liability company. The voting members of Gamma
Fund, LLC are George E. McCown, David E. De Leeuw, David E. King, Robert B.
Hellman, Jr., Charles Ayres and Steven A. Zuckerman, who are also the only
general partners of MDC III and MDC IIIA. Voting and dispositive decisions
regarding the MBW Common LLC Securities are made by Mr. McCown and Mr. De
Leeuw, as Managing General partners of each of MDC III and MDC IIIA, who
together have more than the required two-thirds-in-interest vote of the
Managing General Partners necessary to effect such decision on behalf of any
such entity. Voting and dispositive decisions regarding the MBW Common LLC
Securities owned by Gamma Fund, LLC are made by a vote or consent of a
majority in number of the voting members of Gamma Fund, LLC. Messrs. McCown,
De Leeuw, King, Hellman, Ayres and Zuckerman have no direct ownership of any
shares of MBW Common LLC Securities and disclaim beneficial ownership of any
shares of MBW Common LLC Securities except, in the case of Gamma Fund LLC,
to the extent of their proportionate partnership interests or membership
interests.
(3) The general partner of Fenway is Fenway Partners, L.P., a Delaware limited
partnership, whose general partner is Fenway Partners Management Inc., a
Delaware corporation. Peter Lamm and Richard Dresdale are directors and
officers of Fenway Partners Management Inc., and as such may be deemed to
have the power to vote or dispose of MBW Common LLC Securities held by
Fenway. Each of Messrs. Lamm and Dresdale have no direct ownership of any
shares of MBW Common LLC Securities and disclaim beneficial ownership of any
shares of MBW Common LLC Securities except to the extent of their indirect
partnership intererests in Fenway.
(4) Mr. Ian Wilson is the managing partner and Ms. M. Laurie Cummings and
Messrs. James B. Ardrey and Ray Chung are partners of Dartford, and as such
they may be deemed to have the power to vote or dispose of MBW Common LLC
Securities held by Dartford. Each of Ms. Cummings, Messrs. Wilson, Ardrey
and Chung disclaims the existence of a group and disclaims beneficial
ownership of MBW Common LLC Securities held by Dartford.
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CERTAIN RELATED TRANSACTIONS
DARTFORD MANAGEMENT SERVICES AGREEMENT
Concurrently with the consummation of the MBW Acquisition, the Company
entered into a Management Services Agreement (the "Dartford Management Services
Agreement") with Dartford pursuant to which Dartford provides management
oversight to the Company. Management services provided by Dartford include, but
are not limited to, corporate and financial planning, oversight of operations,
production of business plans, identification of possible acquisitions and advice
with the financing thereof and definition and development of business
opportunities. The annual management fee for these services will be an amount
based upon a percentage of consolidated annual net sales of MBW LLC and its
subsidiaries, provided that the fee shall be not less than $600,000 per year.
The net sales of MBW LLC are the same as those of the Company in that MBW LLC's
sole asset is its ownership of all of the outstanding common stock of Holdings
of the Company. In the event MBW LLC were to acquire additional assets, the
basis for this management fee would be reevaluated. The annual management fee
will be equal to 0.5% of net sales up to $250 million, an additional amount
equal to 0.375% of net sales above $250 million but less than $500 million and
an additional 0.25% of net sales above $500 million. The annual management fee
is subject to reduction (i) upon the Company, Holdings or MBW LLC hiring or
appointing a Chief Executive Officer or other senior executive with
responsibility and authority for providing to the Company the management
services provided by Dartford under the Dartford Management Services Agreement,
(ii) upon the sale to the public by the Company, Holdings or MBW LLC for its own
account of shares of capital stock or limited liability company interests
pursuant to a registration statement filed with the Commission or (iii) during
the three months prior to termination of the Dartford Management Services
Agreement after a sale of substantially all of the equity securities or assets
of the Company, Holdings or MBW LLC. Dartford will also receive a transaction
fee for subsequent Acquisitions by the Company equal to 1.25% of the Acquisition
Price ($2,750,000 for the LC Acquisition). Pursuant to the Dartford Management
Services Agreement, from the date thereof until the earlier of June 30, 1998 and
the termination of the Dartford Management Services Agreement, Dartford will not
organize and participate in a newly formed business group for the purpose of
effecting acquisitions unless (i) certain changes of control have occurred in
one of Dartford's currently existing business groups or (ii) the management
services agreement between Dartford and a member company of one of Dartford's
currently existing business groups is terminated. In addition, from the date of
the Dartford Management Services Agreement until June 30, 1998, Dartford may not
effect acquisitions through more than four business groups. From and after July
1, 1998 until the termination of the Dartford Management Services Agreement,
Dartford may organize and participate in a newly formed business group in the
event of (i) certain changes of control in one of Dartford's currently existing
business groups; (ii) the termination of one of the management services
agreements between Dartford and a member company of one of Dartford's currently
existing business groups; and (iii) a new member joining Dartford and
participating in a material respect in one of Dartford's currently existing
business groups. The Dartford Management Services Agreement expires on the
earlier of the date six months following a sale of substantially all of the
equity securities or assets of the Company, Holdings or MBW LLC and the fifth
anniversary of the MBW Acquisition Closing Date and is renewable annually
thereafter unless terminated by either party. The Dartford Management Services
Agreement can also be terminated by either party prior to the expiration of the
term upon the occurrence of certain events. The Company believes that the terms
of and fees paid for the management services rendered are at least as favorable
to the Company as those which could be negotiated with an unaffiliated third
party. In addition, for services rendered in connection with the Transactions,
Dartford received a fee of $250,000 upon the closing of the MBW Acquisition, was
reimbursed $32,655 for out-of-pocket expenses incurred in connection with the
MBW Acquisition and was issued 1,000 membership units of MBW Common LLC
Securities.
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<PAGE>
MDC ADVISORY SERVICES AGREEMENT
Concurrently with the consummation of the MBW Acquisition, the Company
entered into an Advisory Services Agreement (the "MDC Advisory Services
Agreement") with MDC Management Company III, L.P. ("MDC Management"), an
affiliate. Under the MDC Advisory Services Agreement, MDC Management provides
certain advisory functions primarily relating to the financing and capital
structure of the Company, including future acquisitions, and general management
oversight. MDC Management will receive an annual monitoring fee for providing
these services based upon a percentage of consolidated annual net sales of MBW
LLC and its subsidiaries, provided that the fee shall be not less than $250,000
per year. The net sales of MBW LLC are the same as those of the Company in that
MBW LLC's sole asset is its ownership of all of the outstanding common stock of
Holdings of the Company. In the event MBW LLC were to acquire additional assets,
the basis for this management fee would be reevaluated. The annual monitoring
fee will be equal to $250,000 for net sales up to $120 million, an additional
amount equal to 0.12821% of net sales above $120 million but less than $250
million, an additional amount equal to 0.125% of net sales above $250 million
but less than $500 million and an additional 0.083% of net sales above $500
million. MDC Management will also receive a transaction fee for subsequent
Acquisitions by the Company equal to 0.65625% of the Acquisition Price
($1,444,000 for the LC Acquisition). The MDC Advisory Services Agreement expires
on the earlier of the date six months following a sale of substantially all of
the equity securities or assets of the Company, Holdings or MBW LLC and the
fifth anniversary of the MBW Acquisition Closing Date and is renewable annually
thereafter unless terminated by the Company. The Company believes that the terms
of and fees paid for the professional services rendered are at least as
favorable to the Company as those which could be negotiated with an unaffiliated
third party. In addition, upon the closing of the MBW Acquisition, MDC
Management received a one-time fee of $1,250,000 for financial advisory services
provided to the Company in connection therewith.
FENWAY AGREEMENT
Concurrently with the consummation of the MBW Acquisition, the Company
entered into an agreement (the "Fenway Agreement") with Fenway, an affiliate. As
an incentive to bring acquisition candidates to the Company, under the Fenway
Agreement, Fenway will receive a transaction fee for subsequent Acquisitions
($481,000 for the LC Acquisition) by the Company equal to 0.21875% of the
Acquisition Price. However, Fenway is not required to introduce such acquisition
candidates to receive the transaction fee.
MBW AGREEMENTS
Concurrently with the consummation of the MBW Acquisition, the Company
entered into agreements with Thomas J. Ferraro, President of the Company, and C.
Gary Willett, Executive Vice President of the Company, whereby the officers
executed promissory notes in favor of the Company in exchange for monies
borrowed to assist in the capitalization of their limited liability interests
held with investors. The promissory notes mature December 31, 1999 with required
annual payments. Interest is due and payable quarterly at the rate of 8.00% per
annum. The aggregate balance outstanding on the promissory notes upon issuance
was $110,000.
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<PAGE>
DESCRIPTION OF SENIOR CREDIT FACILITIES
The description set forth below is qualified in its entirety by reference to
certain agreements setting forth the principal terms and conditions of the
Company's Senior Credit Facilities, copies of which are filed as exhibits to the
Registration Statement of which this Prospectus is a part.
In connection with the MBW Acquisition, the Company entered into a Credit
Agreement with Chase Manhattan and various lenders providing for senior secured
credit facilities. In connection with such financing, Chase Manhattan acts as
Administrative Agent and CSI acted as Arranging Agent. In connection with the LC
Acquisition, the Senior Credit Facilities were amended to provide as follows:
The Senior Credit Facilities consist of (i) a senior secured Term Facility
in a principal amount of $40.0 million and (ii) a senior secured Revolving
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 $60.0 million (of which not more than
$5.0 million may be represented by letters of credit).
Loans and letters of credit under the Revolving Facility will be available
at any time through the final maturity date on December 31, 2003. The Term
Facility will have a final maturity date of December 31, 2003, and will amortize
in quarterly payments of $1.125 million through December 31, 1999 with such
quarterly payments increasing annually in the amount of $250,000 per payment for
each year thereafter until the final maturity date.
The Company is required to make mandatory prepayments on the Senior Credit
Facilities under certain circumstances, including upon certain asset sales,
issuance of debt securities or issuance of equity securities to persons other
than the Equity Investors. The Company will also be required to make prepayments
on the Senior Credit Facilities and permanently reduce commitments under the
Revolving Facility in an amount equal to 50% of the Company's annual trailing
Consolidated Excess Cash Flow commencing with the fiscal year ending in December
1998 and thereafter and upon receipt of cash proceeds from property and casualty
insurance or condemnation awards. At the Company's option, subject to certain
requirements, loans may be prepaid, and revolving credit commitments or letters
of credit may be permanently reduced, in whole or in part at any time without
premium or penalty.
The obligations of the Company under the Senior Credit Facilities are
unconditionally and irrevocably guaranteed by Holdings and any future domestic
subsidiaries of the Company (collectively, the "Guarantors"). In addition, the
Senior Credit Facilities are secured by first priority or equivalent security
interests in all capital stock of the Company (including all the capital stock
of, or other equity interest in, future domestic subsidiaries of the Company)
and the tangible and intangible assets of the Company and the Guarantors.
At the Company's option the interest rate per annum applicable to the
Revolving Facility will be either the rate (grossed-up for maximum statutory
reserve requirements for eurocurrency liabilities) at which eurodollar deposits
for one, two, three or six months (as selected by the Company) are offered to
Chase Manhattan in the interbank eurodollar market in the approximate amount of
Chase Manhattan's share of the relevant Loan (the "Adjusted Eurodollar Rate")
plus a margin of 2.25% (the "Applicable Eurodollar Rate Margin") or the Base
Rate plus a margin of 1.25%. The margin is based upon the Company's ratio of
consolidated total debt to consolidated EBITDA. The Base Rate is the higher of
(i) the rate of interest publicly announced by Chase Manhattan as its prime rate
in effect at its principal office in New York City and (ii) the federal funds
effective rate plus 0.5%.
At the Company's option, the interest rate per annum applicable to loans
under the Term Facility will be either the Adjusted Eurodollar Rate plus a
margin of 2.25% or the Base Rate plus a margin of 1.25%. The Base Rate is the
higher of (i) the rate of interest publicly announced by Chase Manhattan as its
prime
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rate in effect at its principal office in New York City, (ii) the federal funds
effective rate plus 0.5%, and (iii) the secondary market rate for certificates
of deposit (grossed-up for maximum statutory reserve requirements) plus 1%.
The Company pays a per annum fee equal to 0.5% on the undrawn portion of the
commitments in respect of the Revolving Facility and a per annum fee on the face
amount of all outstanding letters of credit equal to the Applicable Eurodollar
Rate Margin then in effect with respect to loans under the Revolving Facility
bearing interest based upon the Eurodollar Rate. The per annum fee is also based
upon the Company's ratio of consolidated total debt to consolidated EBITDA.
The Senior Credit Facilities 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, enter into leases,
guarantees, investments or acquisitions, engage in mergers or consolidations,
make capital expenditures, or engage in certain transactions with subsidiaries
and affiliates and otherwise restrict corporate activities. In addition, under
the Senior Credit Facilities, the Company is required to comply with specified
ratios and tests, including minimum interest coverage, minimum fixed charge
coverage and maximum leverage ratios and a limitation on capital expenditures.
An event of default under the Senior Credit Facilities will occur (i) if the
Company fails to make payments under the Senior Credit Facilities or, in certain
circumstances, under other outstanding indebtedness; (ii) if the Company
breaches the financial covenants contained in the Senior Credit Facilities;
(iii) if the Company breaches the warranties contained in the Senior Credit
Facilities; (iv) in the event of the bankruptcy, insolvency or reorganization of
the Company; (v) if any judgment or attachment involving, in an individual case
an amount in excess of $1,000,000 or, in the aggregate in excess $2,000,000,
shall be entered against Holdings or the Company and shall remain undischarged
on unstayed for a period of 60 days; (vi) if any judgment or decree of
dissolution entered against the Company; (vii) if there occurs certain specified
ERISA events; (viii) if the Company undergoes a "change in control" as described
below; (ix) if the MBW Co-Pack Agreement, the Log Cabin Co-Pack Agreement, the
Red Wing Co-Pack Agreement or the Flavor Supply Agreement are terminated, and
the Company fails to make alternate arrangements satisfactory to the Lenders;
(x) a failure to comply with the subordination provisions contained in the
Senior Credit Facilities; or (xi) under certain other circumstances customary
for a transaction of this type. As noted above, an event of default under the
Senior Credit Facilities will occur if there is a change in control in the
Company.
A change in control will be deemed to have occurred if (i) prior to the
consummation of any initial public offering of the common stock of Holdings, (x)
MBW LLC ceases to own directly 100% of the outstanding capital stock of Holdings
not including those shares of common stock of Holdings, distributed pursuant to
employee stock plans, (y) MDC, Fenway and Dartford cease to beneficially own in
the aggregate at least 51% of the voting securities of the Company or (z) any
person (other than MDC, Fenway or Dartford), including a "group" within the
meaning of Sections 13(d) and 14(d) (2) of the Exchange Act which includes such
person, acquires beneficial ownership of more than 30% of the voting securities
of the Company; (ii) Holdings shall at any time cease to own 100% of the
outstanding capital stock of the Company; or (iii) after the consummation of any
initial public offering of the common stock of Holdings, (x) MDC, Fenway and
Dartford beneficially own in the aggregate a lesser percentage of the voting
securities of the Company than any other person, including a "group" within the
meaning of Sections 13(d) and 14(d) (2) of the Exchange Act which includes such
person, (y) there is a change in composition of a majority of the Board of
Directors of the Company, (z) any person (other than MDC, Fenway or Dartford),
including a "group" within the meaning of Sections 13(d) and 14(d) (2) of the
Exchange Act which includes such person, acquires beneficial ownership of more
than 25% of the voting securities of the Company. The change of control
provisions contained in the Indentures differ from those contained in the Senior
Credit Facilities with respect to those changes in percentage ownership
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and the composition of the Board of Directors that trigger such provisions. See
"Description of Notes-- Change of Control."
The Senior Credit Facilities also contain provisions that prohibit any
modification of the Indentures in any manner adverse to the banks, financial
institutions and other entities under the Senior Credit Facilities (the
"Lenders") and that limit the Company's ability to refinance the Notes without
the consent of such Lenders.
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DESCRIPTION OF NOTES
GENERAL
The Series A Notes were issued under an indenture dated as of February 10,
1997 (the "Series A Indenture") between the Company and Wilmington Trust
Company, as Trustee (the "Trustee"). The Series C Notes were issued under an
indenture dated as of July 1, 1997 between the Company and the Trustee (the
"Series C Indenture"). The terms of the Series A Indenture and the Series C
Indenture are in all material respects identical. The Old Notes and the New
Notes shall be collectively referred to as the "Notes," and the Series A
Indenture and the Series C Indenture shall be collectively referred to as the
"Indentures." The terms and conditions of the Notes include those stated in the
Indentures and those made part of the Indentures by reference to the Trust
Indenture Act of 1939 as in effect on the date of the Indentures. The following
statements are summaries of the provisions of the Notes and the Indentures and
do not purport to be complete. Such summaries make use of certain terms defined
in the Indentures and are qualified in their entirety by express reference to
the Indentures. The definitions of certain capitalized terms used in the
following summary are set forth below under "-- Certain Definitions." Copies of
the Indentures are filed as exhibits to the Registration Statement of which this
Prospectus is a part.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, The City of 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. Any Old
Notes that remain outstanding after the completion of the Exchange Offer,
together with the New Notes issued in connection with the Exchange Offer, will
be treated as a single class of securities under the Indenture. See "The
Exchange Offer" and "Old Notes Exchange and Registration Rights Agreement."
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 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.
TERMS OF NOTES
The Notes are unsecured senior subordinated obligations of the Company,
limited to $200.0 million aggregate principal amount, and will mature on
February 15, 2007. Each 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
semi-annually on February 15 and August 15 of each year commencing August 15,
1997 to holders of record at the close of business on the February 1 or August 1
immediately preceding the interest payment date.
OPTIONAL REDEMPTION
Except as set forth below, the Notes are not redeemable at the option of the
Company prior to February 15, 2002. 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
the registered address of each holder of Notes to be redeemed, 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 February 15 of the
years set forth below:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- ---------------------------------- ------------------
<S> <C>
2002.............................. 104.9375%
2003.............................. 103.2917%
2004.............................. 101.6458%
2005 and thereafter............... 100.0000%
</TABLE>
In addition, at any time and from time to time prior to February 15, 2000,
the Company may redeem up to $70.0 million of the aggregate principal amount of
Notes with the cash proceeds of one or more Equity Offerings received by, or
invested in, the Company at a redemption price (expressed as a percentage of
principal amount) of 109.875%, 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 $130.0 million of the aggregate principal
amount of the Notes remain outstanding after each such redemption.
At any time on or prior to February 15, 2002, 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 February 15, 2002 (such redemption price being described under "--Optional
Redemption") plus (2) all required interest payments due on such Note through
February 15, 2002, computed using a discount rate equal to the Treasury Rate
plus 50 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 February 15, 2002; provided, however, that if
the period from the Redemption Date to February 15, 2002 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.
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
The payment of Indebtedness evidenced by, and all other obligations in
respect of, the Notes is subordinated in right of payment, as set forth in the
Indentures, to the prior payment in full in cash or Cash Equivalents 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
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described herein. At March 31, 1997, on a pro forma basis after giving effect to
the LC Acquisition, the Company would have had $86.0 million of Senior
Indebtedness outstanding (excluding unused revolving credit commitments of $14.0
million under the Senior Credit Agreement). Although the Indentures contain
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."
"Senior Indebtedness" means the principal of, premium (if any), and interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization of the Company regardless of whether
post-filing interest is allowed in such proceeding) on, and fees and other
amounts owing in respect of, the Bank Indebtedness and all other Indebtedness of
the Company, whether outstanding on the Issue Date or thereafter issued, 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 (i) any obligation of the
Company to any Subsidiary, (ii) any liability for Federal, state, foreign, local
or other taxes owed or owing by the Company, (iii) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities), (iv)
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 or (v) any Capital Stock.
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 Indentures 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 expressly subordinated in right of
payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not
deemed to be subordinate or junior to Secured Indebtedness merely because it is
unsecured.
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 Indentures 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 expressly subordinated in right of
payment to Senior Subordinated Indebtedness. 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, or
liquidated damages with respect to, or make any payment on account of any other
obligations with respect to, 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 in cash or Cash Equivalents 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 in cash or Cash Equivalents. However, the
Company may pay any such amounts without regard to the foregoing if the Company
and the Trustee receive written notice approving such payment from the
Representative of the Designated Senior Indebtedness with respect to which
either of the events set forth in clause (i) or (ii) of the immediately
preceding sentence has occurred and is continuing. During the continuance of any
default (other than a default described in clause (i) or (ii) of the second
preceding sentence) with respect to any Designated Senior Indebtedness pursuant
to which the maturity thereof may be accelerated immediately without further
notice (except
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such notice as may be required to effect such acceleration) or the expiration of
any applicable grace periods, the Company may not pay any amounts in respect of
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 in cash or
Cash Equivalents). 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 in cash or Cash
Equivalents 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 in cash or Cash Equivalents, any payment or distribution to which holders
would be entitled but for the subordination provisions of the Indentures 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 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 Indentures otherwise permit payment at that time.
By reason of such subordination provisions contained in the Indentures, 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.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each holder of the Notes 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 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) prior to the first public offering of Voting Stock of the Company,
Holdings or MBW LLC, as the case may be, the Permitted Holders cease to be
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of majority voting power of the
Voting Stock of the Company, whether as a result of issuance of securities
of the Company, Holdings or MBW LLC, as the case may be, any merger,
consolidation, liquidation or dissolution of the Company, Holdings or MBW
LLC, as the case may be, any direct or indirect transfer of securities
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by any Permitted Holder or otherwise (for purposes of this clause (i) and
clause (ii) below, the Permitted Holders will be deemed to beneficially own
any Voting Stock of a Person (the "specified corporation") held by any other
Person (the "parent corporation") so long as the Permitted Holders
beneficially own, directly or indirectly, a majority of the voting power of
the Voting Stock of the parent corporation);
(ii) following the first public offering of Voting Stock of the Company,
Holdings or MBW LLC, as the case may be, any "person" (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act), other than one or more
Permitted Holders, is or becomes the beneficial owner (as defined in clause
(i) above, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 35% of the total voting power of
the Voting Stock of the Company, Holdings or MBW LLC, as the case may be;
provided that the Permitted Holders beneficially own (as defined in clause
(i) above), directly or indirectly, in the aggregate a lesser percentage of
the total voting power of the Voting Stock of the Company, Holdings or MBW
LLC, as the case may be, than such other person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of the Company, Holdings or
MBW LLC, as the case may be, (for purposes of this clause (ii), such other
person shall be deemed to beneficially own any Voting Stock of a specified
corporation held by a parent corporation, if such other person "beneficially
owns" (as defined in this clause (ii)), directly or indirectly, more than
35% of the voting power of the Voting Stock of such parent corporation and
the Permitted Holders "beneficially own" (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the voting
power of the Voting Stock of such parent corporation and do not have the
right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of such parent
corporation); or
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved by a
vote of a majority of the directors of the Company then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office.
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 of record of the Notes with a copy to the Trustee stating: (i) that a
Change of Control has occurred and that such holder has the right to require the
Company to purchase such holder's 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); (ii) the
circumstances and relevant facts and financial information concerning such
Change of Control; (iii) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and (iv) the
procedures determined by the Company, consistent with the Indentures, 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 Indentures, the Company will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described in the Indentures by virtue thereof.
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The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the Senior Credit Agreement. The change
of control provisions contained in the Senior Credit Facilities differ from
those contained in the Indentures with respect to those changes in percentage
ownership and the composition of the Board of Directors that will trigger an
event of default under such provisions. See "Description of Senior Credit
Facilities." Future Senior Indebtedness of the Company and its Subsidiaries may
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 Senior Credit Agreement
generally prohibit the Company's prepayment of the 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 or waivers, 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 Indentures.
CERTAIN COVENANTS
The Indentures contain certain covenants including, among others, the
following:
LIMITATION ON INDEBTEDNESS. (a) The Company shall not, and shall not permit
any of its Subsidiaries to, Incur any Indebtedness; provided, however, that the
Company and any of its Subsidiaries may Incur Indebtedness if on the date
thereof the Consolidated Coverage Ratio would be greater than 2.00:1.00.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Subsidiaries may Incur the following Indebtedness: (i) Bank Indebtedness
provided that the aggregate principal amount of Indebtedness Incurred pursuant
to this clause (i) does not exceed an amount outstanding at any time equal to
$60.0 million less the aggregate amount of permanent reductions of commitments
to extend credit thereunder and repayments of principal thereof (without
duplication of repayments required as a result of such reductions of
commitments); (ii) Indebtedness (A) of the Company to any Wholly-Owned
Subsidiary and (B) of any Subsidiary to the Company or any Wholly-Owned
Subsidiary; (iii) Indebtedness represented by the Notes, any Indebtedness (other
than the Indebtedness described in clauses (i)-(ii) above) outstanding on the
date of the Indentures and any Refinancing Indebtedness Incurred in respect of
any Indebtedness described in this clause (iii) or this paragraph (b); (iv)
Indebtedness represented by the Note Guarantees and Guarantees of Indebtedness
Incurred pursuant to clause (i) above; (v) Indebtedness under Currency
Agreements and Interest Rate Agreements which are entered into for bona fide
hedging purposes of the Company or its 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 Subsidiaries Incurred without
violation of the Indentures or to business transactions of the Company or its
Subsidiaries on customary terms entered into in the ordinary course of business;
(vi) Indebtedness of the Company attributable to Capitalized Lease Obligations,
or Incurred to finance the acquisition, construction or improvement of fixed or
capital assets, or constituting Attributable Indebtedness in respect of
Sale/Leaseback Transactions, in an aggregate principal amount at any one time
outstanding not in excess of $5.0 million; and (vii) Indebtedness of the Company
or any of its Subsidiaries (which may comprise Bank Indebtedness) in an
aggregate principal amount at any time outstanding not in excess of $10.0
million.
(c) Notwithstanding any other provision of this covenant, the Company shall
not Incur any Indebtedness (i) pursuant to paragraph (b) above if the proceeds
thereof are used, directly or indirectly, to repay, prepay, redeem, defease,
retire, refund or refinance any Subordinated Obligations unless such
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Indebtedness shall be subordinated to the Notes to at least the same extent as
such Subordinated Obligations or (ii) pursuant to paragraph (a) or (b) if such
Indebtedness is subordinate or junior in ranking in any respect to any Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is
expressly subordinated in right of payment to Senior Subordinated Indebtedness.
(d) 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.
LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not
permit any Subsidiary, 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) except (A) dividends or distributions payable in its Capital Stock
(other than Disqualified Stock) and (B) dividends or distributions payable to
the Company or another Subsidiary (and, if such Subsidiary is not a Wholly-Owned
Subsidiary, to its other stockholders on a PRO RATA basis), (ii) purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company
or any Subsidiary held by Persons other than the Company or another Subsidiary,
(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 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 as a "Restricted Payment"), if
at the time the Company or such Subsidiary makes such Restricted Payment: (1) a
Default shall have occurred and be continuing (or would result therefrom); or
(2) the Company could not Incur at least 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 (the amount so expended, if other than in cash, to be determined in
good faith by the Board of Directors, whose determination shall be conclusive
and evidenced by a resolution of the Board of Directors) 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
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 Cash Proceeds received by the Company from the issue or
sale of its Capital Stock (other than Disqualified Stock) or other cash
contributions to its capital subsequent to the Issue Date (other than an
issuance or sale to a Subsidiary of the Company or an employee stock ownership
plan or other trust established by the Company or any of its Subsidiaries); (C)
aggregate Net Cash Proceeds from the issue or sale of its Capital Stock to an
employee stock ownership plan or similar trust, provided, however, that if such
plan or trust Incurs any Indebtedness to or Guaranteed by the Company to finance
the acquisition of such Capital Stock, such aggregate amount shall be limited to
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; and (D) the amount
by which Indebtedness of the Company or its Subsidiaries is reduced on the
Company's balance sheet upon the conversion or exchange (other than by a
Subsidiary) subsequent to the Issue Date of any Indebtedness of the Company or
its Subsidiaries convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any cash, or other
property, distributed by the Company or any Subsidiary upon such conversion or
exchange).
(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
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than Capital Stock issued or sold to a Subsidiary or an employee stock ownership
plan or other trust established by the Company or any of its Subsidiaries);
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) payment of dividends or other distributions by the
Company for the purposes set forth in clauses (A) through (C) below; provided,
however, that any such dividend or distribution described in clauses (A) and (B)
will be excluded in the calculation of the amount of Restricted Payments and any
such dividend or distribution described in clause (C) will be included in the
calculation of the amount of Restricted Payments: (A) in amounts equal to the
amounts required for Holdings and MBW LLC to pay franchise taxes and other fees
required to maintain its legal existence and provide for audit, accounting,
legal and other operating costs of up to $500,000 per fiscal year; (B) in
amounts equal to amounts required for Holdings and MBW LLC to pay Federal, state
and local income taxes to the extent such income taxes are attributable to the
income of the Company and its Subsidiaries; and (C) in amounts equal to amounts
expended by the Company, Holdings or MBW LLC to repurchase Capital Stock of the
Company, Holdings or MBW LLC owned by employees (including former employees) of
the Company or its Subsidiaries or their assigns, estates and heirs; provided
that the aggregate amount paid, loaned or advanced pursuant to this clause (C)
shall not, in the aggregate, exceed the sum of $3.0 million plus any amounts
contributed by MBW LLC or Holdings to the Company as a result of resales of such
repurchased shares of Capital Stock; or (vi) any repurchase of equity interest
deemed to occur upon exercise of stock options if such equity interests
represent a portion of the exercise price of such options.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM SUBSIDIARIES. The Company
shall not, and shall not permit any of its Subsidiaries to, create or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any such 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 on the Issue Date,
including those arising under the Senior Credit Documents; (B) any encumbrance
or restriction with respect to a Subsidiary pursuant to an agreement relating to
any Indebtedness Incurred by a Subsidiary prior to the date on which such
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 Subsidiary was acquired by the Company); (C)
any encumbrance or restriction with respect to a Subsidiary pursuant to an
agreement effecting a refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clauses (A) or (B) or this clause (C) or contained in
any amendment, supplement or modification (including an amendment and
restatement) to an agreement referred to in clauses (A) or (B) or this clause
(C); provided, however, that the encumbrances and restrictions contained in any
such refinancing agreement or amendment taken as a whole are no less favorable
to the holders of the Notes in any material respect than encumbrances and
restrictions contained in such agreements; (D) in the case of clause (iii), any
encumbrance or restriction (1) that restricts in a customary manner the
subletting, assignment or transfer of any property or asset that is subject to a
lease, license, or similar contract, (2) by virtue of any transfer of, agreement
to transfer, option or right with respect to, or Lien on, any
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property or assets of the Company or any Subsidiary not otherwise prohibited by
the Indentures, or (3) contained in security agreements securing Indebtedness of
a Subsidiary to the extent such encumbrance or restrictions restrict the
transfer of the property subject to such security agreements; (E) any such
restriction imposed by applicable law; (F) any restriction with respect to a
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
Subsidiary pending the closing of such sale or disposition; and (G) purchase
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired.
LIMITATION ON SALES OF ASSETS. (a) The Company shall not, and shall not
permit any Subsidiary to, make any Asset Disposition unless (i) the Company or
such Subsidiary receives consideration (including by way of relief from, or by
any other Person assuming sole responsibility for, any liabilities, contingent
or otherwise) at the time of such Asset Disposition at least equal to the fair
market value of the shares and assets subject to such Asset Disposition, (ii) at
least 85% of the consideration thereof received by the Company or such
Subsidiary is in the form of cash and (iii) an amount equal to 100% of the Net
Available Cash from such Asset Disposition is applied by the Company (or such
Subsidiary, as the case may be) (A) first, to the extent the Company elects (or
is required by the terms of any Senior Indebtedness or Indebtedness (other than
Preferred Stock) of a Wholly-Owned Subsidiary), to prepay, repay or purchase
Senior Indebtedness or such Indebtedness (other than Preferred Stock) of a
Wholly-Owned Subsidiary (in each case other than Indebtedness owed to the
Company or an Affiliate of the Company) within one year after the later of the
date of such Asset Disposition or the receipt of such Net Available Cash; (B)
second, to the extent of the balance of Net Available Cash after application in
accordance with clause (A), to the extent the Company or such Subsidiary elects,
to reinvest in Additional Assets (including by means of an Investment in
Additional Assets by a Subsidiary with Net Available Cash received by the
Company or another Subsidiary) within one year after the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (C) third, 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 pursuant
and subject to the conditions of the Indentures to the Noteholders at a purchase
price of 100% of the principal amount thereof plus accrued and unpaid interest
to the purchase date; 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
(x) acquire Additional Assets (other than Indebtedness and Capital Stock) or (y)
prepay, repay or purchase Indebtedness of the Company (other than Indebtedness
owed to an Affiliate of the Company and other than Disqualified Stock of the
Company) or Indebtedness of any Subsidiary (other than Indebtedness owed to the
Company or an Affiliate of the Company), in each case described in this clause
(D) within one year from the receipt of such Net Available Cash or, if the
Company has made an Offer pursuant to clause (C), six months from the date such
Offer is consummated; provided, however, that, in connection with any
prepayment, repayment or purchase of Indebtedness pursuant to clause (A), (C) or
(D) above, the Company or such 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 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 $1.0
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 $10.0 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 of Indebtedness (other than Disqualified Stock) of the
Company or any Subsidiary and the release of the Company or such Subsidiary from
all liability on such Indebtedness in connection with such Asset
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Disposition and (y) securities received by the Company or any Subsidiary of the
Company from the transferee that are promptly converted by the Company or such
Subsidiary into cash.
(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 interest to the purchase date in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in the Indentures. 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
Indentures. 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 Indentures by virtue thereof.
LIMITATION ON AFFILIATE TRANSACTIONS. (a) The Company will not, and will
not permit any Subsidiary to, directly or indirectly, enter into or conduct any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless: (i) the terms of such Affiliate Transaction are no less
favorable to the Company or such 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 $1.0 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 $5.0 million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Affiliate
Transaction is fair to the Company or such Subsidiary, as the case may be, from
a financial point of view.
(b) The provisions of the foregoing paragraph (a) will not prohibit (i) any
Restricted Payment permitted to be paid pursuant to the covenant described under
"--Limitation on Restricted Payments" (and in the case of Permitted Investments,
only those described in clauses (v), (vi) and (ix) of the definition of
Permitted Investments), (ii) the performance of the Company's or Subsidiary's
obligations under any employment contract, collective bargaining agreement,
employee benefit plan, related trust agreement or any other similar arrangement
heretofore or hereafter entered into in the ordinary course of business, (iii)
payment of compensation to, and indemnity provided on behalf of, employees,
officers, directors or consultants (excluding the Management Services Agreement)
in the ordinary course of business, (iv) maintenance in the ordinary course of
business of benefit programs or arrangements for employees, officers or
directors, including vacation plans, health and life insurance plans, deferred
compensation plans, and retirement or savings plans and similar plans, (v) any
transaction between the Company and a Wholly-Owned Subsidiary or between
Wholly-Owned Subsidiaries or (vi) the payment of certain fees under the
Management Services Agreement as in effect on the Issue Date.
LIMITATION ON SALE OF SUBSIDIARY CAPITAL STOCK. The Company (i) will not,
and will not permit any Subsidiary to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Subsidiary to any Person (other
than to the Company or a Wholly-Owned Subsidiary) and (ii) will not permit any
Subsidiary to issue any of its Capital Stock (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or a Wholly-Owned Subsidiary; provided, however, that
the foregoing shall not prohibit such conveyance, sale, lease or other
disposition of all the Capital Stock of a Subsidiary if the net cash proceeds
from such transfer,
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conveyance, sale, lease, other disposition or issuance are applied in accordance
with the covenant described above under "--Limitation on Sales of Assets."
SEC REPORTS. Notwithstanding that the Company may not be required to be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the Commission, and within 15 days after such
reports are filed, provide the Trustee and the holders (at their addresses as
set forth in the register of Notes) with the annual reports and the information,
documents and other reports which are otherwise required pursuant to Section 13
and 15(d) of the Exchange Act. Such requirements may also be satisfied, for the
Series A Notes and the Series C Notes, prior to April 11, 1997 and August 30,
1997, respectively, with the filing with the Commission of a registration
statement under the Securities Act that contains the foregoing information
(including financial statements) and by providing copies thereof to the Trustee
and the holders. In addition, following the registration of the common stock of
the Company pursuant to Section 12(b) or 12(g) of the Exchange Act, the Company
shall furnish to the Trustee and the holders, promptly upon their becoming
available, copies of the Company's annual report to stockholders and any other
information provided by the Company to its public stockholders generally.
FUTURE NOTE GUARANTORS. The Company will cause each Subsidiary which Incurs
Indebtedness or which is a guarantor of Indebtedness Incurred pursuant to clause
(b)(i) of the covenant described under "--Limitation on Indebtedness" to execute
and deliver to the Trustee a Note Guarantee pursuant to which such Subsidiary
will Guarantee, jointly and severally, to the holders and the Trustee, subject
to subordination provisions substantially the same as those described above, the
full and prompt payment of the Notes in the Indentures. Each Note Guarantee will
be limited in amount to an amount not to exceed the maximum amount that can be
Guaranteed by that Subsidiary without rendering the Note Guarantee, as it
relates to such Subsidiary, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
LIMITATION ON LINES OF BUSINESS. The Company will not, and will not permit
any Subsidiary to, engage in any business, other than the food business and such
other business activities which are incidental or related thereto.
MERGER AND CONSOLIDATION. The Company shall not consolidate with or merge
with or into, or convey, transfer or lease all or substantially all its assets
to, any Person, unless: (i) the resulting, surviving or transferee Person (the
"Successor Company") is a corporation 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) expressly assumes, 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 Indentures;
(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 Subsidiary at the time of such
transaction), no 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"; (iv) immediately after giving
effect to such transaction, the Successor Company will have Consolidated Net
Worth in an amount which is not less than the Consolidated Net Worth of the
Company immediately prior to such transaction; and (v) the Company shall have
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such supplemental
indenture (if any) comply with the Indentures.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indentures, but the
predecessor, the Company, in the case of a lease of all or substantially all its
assets will not be released from the obligation to pay the principal of and
interest on the Notes.
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Notwithstanding the foregoing clauses (ii), (iii) and (iv), (1) any
Subsidiary of the Company may consolidate with, merge into or transfer all or
part of its properties and assets to the Company or another Wholly-Owned
Subsidiary of 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
An Event of Default is defined in the Indentures as (i) a default in any
payment of interest on any Note when due, continued for 30 days, (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,
(iii) the failure by the Company to comply with its obligations under "--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 Indentures, (vi) Indebtedness
of the Company or any 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
$5.0 million and such default shall not have been cured or such acceleration
rescinded within 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 $5.0 million (to the extent not
covered by insurance) is rendered against the 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) the failure of any Note Guarantee to be in
full force and effect (except as contemplated by the terms thereof) or the
denial or disaffirmation by any Note Guarantor of its obligations under the
Indentures or any Note Guarantee if 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 at least 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 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 Indentures 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 Indentures
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 Indentures 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
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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 Indentures 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 Indentures, 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 Indentures provide 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 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,
their status and what action the Company is taking or proposes to take in
respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indentures 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
Note affected, no amendment may, among other things, (i) reduce the amount of
Notes whose holders must consent to an amendment, (ii) reduce the rate of or
extend the time for payment of interest on any 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 Note or change the time at which any
Note may be redeemed as described under "Optional Redemption" above, (v) make
any Note payable in money other than that stated in the Note, (vi) make any
change to the subordination provisions of the Indentures that adversely affects
the rights of any holder of the Notes, (vii) impair the right of any holder to
receive payment of principal of and interest 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 (viii) 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
Indentures to cure any ambiguity, omission, defect or inconsistency, to provide
for the assumption by a successor corporation of the obligations of the Company
under the Indentures, 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 Guarantees with respect to the Notes, to secure the Notes, to
add to the covenants of the Company for the benefit of the Noteholders 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
Indentures under the Trust Indentures Act. However, no amendment may be made to
the subordination provisions of the Indentures 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.
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The consent of the holders is not necessary under the Indentures 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 an 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 Indentures ("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 Subsidiaries and the judgment default 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
Subsidiaries), or (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
Wilmington Trust Company is to be the Trustee under the Indentures and has
been appointed by the Company as Registrar and Paying Agent with regard to the
Notes.
GOVERNING LAW
The Indentures provide that they 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) to be used by the Company or a Subsidiary in a
Related Business; (ii) the Capital Stock of a Person that becomes a Subsidiary
as a result of the acquisition of such Capital Stock by the Company or another
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Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Subsidiary; provided, however, that, in the case
of clauses (ii) and (iii), such Subsidiary is primarily engaged in a Related
Business.
"Affiliate" of any specified Person means (i) any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any Person who is a director or
officer (a) of such Person, (b) of any Subsidiary of such Person or (c) of any
Person described in clause (i) above. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the covenants described under "Certain Covenants--Limitation on
Sales of Assets and Subsidiary Stock", "-- Limitation on Restricted Payments"
and "--Limitation on Affiliate Transactions" only, "Affiliate" shall also mean
any beneficial owner of shares representing 5% or more of the total voting power
of the Voting Stock (on a fully diluted basis) of the Company or of rights or
warrants to purchase such Voting Stock (whether or not currently exercisable)
and any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.
"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
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 Subsidiaries (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition by a
Subsidiary to the Company or a Wholly-Owned Subsidiary or by the Company or a
Subsidiary to a Wholly-Owned Subsidiary, (ii) a disposition of inventory or
Temporary Cash Investments in the ordinary course of business, (iii) a
disposition of obsolete equipment or equipment that is no longer useful in the
conduct of the business of the Company and its Subsidiaries and that is disposed
of in each case in the ordinary course of business, (iv) the sale of other
assets so long as the fair market value of the assets disposed of pursuant to
this clause (iv) does not exceed $1.0 million in the aggregate in any fiscal
year and $5.0 million in the aggregate prior to February 15, 2007, (v) for the
purposes of the covenant described under "Certain Covenants--Limitation on Sales
of Assets" only, a disposition subject to the covenant described under "--
Limitation on Restricted Payments" and (vi) the disposition of all or
substantially all of the assets of the Company in the manner permitted pursuant
to the provisions described under the caption "--Merger and Consolidation" or
any disposition that constitutes a Change of Control pursuant to the Indentures.
"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 or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to Preferred Stock multiplied by the
amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in respect of
the Senior Credit Documents and any Indebtedness that is incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) Indebtedness under such Senior Credit Documents
including Indebtedness that refinances such Indebtedness, as amended from time
to time, 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 postfiling
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interest is allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in respect
thereof (including, without limitation, cash collateralization of letters of
credit).
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"Capital Stock" 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.
"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.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States Government, or any agency or
instrumentality thereof, having maturities of not more than one year from the
date of acquisition; (ii) marketable general obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition thereof, having a credit
rating of "A" or better from either Standard & Poor's Ratings Group or Moody's
Investors Service, Inc.; (iii) certificates of deposit, time deposits,
eurodollar time deposits, overnight bank deposits or bankers' acceptances having
maturities of not more than one year from the date of acquisition thereof issued
by any domestic commercial bank the long-term debt of which is rated at the time
of acquisition thereof at least "A" or the equivalent thereof by Standard &
Poor's Ratings Group, or "A" or the equivalent thereof by Moody's Investors
Service, Inc., and having capital and surplus in excess of $500.0 million; (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (i), (ii) and (iii) entered into
with any bank meeting the qualifications specified in clause (iii) above; (v)
commercial paper rated at the time of acquisition thereof at least "A-2" or the
equivalent thereof by Standard & Poor's Ratings Group or "P-2" or the equivalent
thereof 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 investments, and in either case maturing within 270
days after the date of acquisition thereof; and (vi) interests in any investment
company which invests solely in instruments of the type specified in clauses (i)
through (v) above.
"Certificated Securities" means registered Notes issued in certificated
form.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Aurora Foods Inc., a Delaware corporation (formerly MBW
Foods Inc.).
"Consolidated Cash Flow" for any period means the Consolidated Net Income
for such period, plus, to the extent deducted in calculating such Consolidated
Net Income, (i) income tax expense, (ii) Consolidated Interest Expense, (iii)
depreciation expense, (iv) amortization expense, in each case for such period,
(v) other non-cash charges reducing Consolidated Net Income (excluding any such
non-cash charge to the extent that it represents an accrual of or reserve for
cash charges in any future period or amortization of a prepaid cash expense that
was paid in a prior period), and (vi) for the period ending on the first
anniversary of the Issue Date only, non-recurring relocation and start-up
expenses not in excess of $3 million, in each case for such period, and minus,
to the extent not already deducted in
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calculating Consolidated Net Income, (i) the aggregate amount of "earnout"
payments paid in cash during such period in connection with acquisitions
previously made by the Company and (ii) non-cash items increasing Consolidated
Net Income for such period.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated Cash Flow for the period of
the most recent four consecutive fiscal quarters ending prior to the date of
such determination to (ii) Consolidated Interest Expense for such four fiscal
quarters; provided, however, that (1) if the Company or any of its Subsidiaries
has Incurred any Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to such Indebtedness as
if such Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period the Company or any of its Subsidiaries shall have made any Asset
Disposition, Consolidated Cash Flow for such period shall be reduced by an
amount equal to the Consolidated Cash Flow (if positive) attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest Expense
attributable to any Indebtedness of the Company or any of its Subsidiaries
repaid, repurchased, defeased or otherwise discharged with respect to the
Company and its continuing Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Subsidiary of the
Company is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Subsidiary to the extent the Company
and its continuing Subsidiaries are no longer liable for such Indebtedness after
such sale), (3) if since the beginning of such period the Company or any of its
Subsidiaries (by merger or otherwise) shall have made an Investment in any
Subsidiary of the Company (or any Person which becomes a Subsidiary of the
Company) or an acquisition of assets, including any Investment in a 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 and
including the pro forma expenses and cost reductions calculated on a basis
consistent with Regulation S-X of the Securities Act) as if such Investment or
acquisition occurred on the first day of such period and (4) if since the
beginning of such period any Person (that subsequently became a Subsidiary of
the Company or was merged with or into the Company or any Subsidiary of the
Company since the beginning of such period) shall have made any Asset
Disposition or any Investment or acquisition of assets that would have required
an adjustment pursuant to clause (2) or (3) above if made by the Company or a
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 Subsidiaries, plus, to the extent not included in
such interest expense, (i) interest expense
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attributable to Capitalized Lease Obligations and imputed interest with respect
to Attributable Indebtedness, (ii) amortization of debt discount and debt
issuance cost (other than those debt discounts and debt issuance costs incurred
on the MBW Acquisition Closing Date and the Issue Date), (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 Subsidiary
under any Guarantee of Indebtedness or other obligation of any other Person,
(vii) net costs associated with Currency Agreements and Interest Rate Agreements
(including amortization of fees), (viii) the product of (A) all Preferred Stock
dividends in respect of all Preferred Stock of Subsidiaries of the Company and
Disqualified Stock of the Company held by Persons other than the Company or a
Wholly-Owned Subsidiary multiplied by (B) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined Federal,
state and local statutory tax rate of the Company, expressed as a decimal, in
each case, determined on a consolidated basis in accordance with GAAP and (ix)
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.
"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 if such Person is not a Subsidiary, except that (A) subject to the
limitations contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to a
Subsidiary, to the limitations contained in clause (iii) below) and (B) the
Company's equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income;(ii) any net income (loss)
of any person acquired by the Company or a Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition; (iii) any net
income (loss) of any Subsidiary if such Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such Subsidiary, directly or indirectly, to the Company, except
that (A) subject to the limitations contained in (iv) below, the Company's
equity in the net income of any such Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash that
could have been distributed by such Subsidiary during such period to the Company
or another Subsidiary as a dividend (subject, in the case of a dividend that
could have been made to another Subsidiary, to the limitation contained in this
clause) and (B) the Company's equity in a net loss of any such Subsidiary for
such period shall be included in determining such Consolidated Net Income; (iv)
any gain (but not loss) realized upon the sale or other disposition of any
assets of the Company or its consolidated 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; (v) any extraordinary gain
or loss; and (vi) the cumulative effect of a change in accounting principles.
"Consolidated Net Worth" means the total of the amounts shown on the balance
sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending prior to the taking of any action for the
purpose of which the determination is being made as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"CSI" means Chase Securities Inc.
"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.
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"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 and (ii)
any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $5.0
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the Indentures.
"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 or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to 123 days after the Stated
Maturity of the Notes.
"Equity Investors" means Dartford Partnership L.L.C, certain affiliates of
McCown De Leeuw & Co., Fenway Partners Capital Fund, L.P. and the other
investors holding equity interests in MBW L.L.C. on the issue date of the Series
A Notes.
"Equity Offering" means any public or private sales of equity securities
(excluding Disqualified Stock) of the Company, Holdings or MBW LLC.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the Prospectus and the accompanying Letter of
Transmittal.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession.
All ratios and computations based on GAAP contained in the Indentures shall be
computed in conformity with GAAP as in effect on the Issue Date.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of any other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Holdings" means Aurora Holdings Inc., a Delaware corporation.
"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 Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary.
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"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (other than contingent or "earn-out" payment obligations
and 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, provided, however, that the amount of Indebtedness of
such Person shall be the lesser of (A) the fair market value of such asset at
such date of determination and (B) the amount of such Indebtedness of such other
Persons, (vii) all Indebtedness of other Persons to the extent Guaranteed by
such Person, (viii) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock or, with
respect to any Subsidiary of the Company, any Preferred Stock (but excluding, in
each case, any accrued dividends) and (ix) to the extent not otherwise included
in this definition, obligations of such Person under Currency Agreements and
Interest Rate Agreements. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above as such amount would be reflected on a balance sheet in
accordance with GAAP and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations 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 receivable on the balance sheet of such Person) or other extension
of credit (including by way of Guarantee or similar arrangement, but excluding
any debt or extension of credit represented by a bank deposit other than a time
deposit) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition of Capital Stock, Indebtedness or
other similar instruments issued by such Person.
"Issue Date" means the date on which the Old Notes were originally issued.
"Letter of Transmittal" means the Letter of Transmittal accompanying this
Prospectus.
"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).
"Management Services Agreement" means (i) the Management Services Agreement
dated as of December 31, 1996 between the Company and Dartford Partnership
L.L.C. (and its permitted successors and assigns thereunder), (ii) the Advisory
Services Agreement dated as of December 31, 1996 between the Company and MDC
Management Company III, L.P. (and its permitted successors and assigns
thereunder) and (iii) the Services Agreement dated as of December 31, 1996
between the
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Company and Fenway Partners Capital Fund, L.P. (and its permitted successors and
assigns thereunder), in each case without giving effect to any amendment or
other modification thereto.
"MBW Acquisition Closing Date" means December 31, 1996.
"MBW LLC" means MBW Investors LLC, a Delaware limited liability company.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom, in each case net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such Asset Disposition,
(ii) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any Lien upon
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other payments
required to be made to any Person owning a beneficial interest in assets subject
to sale or minority interest holders in Subsidiaries or joint ventures as a
result of such Asset Disposition, (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 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 Subsidiary.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock
or Indebtedness, 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.
"New Notes" means the Company's 9 7/8% Series B Subordinated Notes due 2007.
"Note Guarantee" means any guarantee which may from time to time be executed
and delivered by a Subsidiary of the Company pursuant to the provisions of the
covenant described under "Certain Covenants --Future Note Guarantors." Each such
Note Guarantee will have subordination provisions equivalent to those contained
in the Indentures.
"Note Guarantor" means any Subsidiary that has issued a Note Guarantee.
"Noteholder" means the Person in whose name a Note is registered in the Note
register.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Old Notes" means the Company's Series A Notes and Series C Notes.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Permitted Holders" means the Equity Investors and their respective
Affiliates.
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"Permitted Investment" means (i) any Investment in a Subsidiary of the
Company or a Person which will, upon making such Investment, become a
Subsidiary; provided, however, that the primary business of such Subsidiary is a
Related Business; (ii) any Investment in another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Subsidiary of the Company; provided, however, that such Person's primary
business is a Related Business; (iii) any Investment in Temporary Cash
Investments; (iv) receivables owing to the Company or any of its Subsidiaries,
if created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (v) payroll, travel and
similar advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (vi) loans or advances to employees made in
the ordinary course of business of the Company or such 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 Subsidiaries
or in satisfaction of judgments or claims; (viii) Investments the payment for
which consists exclusively of equity securities (exclusive of Disqualified
Stock) of the Company; (ix) loans or advances to employees and directors to
purchase equity securities of the Company, Holdings or MBW LLC; provided that
the aggregate amount of such loans and advances shall not exceed $2.0 million at
any time outstanding; (x) any Investment in another Person to the extent such
Investment is received by the Company or any Subsidiary as consideration for
Asset Disposition effected in compliance with the covenant under "Limitations on
Sales of Assets"; (xi) prepayment and other credits to suppliers made in the
ordinary course of business consistent with the past practices of the Company
and its Subsidiaries; (xii) 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; and
(xiii) any Investment in another Person not to exceed in the aggregate $2.0
million at any one time outstanding (measured as of the date made and without
giving effect to subsequent changes in value).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision hereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"principal" of a Note means the principal of the Note plus the premium, if
any, payable on the note which is due or overdue or is to become due at the
relevant time.
"Prospectus" means this Prospectus.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) (collectively, "refinances," and "refinanced" shall have
a correlative meaning) any Indebtedness existing on the respective dates of the
Indentures or Incurred in compliance with the Indentures (including Indebtedness
of the Company that refinances Indebtedness of any Subsidiary and Indebtedness
of any Subsidiary that refinances Indebtedness of another Subsidiary) including
Indebtedness that refinances Refinancing Indebtedness, provided, however, that
(i) the Refinancing Indebtedness has a Stated Maturity no earlier than the
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 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 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
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refinanced (plus the amount of any premium required to be paid in connection
therewith and plus reasonable fees and expenses in connection therewith);
provided further that Refinancing Indebtedness shall not include Indebtedness of
a Subsidiary which refinances Indebtedness of the Company.
"Related Business" means the food business and such other business
activities which are incidental or related thereto.
"Representative" means any trustee, agent or representative (if any) of an
issue of Senior Indebtedness.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Subsidiary transfers such
property to a Person and the Company or a Subsidiary leases it from such Person.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Agreement" means the Credit Agreement dated as of July 1,
1997, among the Company, Holdings, the lenders parties thereto, and The Chase
Manhattan Bank, as administrative agent and Chase Securities Inc., as arranging
agent.
"Senior Credit Documents" means the collective reference to the Senior
Credit Agreement, the notes issued pursuant thereto and the Holdings Guaranty,
the Subsidiary Guaranty, the Security Agreement, the Pledge Agreement, the
Collateral Account Agreement and the Patent and Trademark Security Agreement
(each as defined in the Senior Credit Agreement) and each of the mortgages and
other security agreements, guarantees and other instruments and documents
executed and delivered pursuant to any of the foregoing or the Senior Credit
Agreement, in each case as amended, modified, renewed, refunded, replaced or
refinanced from time to time, including any agreement extending the maturity of,
refinancing, replacing or otherwise restructuring (including increasing the
amounts of available borrowing thereunder provided that such increase in
borrowing is permitted by the covenant described under the caption "--Limitation
on Indebtedness" or adding Subsidiaries of the Company as additional borrowers
or guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement whether by the same or any
other agent, lender or group of lenders.
"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.
"Series A Notes" means the Company's outstanding 9 7/8% Senior Subordinated
Notes due 2007.
"Series C Notes" means the Company's outstanding 9 7/8% Series C Senior
Subordinated Notes.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"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.
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"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary shall
refer to a Subsidiary of the Company.
"Temporary Cash Investments" means any of the following: (i) any Investment
in direct obligations of the United States of America or any agency thereof or
obligations Guaranteed by the United States of America or any agency thereof,
(ii) Investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America having capital, surplus and undivided profits
aggregating in excess of $250.0 million (or the foreign currency equivalent
thereof) and whose long-term debt, or whose parent holding company's long-term
debt, is rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act), (iii) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (i)
above entered into with a bank meeting the qualifications described in clause
(ii) above, (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.
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Trust indenture Act" means the Trust Indenture Act of 1939.
"Unsecured Indebtedness" means any Indebtedness of the Company not secured
by a Lien.
"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 Person means all classes of Capital Stock of such Person
then outstanding and normally entitled to vote in the election of directors or
managers.
"Wholly-Owned Subsidiary" means a Subsidiary of the Company, all 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
Except as set forth below, the New Notes will be represented by one
permanent global certificate in definitive, fully registered form (the "Global
Note"). The Global Note will be deposited with, or on behalf of, DTC and
registered in the name of Cede & Co., as nominee of DTC, or will remain in the
custody of the Trustee pursuant to the FAST Balance Certificate Agreement
between DTC and the Trustee.
DTC 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. DTC was created to hold securities for its
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participating organizations (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.
DTC's Participants include securities brokers and dealers (including the Initial
Purchaser), banks and trust companies, clearing corporations and certain other
organizations. Access to DTC'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. Holders who are not Participants may
beneficially own securities held by or on behalf of the Depository only through
Participants or Indirect Participants.
The Company expects that pursuant to procedures established by DTC (i) upon
deposit of the Global Note, DTC will credit the accounts of Participants
designated by the Exchange Agent with an interest in the Global Note and (ii)
ownership of the Notes will be shown on, and the transfer of ownership thereof
will be effected only through, records maintained by DTC (with respect to the
interest of Participants), the Participants and the Indirect Participants. The
laws of some states require that certain persons take physical delivery in
definitive form of securities that they own and that a security interest in
negotiable instruments can only be perfected by delivery of certificates
representing the instruments. Consequently, the ability to transfer Notes or to
pledge the Notes as collateral will be limited to such extent.
So long as DTC or its nominee is the registered owner of the Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the Notes represented by the Global Note for all purposes under the
Indentures. Except as provided below, owners of beneficial interests in the
Global Note will not be entitled to have Notes represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of Certificated Securities, and will not be considered the owners or
Holders thereof under the Indentures 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 Notes
represented by the Global Note to pledge or transfer such interest to persons or
entities that do not participate in DTC'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.
Accordingly, each holder owning a beneficial interest in the Global Note
must rely on the procedures of DTC and, if such holder is not a Participant or
an Indirect Participant, on the procedures of the Participant through which such
holder owns its interest, to exercise any rights of a holder of Notes under the
Indenturess or the Global Note. The Company understands that under existing
industry practice, in the event the Company requests any action of holders of
Notes or a holder that is an owner of a beneficial interest in the Global Note
desires to take any action that DTC, as the holder of such Global Note, is
entitled to take, DTC would authorize the Participants to take such action and
the Participant would authorize holders owning through such Participants to take
such action or would otherwise act upon the instruction of such holders. Neither
the Company nor the Trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of Notes by DTC,
or for maintaining, supervising or reviewing any records of DTC relating to such
Notes.
Payments with respect to the principal of, premium, if any, and interest on,
any Notes represented by the Global Note registered in the name of DTC or its
nominee on the applicable record date will be payable by the Trustee to or at
the direction of DTC or its nominee in its capacity as the registered holder of
the Global Note representing such Notes under the Indentures. Under the terms of
the Indentures, the Company and the Trustee may treat the persons in whose names
the 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 interest in the Global Note (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
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amount of beneficial interest in the Global Note as shown on the records of DTC.
Payments by the Participants and the Indirect Participants to the beneficial
owners of interests in the Global Note will be governed by standing instructions
and customary practice and will be the responsibility of the Participants or the
Indirect Participants and DTC.
CERTIFICATED SECURITIES
If (i) the Company notifies the Trustee in writing that DTC is no longer
willing or able to act as a depository or DTC ceases to be registered as a
clearing agency under the Exchange Act 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 Notes in
definitive form under the Indentures or (iii) upon the request of DTC or the
Trustee upon the occurrence and continuation of an Event of Default, then, upon
surrender by DTC of its Global Note, Certificated Securities will be issued to
each person that DTC identifies as the beneficial owner of the Notes represented
by the Global Note. 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 DTC or
any Participant or Indirect Participant in identifying the beneficial owners of
the related Notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from DTC for all purposes (including with
respect to the registration and delivery, and the respective principal amounts,
of the Notes to be issued).
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of White & Case, special tax counsel to the Company, the
following is a discussion of the material U.S. federal income tax consequences
relating to the purchase, ownership and disposition of the Notes. This
discussion is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury Regulations promulgated thereunder and
judicial and administrative interpretations thereof, all as in effect as of the
date hereof and all of which are subject to change (possibly on a retroactive
basis) or different interpretation. The opinion of White & Case, is not binding
on the Internal Revenue Service (the "Service") and there can be no assurance
that the Service will not challenge one or more of the tax consequences
described herein, and the Company has not obtained, nor does it intend to
obtain, a ruling from the Service with respect to the U.S. federal income tax
consequences of the Offering. This discussion does not purport to address all
aspects of U.S. federal income taxation that may be relevant to particular
holders in light of their personal circumstances, the U.S. federal income tax
consequences to certain types of holders subject to special treatment under the
Code (for example, life insurance companies, tax exempt organizations, financial
institutions, dealers in securities or currencies, persons holding Notes as a
part of a "hedging" or "conversion" or "integrated" transaction or a straddle,
or holders with a "functional currency" other than the U.S. dollar) or the
effect of any applicable state, local or foreign tax laws. Finally, this
discussion assumes that all Notes will be held as "capital assets" within the
meaning of Section 1221 of the Code. INVESTORS CONSIDERING THE PURCHASE OF NOTES
ARE URGED TO CONSULT THEIR OWN TAX ADVISOR TO DETERMINE THEIR PARTICULAR TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES UNDER
FEDERAL AND APPLICABLE STATE, LOCAL AND OTHER TAX LAWS.
PAYMENT OF INTEREST
The stated interest on the Notes will be includable in a U.S. Holder's gross
income as ordinary income for U.S. federal income tax purposes at the time it is
paid or accrued in accordance with the U.S. Holder's method of tax accounting.
The Notes will not have original issue discount. As used herein, a "U.S. Holder"
of a Note means a holder that is a citizen or resident of the United States or
any political subdivision thereof, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, an estate the income of which is subject to U.S. federal
income taxation regardless of its source or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and a U.S. fiduciary has the authority to control all substantial
decisions of the trust.
CONTINGENT PAYMENTS
As more fully described below in "Old Exchange and Registration Rights
Agreements," in the event of a Registration Default, the Company will be
required to pay additional amounts to a U.S. Holder of the Notes as liquidated
damages (the "Contingent Payments"). Under the Treasury Regulations regarding
contingent payment debt instruments, any payment subject to a remote or
incidental contingency (i.e., there is a remote likelihood that the payment will
be required or the potential amount of the payment is insignificant relative to
the remaining payments on the debt instrument) is not considered a contingent
payment and is ignored for purposes of computing original issue discount
accruals. The Company intends to take the position that the Contingent Payments
are subject to either a remote or incidental contingency. Accordingly, a U.S.
Holder of a Note should be required to report any Contingent Payments as
interest income for U.S. federal income tax purposes only at the time of any
such payment.
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EXCHANGE OFFER
The exchange of Old Notes for New Notes pursuant to the Exchange Offer
should not constitute a material modification of the terms of the Notes and,
therefore, such exchange should not constitute an exchange for U.S. federal
income tax purposes. Accordingly, such exchange should have no U.S. federal
income tax consequences to U.S. Holders of Notes and the holding period of the
New Notes will include the holding period of the Notes and the basis of the New
Notes will be the same as the basis of the Notes immediately before the
exchange.
PURCHASES OF NOTES AT OTHER THAN ORIGINAL ISSUE PRICE
The foregoing does not discuss special rules which may affect the treatment
of a U.S. Holder that acquires Notes other than at par, including those
provisions of the Code relating to the treatment of "market discount," and
"amortizable bond premium." Any such purchaser should consult its tax advisor as
to the consequences to him of the acquisition, ownership, and disposition of
Notes.
SALE OR REDEMPTION
A U.S. Holder of a Note who disposes of such Note in a taxable sale,
exchange, redemption or other disposition will recognize gain or loss equal to
the difference between (i) the amount of cash plus the fair market value of any
property received for such Note (other than cash or property received in payment
of accrued and unpaid interest) and (ii) the U.S. Holder's adjusted tax basis in
such Note. Such gain or loss will be capital gain or loss and will be long-term
if the Note has been held for a period of one year at the time of sale,
exchange, redemption or other disposition. Any portion of the amount realized on
the sale or other disposition of a Note that represents accrued but unpaid
interest will be treated as a payment of such interest. Under current law, net
long-term capital gains of individuals are taxed at lower rates than items of
ordinary income. The deductibility of capital losses is subject to limitations.
BACKUP WITHHOLDING
Under the Code, a U.S. Holder of Notes may be subject to "backup
withholding" at a 31% rate with respect to interest payments or gross proceeds
from the disposition of Notes. This withholding applies if the U.S. Holder (i)
fails to furnish to the payor the U.S. Holder's social security or other
taxpayer identification number ("TIN") within a reasonable time after the
request thereof, (ii) furnishes an incorrect TIN, (iii) is notified by the
Service that it has failed to report properly interest or dividends, or (iv)
fails, under certain circumstances, to provide a certified statement, signed
under penalty of perjury, that the TIN provided is its correct number and that
it is not subject to backup withholding. Any amount withheld from a payment to a
U.S. Holder under the backup withholding rules is allowable as a credit against
such U.S. Holder's federal income tax liability, provided that the required
information is furnished to the Service, and if backup withholding results in an
overpayment of taxes, a refund may be obtained from the Service. Corporations
and certain other entities described in the Code and Treasury Regulations are
exempt from such withholding if their exempt status is properly established.
U.S. Holders of Notes should consult their tax advisors as to their
qualifications for exemption from withholding and the procedure for obtaining
such exemption.
These backup withholding tax and information reporting rules currently are
under review by the U.S. Treasury Department and proposed U.S. Treasury
Regulations issued on April 15, 1996 would modify certain of such rules
generally with respect to payments made after December 31, 1997. Accordingly,
the application of such rules to the Notes could be changed.
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OLD NOTES EXCHANGE AND REGISTRATION RIGHTS AGREEMENTS
Pursuant to the Exchange and Registration Rights Agreements, the Company
agreed to (i) file with the Commission on or prior to 60 days after the relevant
issue date a registration statement on an appropriate form under the Securities
Act (the "Exchange Offer Registration Statement") relating to a registered
exchange offer (the "Exchange Offer") for the New Notes under the Securities Act
and (ii) use its best efforts to cause the Exchange Offer Registration Statement
to be declared effective under the Securities Act within 150 days after the
relevant issue date. As soon as practicable after the effectiveness of the
Exchange Offer Registration Statement, the Company will offer to the holders of
the Old Notes who are not prohibited by any law or policy of the Commission from
participating in the Exchange Offer the opportunity to exchange their Notes for
an issue of a new series of notes, identical in all material respects to the Old
Notes (except that the New Notes will not contain terms with respect to transfer
restrictions, registration rights and liquidated damages) that would be
registered under the Securities Act. The Company will keep the Exchange Offer
open for not less than 30 days (or longer, if required by law) after the date
notice of the Exchange Offer is mailed to the holders of the Old Notes. If (i)
applicable interpretations of the staff of the Commission do not permit the
Company to effect the Exchange Offer as contemplated thereby or (ii) for any
other reason the Exchange Offer is not consummated within 180 days after the
relevant issue date or (iii) any holder either (A) is not eligible to
participate in the Exchange Offer or (B) participates in the Exchange Offer and
does not receive freely transferrable New Notes in exchange for tendered Old
Notes, the Company will file with the Commission a shelf registration statement
(the "Shelf Registration Statement") to cover resales of Transfer Restricted
Securities by such holders who satisfy certain conditions relating to, among
other things, the provision of information in connection with the Shelf
Registration Statement. For purposes of the foregoing, "Transfer Restricted
Securities" means each Old Note until (i) the date on which such Note has been
exchanged for a freely transferable New Note in the Exchange Offer, (ii) the
date on which such Note has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or (iii) the
date on which such Note is distributed to the public pursuant to Rule 144 under
the Securities Act or is saleable pursuant to Rule 144(k) under the Securities
Act.
The Company will use its best efforts to have the Exchange Offer
Registration Statement and, if applicable, a Shelf Registration Statement (each
an "Exchange Registration Statement") declared effective by the Commission as
promptly as practicable after the filing thereof. Unless the Exchange Offer
would not be permitted by a policy of the Commission, the Company will commence
the Exchange Offer and will use its best efforts to consummate the Exchange
Offer as promptly as practicable, but in any event prior to 180 days after the
relevant issue date. If applicable, the Company will use its best efforts to
keep the Shelf Registration Statement effective for a period of three years
after the relevant issue date, subject to certain exceptions, including
suspending the effectiveness thereof for certain valid business reasons. If (i)
the applicable Exchange Registration Statement is not filed with the Commission
on or prior to 60 days after the relevant issue date, (ii) the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
is not declared effective within 150 days after the relevant issue date (or in
the case of a Shelf Registration Statement required to be filed in response to a
change in law or the applicable interpretations of Commission's staff, if later,
within 45 days after publication of the change in law or interpretation), (iii)
the Exchange Offer is not consummated on or prior to 180 days after the relevant
issue date, or (iv) the Shelf Registration Statement is filed and declared
effective within 150 days after the relevant issue date (or in the case of a
Shelf Registration Statement required to be filed in response to a change in law
or the applicable interpretations of Commission's staff, if later, within 45
days after publication of the change in law or interpretation), but shall
thereafter cease to be effective (at any time that the Company is obligated to
maintain the effectiveness thereof) without being succeeded within 60 days by an
additional Exchange Registration Statement filed and declared effective (each
such event referred to in clauses (i) through (iv), a "Registration Default"),
the Company will generally be obligated to pay liquidated damages to each holder
of Transfer Restricted Securities, during the period of such Exchange
Registration Default, in an amount
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equal to $0.192 per week per $1,000 principal amount of the Notes constituting
Transfer Restricted Securities held by such holder until the applicable Exchange
Registration Statement is filed or declared effective, the Exchange Offer is
consummated or the Shelf Registration Statement again becomes effective, as the
case may be; provided, however, no liquidated damages shall be payable for a
Registration Default under clause (iii) above if a Shelf Registration Statement
covering resales of the Transfer Restricted Securities for which the Exchange
Offer was intended shall have been declared effective. All accrued liquidated
damages shall be paid to holders in the same manner as interest payments on the
Notes on semi-annual payment dates which correspond to interest payment dates
for the Notes. Following the cure of all Registration Defaults, the accrual of
liquidated damages will cease.
The Exchange and Registration Rights Agreements also provide that the
Company (i) shall make available for a period of 90 days after the consummation
of the Exchange Offer a prospectus meeting the requirements of the Securities
Act to any broker-dealer for use in connection with any resale of any such New
Notes and (ii) shall pay all expenses incident to the Exchange Offer (including
the expenses of one counsel to the holders of the Notes) and will indemnify
certain holders of the Notes (including any broker-dealer) against certain
liabilities, including liabilities under the Securities Act. A broker-dealer
that delivers such a prospectus to purchasers in connection with such resales
will be subject to certain of the civil liability provisions under the
Securities Act, and will be bound by the provisions of the Exchange and
Registration Rights Agreements (including certain indemnification rights and
obligations).
Each holder of Old Notes that wishes to exchange such Notes for New Notes in
the Exchange Offer will be required to make certain representations, including
representations 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
Holdings 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 a 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 a 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.
Holders of the Old Notes will be required to make certain representations to
the Company (as described above) in order to participate in the Exchange Offer,
and will be required to deliver information to be used in connection with the
Shelf Registration Statement in order to have their Notes included in the Shelf
Registration Statement and benefit from the provisions regarding liquidated
damages set forth in the preceding paragraphs. A holder who sells Old Notes
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Exchange and Registration Rights Agreements which
are applicable to such a holder (including certain indemnification obligations).
For so long as the Notes are outstanding, the Company will continue to
provide to holders of the Old Notes and to prospective purchasers of the Old
Notes the information required by paragraph (d)(4) of Rule 144A under the
Securities Act ("Rule 144A"). The Company will provide a copy of the Exchange
and Registration Rights Agreement to prospective purchasers of Old Notes
identified to the Company by the Initial Purchasers upon request.
The foregoing description of the Exchange and Registration Rights Agreements
is a summary only and is qualified in its entirety by reference to all
provisions of the Exchange and Registration Rights Agreements.
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PLAN OF DISTRIBUTION
Based on interpretations by the Commission set forth in no-action letters
issued to third parties, the Company believes that New Notes issued pursuant to
the Exchange Offer in exchange for the Old Notes may be offered for resale,
resold and otherwise transferred by holders thereof (other than any holder which
is (i) an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act, (ii) a broker-dealer who acquired Notes directly from the
Company or (iii) broker-dealers who acquired Notes as a result of market-making
or other trading activities) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such New
Notes are acquired in the ordinary course of such holders' business, and such
holders are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a distribution
of such New Notes; provided that broker-dealers ("Participating Broker-Dealers")
receiving New Notes in the Exchange Offer will be subject to a prospectus
delivery requirement with respect to resales of such New Notes. To date, the
Commission has taken the position that Participating Broker-Dealers may fulfill
their prospectus delivery requirements with respect to transactions involving an
exchange of securities such as the exchange pursuant to the Exchange Offer
(other than a resale of an unsold allotment from the sale of the Old Notes to
the Initial Purchasers) with the Prospectus, contained in the Exchange Offer
Registration Statement. Pursuant to the Exchange and Registration Rights
Agreements, the Company has agreed to permit Participating Broker-Dealers to use
this Prospectus in connection with the resale of such New Notes. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this Prospectus, and any amendment or supplement to this Prospectus, available
to any broker-dealer that requests such documents in the Letter of Transmittal.
Each holder of the Old Notes who wishes to exchange its Old Notes for New
Notes in the Exchange Offer will be required to make certain representations to
the Company as set forth in "The Exchange Offer--Purpose and Effect of the
Exchange Offer." In addition, each holder who is a broker-dealer and who
receives New Notes for its own account in exchange for Old Notes that were
acquired by it as a result of market-making activities or other trading
activities, will be required to acknowledge that it will deliver a prospectus in
connection with any resale by it of such New Notes.
The Company will not 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 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 and/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
commissions 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.
The Company has agreed to pay all expenses incidental to the Exchange Offer
other than commissions and concessions of any brokers or dealers and will
indemnify holders of the Old Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act, as set
forth in the Exchange and Registration Rights Agreements.
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LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the Company
by White & Case, New York, New York.
EXPERTS
The balance sheet of MBW Foods Inc. as of December 31, 1996 included in this
Prospectus has been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The statement of assets to be acquired of Mrs. Butterworth's Business as of
December 31, 1996 and the statements of operations of Mrs. Butterworth's
Business for each of the three years in the period ended December 31, 1996
included in this Prospectus have been so included in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
The statement of assets to be acquired of the Log Cabin Syrup Business (the
"Business"), a component of Kraft Foods, Inc. as of December 28, 1996, and the
statements of operations of the Business for the years ended December 28, 1996,
December 30, 1995 and December 31, 1994, included in this Prospectus, have been
so included in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
MBW FOODS INC.
Report of Independent Accountants........................................................................ F-2
Balance Sheet as of December 31, 1996 and as of March 31, 1997 (unaudited)............................... F-3
Statement of Operations for the three months ended March 31, 1997 (unaudited)............................ F-4
Statement of Cash Flows for the three months March 31, 1997 (unaudited).................................. F-5
Notes to Financial Statements............................................................................ F-6
MRS. BUTTERWORTH'S BUSINESS, A COMPONENT OF CONOPCO, INC.
Report of Independent Accountants........................................................................ F-10
Statement of Assets to be Acquired as of December 31, 1996............................................... F-11
Statement of Operations for the years ended December 31, 1994, 1995 and 1996 and for the three months
ended March 31, 1996 (unaudited)....................................................................... F-12
Notes to Financial Statements............................................................................ F-13
LOG CABIN BUSINESS, A COMPONENT OF KRAFT FOODS, INC.
Report of Independent Accountants........................................................................ F-17
Statements of Assets to be Acquired as of December 28, 1996.............................................. F-18
Statement of Operations for the years ended December 31, 1994, December 30, 1995 and December 28, 1996... F-19
Notes to Financial Statements............................................................................ F-20
Statement of Operations for the three months ended March 31, 1996 (unaudited) and March 31, 1997
(unaudited)............................................................................................ F-25
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MBW Foods, Inc.
In our opinion, the accompanying balance sheet of MBW Foods, Inc. (a
wholly-owned subsidiary of MBW Investors LLC) presents fairly, in all material
respects, the financial position of the Company at December 31, 1996, in
conformity with generally accepted accounting principles. This financial
statement is the responsibility of the Company's management; our responsibility
is to express an opinion on this financial statement based on our audit. We
conducted our audit of this statement in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
San Francisco, California
March 28, 1997
F-2
<PAGE>
MBW FOODS INC.
(A WHOLLY-OWNED SUBSIDIARY OF MBW INVESTORS LLC)
BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
-------------- -----------
<S> <C> <C>
(UNAUDITED)
ASSETS:
Cash................................................................................ $ 8,666 $ 8,029
Accounts receivable, net of allowance of $21 at March 31, 1997...................... 480 5,510
Accounts receivable--other.......................................................... -- 3,664
Inventories (Note 3)................................................................ 1,182 1,164
Prepaid expenses.................................................................... 9 18
Net current deferred tax asset...................................................... -- 177
-------------- -----------
Total current assets.......................................................... 10,337 18,562
Machinery and equipment, net........................................................ 5,206 5,169
Goodwill and other intangible assets, net (Note 4).................................. 111,358 110,578
Other assets........................................................................ 3,995 6,633
-------------- -----------
Total assets.................................................................. $ 130,896 $ 140,942
-------------- -----------
-------------- -----------
LIABILITIES:
Accrued expenses.................................................................... $ 2,736 $ 7,853
-------------- -----------
Total current liabilities..................................................... 2,736 7,853
Long-term debt (Note 5)............................................................. 95,000 --
Senior subordinated notes........................................................... -- 100,000
-------------- -----------
Total liabilities............................................................. 97,736 107,853
Stockholder's equity:
Common stock, no par value, 3,000 shares authorized, 1,000 shares issued and
outstanding..................................................................... 33,160 33,160
Accumulated deficit............................................................... -- (71)
-------------- -----------
Total Stockholder's equity.................................................... 33,160 33,089
-------------- -----------
Total liabilities and stockholder's equity.................................... $ 130,896 $ 140,942
-------------- -----------
-------------- -----------
</TABLE>
See Notes to the balance sheet.
F-3
<PAGE>
MBW FOODS INC.
(A WHOLLY-OWNED SUBSIDIARY OF MBW INVESTORS LLC)
STATEMENT OF OPERATIONS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1997
---------------------
<S> <C>
Net sales.................................................................................. $ 21,253
Cost of products sold...................................................................... 7,167
--------
Gross profit............................................................................. 14,086
Brokerage, distribution and market expenses:
Brokerage and distribution............................................................... 2,279
Trade promotions......................................................................... 3,643
Consumer marketing....................................................................... 1,331
--------
Total brokerage, distribution and marketing expenses..................................... 7,253
Selling, general and administrative expenses............................................... 1,053
Transition costs........................................................................... 126
Amortization of goodwill and other intangibles............................................. 828
--------
Operating profit......................................................................... 4,826
Amortization of deferred financing fees.................................................... 2,322
Interest expense, net...................................................................... 2,622
--------
Loss before income taxes................................................................. (118)
Benefit from income taxes.................................................................. (47)
--------
Net loss................................................................................. $ (71)
--------
--------
</TABLE>
F-4
<PAGE>
MBW FOODS INC.
(A WHOLLY-OWNED SUBSIDIARY OF MBW INVESTORS LLC)
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1997
---------------------
<S> <C>
Cash flows from operating activities:
Net loss................................................................................. $ (71)
Adjustments to reconcile net loss to cash used by operating activities:
Depreciation and amortization.......................................................... 3,274
Deferred income taxes.................................................................. (177)
Change in assets and liabilities:
Increase in accounts receivable...................................................... (8,693)
Decrease in inventories.............................................................. 18
Increase in prepaid expenses......................................................... (9)
Increase in accrued expenses......................................................... 5,117
----------
Net cash used in operating activities...................................................... (541)
Cash flows from investing activities:
Additions to property, plant and equipment............................................... (96)
Increase in intangibles acquired......................................................... (49)
----------
Net cash used in investing activities...................................................... (145)
----------
Cash flows from financing activities:
Proceeds from long term borrowings....................................................... 100,000
Payment of borrowings.................................................................... (95,000)
Debt issuance costs...................................................................... (4,951)
----------
Net cash provided by financing activities.................................................. 49
----------
Decrease in cash and cash equivalents...................................................... (637)
Cash and cash equivalents, beginning of period............................................. 8,666
----------
Cash cash equivalents, end of period....................................................... $ 8,029
----------
----------
</TABLE>
F-5
<PAGE>
MBW FOODS INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1--THE COMPANY
ORGANIZATION
MBW Foods Inc. (the "Company"), a newly formed Delaware corporation, is a
privately held food company. The Company commenced operations on December 31,
1996, when it acquired the Mrs. Butterworth's syrup and pancake business from
Conopco, Inc., a subsidiary of Unilever United States, Inc. ("Conopco"). The
Company is a wholly-owned subsidiary of MBW Holdings Inc. ("Holdings"), also a
Delaware corporation. Holdings is wholly-owned by MBW Investors LLC ("MBW LLC"),
a Delaware limited liability company. The Company was initially capitalized with
a capital infusion from Holdings, which was contributed by MBW LLC, and senior
secured debt and senior subordinated debt (Note 5).
After the close of business on December 31, 1996, the Company acquired
substantially all the assets of Mrs. Butterworth's syrup and pancake business
(the "Business") from Conopco. The Company acquired the inventories,
manufacturing equipment and intangible assets of the Business for a purchase
price of $114.1 million. In due course, the Company will relocate the
manufacturing equipment from Conopco's facility.
The acquisition was accounted for by the purchase method of accounting. The
purchase agreement contains customary representations, warranties and covenants
by Conopco and the Company. The acquisition was financed by (i) an equity
capital contribution from Holdings of approximately $33.2 million, (ii) $45
million of loans borrowed under a senior secured credit facility (Note 5), and
(iii) $50 million of loans borrowed under a senior subordinated credit facility
(Note 5).
The cost to acquire the Business has been allocated to tangible and
intangible aspects acquired as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Cash paid to acquire Business................................................. $ 114,100
Other acquisition costs....................................................... 3,646
--------------
117,746
Costs assigned to tangible assets............................................. (6,388)
--------------
Costs attributable to intangible assets....................................... $ 111,358
--------------
--------------
</TABLE>
OPERATIONS
The Company produces and markets syrup and pancake mix products that are
sold across the United States. The products are manufactured under co-packing
agreements with Conopco and a third party. The principal trademark under which
products are sold is Mrs. Butterworth's-Registered Trademark-.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The policies utilized by the Company in the preparation of the financial
statement conform to generally accepted accounting principles and require
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities.
Actual amounts could differ from these estimates and assumptions. The Company
uses the accrual basis of accounting in the preparation of its financial
statements.
F-6
<PAGE>
MBW FOODS INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FISCAL YEAR
The Company's fiscal year ends on the last Saturday in December. The balance
sheet at December 31, 1996 reflects the acquisition of the Business as of 11:59
p.m. on that date.
CASH
The Company considers all highly liquid financial instruments with a
maturity of three months or less to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market value. Cost is
determined using the first-in, first-out (FIFO) method. Inventories include the
cost of raw materials, packaging and supplies, labor and manufacturing overhead.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost and consists of machinery
and equipment. Depreciation will be computed using the straight-line method over
the estimated useful lives of the individual assets of ten years. As of December
31, 1996, there was no accumulated depreciation.
INTANGIBLE ASSETS
Intangible assets include goodwill, trademarks and various identifiable
intangible assets purchased by the Company. Goodwill will be amortized over
forty years using the straight-line method. Other intangible assets will be
amortized using the straight-line method over periods ranging from five to forty
years. As of December 31, 1996, there was no accumulated amortization.
OTHER ASSETS
Other assets consist of deferred loan acquisition costs. Deferred loan costs
will be amortized using the straight-line method over the terms of the related
debt. As of December 31, 1996, there was no accumulated amortization.
ADVERTISING
Advertising costs are expensed when the advertising first takes place.
NOTE 3 -- INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Raw materials, packaging and supplies............................................... $ 523
Finished goods...................................................................... 659
---------
$ 1,182
---------
---------
</TABLE>
F-7
<PAGE>
MBW FOODS INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- GOODWILL AND OTHER INTANGIBLES
Goodwill and other intangible assets consist of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Goodwill......................................................................... $ 64,518
Trademarks....................................................................... 44,500
Other intangibles................................................................ 2,340
-----------
$ 111,358
-----------
-----------
</TABLE>
NOTE 5--LONG-TERM DEBT
Long-term debt consists of the following;
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Senior Secured Debt
Senior secured revolving debt; interest rate of 9.50% at December 31, 1996;
principal due in quarterly installments through December 15, 2001; floating
interest rate at the prime rate plus 1.25% or alternatively, the one, three or
six month Eurodollar rate plus 2.50% payable quarterly or at the termination of
the Eurodollar contract interest period.......................................... $ 30,000
Senior secured term debt; interest rate of 10.00% at December 31, 1996; principal
due in quarterly installments through December 15, 2002; floating interest rate
at the prime rate plus 1.75% or alternatively, the one, three or six month
Eurodollar rate plus 3.00% payable quarterly or at the termination of the
Eurodollar contract interest period.............................................. 15,000
Senior Subordinated Note
Senior subordinated note; interest rate of 12.75% at December 31, 1996; floating
interest rate at the prime rate plus (i) 4.50% through June 29, 1997, (ii) 5.50%
for the period June 30, 1997 through September 29, 1997, and (iii) 6.00% for the
period September 30, 1997 through maturity....................................... 50,000
---------
Total long-term debt......................................................... $ 95,000
---------
---------
</TABLE>
SENIOR SECURED DEBT
On December 31, 1996, the Company and Holdings entered into a Credit
Agreement (the "Agreement") with several banks for $15 million of senior secured
term debt and a $45 million revolving credit facility. At December 31, 1996, the
Company had an outstanding balance of $30 million under the revolver. The
proceeds from the senior secured term debt, a $30 million draw down of the
revolving credit facility along with a senior subordinated note and contributed
equity capital were used to acquire the Business from Conopco, pay fees and
expenses and fund working capital. The debt is guaranteed by Holdings.
F-8
<PAGE>
MBW FOODS INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
NOTE 5--LONG-TERM DEBT (CONTINUED)
The unused borrowing availability was $15 million at December 31, 1996. The
Agreement requires a commitment fee of 0.50% per annum payable quarterly on the
unused portion of the revolving credit facility. The borrowing availability
increased to $60 million upon payment of the $15 million senior secured term
debt.
The Agreement includes restrictive covenants which limit additional
borrowing, cash dividends, and capital expenditures, while also requiring the
Company to maintain certain financial ratios. The Agreement contains optional
prepayment provisions with no premium. Substantially all the assets of the
Company are pledged as collateral for the debt.
SENIOR SUBORDINATED NOTE
On December 31, 1996, the Company issued a $50 million senior subordinated
note (the "Note") to a bank. The Company can prepay portions of the outstanding
balance of the Note without incurring a premium. The Note includes restrictive
covenants which limit cash dividends, loans and investments and capital
expenditures while also requiring the Company to maintain certain financial
ratios.
See subsequent event discussion at Note 7.
NOTE 6--RELATED PARTY TRANSACTIONS
The Company paid certain members of MBW LLC fees totaling $1.5 million as of
December 31, 1996. The fees were paid for services provided in identifying,
negotiating and consummating the Company's acquisition. The fees are included in
the costs of the acquisition.
On December 31, 1996, Mr. Thomas J. Ferraro, the President of the Company
and Mr. C. Gary Willett, the Executive Vice President of the Company, executed
promissory notes in favor of the Company in exchange for monies borrowed to
assist in the capitalization of their limited liability company interests held
with Investors. The promissory notes mature December 31, 1999 with required
annual payments. Interest is due and payable quarterly at the rate of 8.00% per
annum. The aggregate balance outstanding on the promissory notes as of December
31, 1996 was $110,000. This amount has been recorded as a reduction to common
stock.
NOTE 7--SUBSEQUENT EVENTS
SUBORDINATED DEBT OFFERING
On February 10, 1997, the Company completed a private offering of 9 7/8%
Senior Subordinated Notes due in 2007, with proceeds to the Company totaling
approximately $97 million. These proceeds were primarily used to retire the $45
million of senior secured debt and the $50 million senior subordinated note. The
repayment of the debt did not result in any gain or loss as the Company's
revolving credit facility remains available.
ACQUISITION (UNAUDITED)
On May 7, 1997, the Company entered into an agreement to acquire
substantially all of the assets of the Log Cabin syrup business from Kraft
Foods, Inc. for a cash purchase price of $220 million.
F-9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
CONOPCO, Inc.
We have audited the accompanying statement of assets to be acquired as of
December 31, 1996 and the statement of operations for the years ended December
31, 1994, 1995 and 1996 of Mrs. Butterworth's Business, a component of CONOPCO,
Inc. (the "Business"). These financial statements are the responsibility of
CONOPCO, Inc.'s management. Our responsibility is to express an opinion on these
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 audits 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.
The accompanying financial statements were prepared to present the assets to
be acquired and the results of operations of the Business pursuant to the
purchase agreement between CONOPCO, Inc. and MBW Acquisition Corp. (the "Buyer")
as described in Note 1 and are not intended to be a complete presentation of the
Business's financial position and cash flows.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the assets to be acquired of the Business as of
December 31, 1996 and the results of its operations for the years ended December
31, 1994, 1995 and 1996, pursuant to the purchase agreement referred to in Note
1, in conformity with generally accepted accounting principles.
Price Waterhouse LLP
San Francisco, California
March 14, 1997
F-10
<PAGE>
MRS. BUTTERWORTH'S BUSINESS
(A COMPONENT OF CONOPCO, INC.)
STATEMENT OF ASSETS TO BE ACQUIRED
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<S> <C>
Inventories........................................................................ $ 829
Machinery and equipment, net of accumulated depreciation of $1,791................. 2,774
---------
Total assets................................................................... $ 3,603
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-11
<PAGE>
MRS. BUTTERWORTH'S BUSINESS
(A COMPONENT OF CONOPCO, INC.)
STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
--------- --------- --------- THREE MONTHS
ENDED
MARCH 31, 1996
---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales.................................................... $ 96,729 $ 91,302 $ 89,541 $ 22,887
Costs and expenses:
Cost of products sold...................................... 29,930 27,743 28,955 7,057
Brokerage and distribution................................. 8,662 7,583 8,140 2,487
Trade promotions........................................... 21,911 19,380 17,672 4,591
Consumer marketing......................................... 15,297 13,291 10,835 4,497
Selling, general and administrative........................ 6,829 6,120 6,753 1,688
--------- --------- --------- ---------------
Total costs and expenses............................... 82,629 74,117 72,355 20,320
--------- --------- --------- ---------------
Income before taxes.................................... 14,100 17,185 17,186 2,567
Provision for income taxes............................. 5,429 6,616 6,616 988
--------- --------- --------- ---------------
Net income............................................. $ 8,671 $ 10,569 $ 10,570 $ 1,579
--------- --------- --------- ---------------
--------- --------- --------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-12
<PAGE>
MRS. BUTTERWORTH'S BUSINESS
(A COMPONENT OF CONOPCO, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(IN THOUSANDS)
1. DESCRIPTION OF BUSINESS
In December 1996, CONOPCO, Inc. ("CONOPCO" or the "Company"), a subsidiary
of Unilever United States, Inc., entered into an Asset Purchase Agreement (the
"Agreement") with MBW Acquisition Corp., the predecessor of MBW Foods Inc. (the
"Buyer"). The Agreement provides for the sale of certain assets of CONOPCO
pertaining to its Mrs. Butterworth's Business (the "Business") and the
assumption of certain liabilities relating to future commitments, as defined
(see Note 8). The Business was operated as part of Van den Bergh Foods Company
("Van den Bergh"), a division of the Company. The Business's products, which are
distributed on a national basis, consist of syrup and pancake mix. A significant
portion of the Business's net sales are with major retailers.
The sale was consummated on December 31, 1996, after the close of business
but before the end of the business day. Under the terms of the Agreement,
CONOPCO, Inc. sold to the Buyer certain assets exclusively used in the Business,
as defined in the Agreement, and retains the manufacturing plants, employees and
the retained liabilities, as defined in the Agreement, of the Business.
Throughout the periods covered by the financial statements, the Business's
operations were conducted and accounted for as part of the Company. These
financial statements have been carved out from the Company's historical
accounting records.
Under the Company's centralized cash management system, cash requirements of
the Business were generally provided directly by the Company and cash generated
by the Business was generally remitted directly to the Company. Transaction
systems (e.g., payroll, employee benefits, accounts payable) used to record and
account for cash disbursements were provided by centralized company
organizations outside the defined scope of the Business. Most of these corporate
systems are not designed to track assets/liabilities and receipts/payments on a
business specific basis. Given these constraints and the fact that only certain
assets of the Business were sold, statements of financial position and cash
flows could not be prepared.
The manufacturing and distribution operations of the Business are conducted
at sites where other Company manufacturing and distribution operations not
included in the Business are present. In addition, certain non-manufacturing
operations of the Business share facilities and space with other Company
operations. At these shared sites, only the assets of the Business (inventories
and machinery and equipment) are included in the statement of assets to be
acquired. The Statement of Assets to be Acquired is as of the close of business
on December 31, 1996, immediately prior to the sale.
Net sales in the accompanying statement of operations represent net sales
directly attributable to the Business. Costs and expenses in the accompanying
statement of operations represent direct and allocated costs and expenses
related to the Business. Costs for certain functions and services performed by
centralized Company organizations outside the defined scope of the Business have
been allocated to the Business based on usage or sales of the Business, as
appropriate, compared to total Van Den Bergh usage or sales. The results of
operations include expense allocations for (1) costs for administrative
functions and services performed on behalf of the Business by centralized staff
groups within the Company, (2) research and development expense and (3)
CONOPCO's general corporate expenses including pension and certain other
postretirement benefits costs (see Notes 2, 3 and 5 for a
F-13
<PAGE>
MRS. BUTTERWORTH'S BUSINESS
(A COMPONENT OF CONOPCO, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
(IN THOUSANDS)
1. DESCRIPTION OF BUSINESS (CONTINUED)
description of the allocation methodologies employed). CONOPCO maintains all
debt and notes payable on a consolidated basis to fund and manage all of its
operations. Debt and related interest expense were not allocated to the
Business.
All of the allocations and estimates in the statements of operations are
based on assumptions that Company management believes are reasonable under the
circumstances. However, these allocations and estimates are not necessarily
indicative of the costs and expenses that would have resulted if the Business
had been operated as a separate entity or future results of the Business.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INCOME RECOGNITION. Sales and related cost of products sold are included in
income and expense, respectively, when products are shipped to the customer.
INVENTORIES. Inventories are priced at the lower of cost or market with cost
determined by the last-in, first-out (LIFO) method.
MACHINERY AND EQUIPMENT (M&E). M&E is stated at historical cost. Alterations
and major overhauls which extend the lives or increase the capacity of M&E are
capitalized. The amounts for property disposals are removed from M&E and
accumulated depreciation accounts and any resultant gain or loss is included in
earnings. Ordinary repairs and maintenance are charged to operating costs.
DEPRECIATION. Van den Bergh calculates depreciation using the straight-line
method over the useful lives of its property and M&E. Depreciation provided in
costs and expenses is allocated to the Business based on sales of the Business
compared to total Van den Bergh sales.
COST OF PRODUCTS SOLD. Cost of products sold includes direct costs of
materials, labor, and overhead and allocated costs for facilities, functions and
services used by the Business at shared sites. Overhead allocations are based on
estimated time spent by employees, relative use of facilities, estimated
consumption of common supplies, and sales of the Business compared to total Van
den Bergh sales.
BROKERAGE AND DISTRIBUTION. Brokerage and distribution includes costs of the
outside brokerage network and outbound freight.
TRADE PROMOTIONS. Trade promotions represents promotional incentives offered
to retailers.
CONSUMER MARKETING. Consumer marketing is comprised of all costs associated
with advertising coupons. Advertising expense is accrued as incurred. Production
costs are expensed on the initial use of the advertisement.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
consists solely of allocated selling, administrative and research and
development expenses. The Business is allocated these expenses based on sales of
the Business compared to total Van den Bergh sales.
INCOME TAXES. The taxable income of the Business was included in the tax
returns of CONOPCO. As such, separate income tax returns were not prepared or
filed for the Business. The provision for income
F-14
<PAGE>
MRS. BUTTERWORTH'S BUSINESS
(A COMPONENT OF CONOPCO, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
(IN THOUSANDS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
taxes included in the accompanying statement of operations has been determined
based upon statutory rates applied to pre-tax income.
PENSIONS. The Company has noncontributory defined benefit plans covering
substantially all U.S. employees, including the employees of the Business. The
benefits for these plans are based primarily on employees' years of service and
employees' compensation during the last years of employment. It is the Company's
policy to fund at least the minimum amounts required by the Employee Retirement
Income Security Act of 1974. The Company maintains profit-sharing and savings
plans for full-time employees who meet certain eligibility requirements. The
costs allocated to the Business relative to the aforementioned plans are based
on sales of the Business.
OTHER POST RETIREMENT BENEFITS. The Company provides certain health care and
life insurance benefits (post retirement benefits) to substantially all eligible
retired U.S. employees and their dependents. These benefits are accounted for as
they are earned by active employees. The post retirement costs allocated to the
Business are based on sales of the Business.
ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates. Also, as
discussed in Note 1, these financial statements include allocations and
estimates that are not necessarily indicative of the costs and expenses that
would have resulted if the Business had been operated as a separate entity or
future results of the Business.
3. RELATED PARTY TRANSACTIONS
The statement of operations include significant allocations from other
Company organizations involving functions and services (such as finance and
accounting, management informations systems, research and development, legal,
human resources and purchasing) that were provided to the Business by
centralized CONOPCO organizations outside the defined scope of the Business. The
costs of these functions and services have been allocated to the Business using
methods that CONOPCO's management believes are reasonable. Such allocations are
not necessarily indicative of the costs that would have been incurred if the
Business had been a separate entity. Total cost of products sold includes
$2,656, $3,026 and $2,990 in allocated costs for the years ended December 31,
1996, 1995 and 1994, respectively. Selling, general and administrative expenses
include $6,753, $6,120 and $6,829 of allocated costs for the years ended
December 31, 1996, 1995 and 1994, respectively.
F-15
<PAGE>
MRS. BUTTERWORTH'S BUSINESS
(A COMPONENT OF CONOPCO, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
(IN THOUSANDS)
4. PROVISION FOR INCOME TAXES
Taxes computed at the U.S. statutory rates are summarized below:
<TABLE>
<CAPTION>
AMOUNT % AMOUNT % AMOUNT %
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1996 1995 1994
-------------------- -------------------- --------------------
Federal.......................................... $ 5,843 34.0 $ 5,843 34.0 $ 4,794 34.0
State (net of federal tax benefit)............... 773 4.5 773 4.5 635 4.5
--------- --- --------- --- --------- ---
Provision for income taxes....................... $ 6,616 38.5 $ 6,616 38.5 $ 5,429 38.5
--------- --- --------- --- --------- ---
--------- --- --------- --- --------- ---
</TABLE>
5. INVENTORIES
<TABLE>
<CAPTION>
1996
---------
<S> <C>
Raw materials, packaging and supplies....................................... $ 301
Finished products........................................................... 631
---------
932
Adjustment to LIFO basis.................................................... (103)
---------
$ 829
---------
---------
</TABLE>
The Company's application of LIFO is not attributable to individual business
units. Accordingly, the results of applying LIFO have been allocated to the
Business based on relative inventory values. Management believes such
allocations are reasonable, but may not necessarily reflect the cost that would
have been incurred if LIFO had been applied on a business specific basis.
6. DEPRECIATION EXPENSE
expenses was $277 in 1996, $311 in 1995 and $215 in 1994.
7. COMMITMENTS AND CONTINGENCIES
Business is currently subject to certain lawsuits and claims with respect to
matters such as product liability and other actions arising in the normal course
of business. Such lawsuits and claims, as defined in the Agreement, are the
responsibility of CONOPCO.
In the normal course of its operations, the Business has informal agreements
with two suppliers to provide the Business with its glass bottle requirements.
These informal agreements contain no specified duration and are subject to price
adjustments. If these agreements were to terminate, the Company expects that the
Business would acquire any on-hand inventory of the suppliers.
F-16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Kraft Foods, Inc.
We have audited the accompanying statement of assets to be acquired of the
Log Cabin Syrup Business (the "Business"), a component of Kraft Foods, Inc. as
of December 28, 1996, and the statements of operations of the Business for the
years ended December 28, 1996, December 30, 1995 and December 31, 1994. These
financial statements are the responsibility of Kraft Foods, Inc.'s management.
Our responsibility is to express an opinion on these statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those statements require that we plan and perform the audits 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.
The accompanying financial statements were prepared to present assets to be
acquired and the results of operations of the Business pursuant to the asset
purchase agreement between Kraft Foods, Inc. and MBW Foods, Inc. as described in
Note 1 and are not intended to be a complete presentation of the Business's
financial position and cash flows.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the assets to be acquired of the Business as of
December 28, 1996 and the results of its operations for the years ended December
28, 1996, December 30, 1995 and December 31, 1994, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Chicago, Illinois
June 4, 1997
F-17
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
STATEMENT OF ASSETS TO BE ACQUIRED
DECEMBER 28, 1996
(IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Inventories....................................................................... $ 6,717
Machinery and equipment, net of accumulated depreciation of $2,415................ 8,238
---------
Total assets................................................................ $ 14,955
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-18
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, DECEMBER 30, 1995 AND DECEMBER 28, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 30, DECEMBER 28,
1994 1995 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Net sales......................................................... $ 115,894 $ 106,330 $ 104,466
Costs and expenses:
Cost of products sold........................................... 35,254 35,804 36,237
Freight and distribution........................................ 7,553 7,620 7,099
Trade promotions................................................ 20,898 23,239 21,355
Consumer marketing.............................................. 7,940 5,478 3,994
Selling, general and administrative............................. 7,863 7,738 7,388
Amortization of goodwill........................................ 1,350 1,350 1,350
-------------- -------------- --------------
Total costs and expenses.................................... 80,858 81,229 77,423
-------------- -------------- --------------
Income before taxes............................................... 35,036 25,101 27,043
Provision for income taxes........................................ 14,391 10,461 11,229
-------------- -------------- --------------
Net income.................................................. $ 20,645 $ 14,640 $ 15,814
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-19
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS)
1. DESCRIPTION OF BUSINESS
On May 7, 1997, Kraft Foods, Inc. ("Kraft" or the "Company"), entered into
an Asset Purchase Agreement (the "Agreement") with MBW Foods Inc. (the "Buyer").
The Agreement provides for the sale of certain assets of Kraft pertaining to its
Log Cabin Syrup Business (the "Business"). Under the terms of the Agreement,
Kraft Foods, Inc. will sell to the Buyer certain assets (inventory and machinery
and equipment) used in the Business, as defined in the Agreement, and retains
the manufacturing plants, employees and certain liabilities, as defined in the
Agreement, of the Business. The sale is expected to be consummated on or about
July 1, 1997.
The Business's products, which are distributed on an international basis,
consist of retail and foodservice syrup products. A significant portion of the
Business's net sales are with major retailers. The accompanying financial
statements represent the results of operations and assets to be acquired of the
Business in the United States and Canada, including export sales, but
specifically excluding the Business in Mexico and the manufacture and sale of
syrups under the Kraft brand name pursuant to a distribution agreement with
Alliant Foodservice, a former indirect wholly-owned subsidiary of Kraft.
Throughout the periods covered by the financial statements, the Business's
operations were conducted and accounted for as part of the Company. These
financial statements have been carved out from the Company's historical
accounting records.
The manufacturing and distribution operations of the Business are conducted
at sites where other Company manufacturing and distribution operations not
included in the Business are present. In addition, certain nonmanufacturing
operations of the Business share facilities and space with other Company
operations. At these shared sites, only the assets of the Business (inventories
and machinery and equipment) are included in the statement of assets to be
acquired.
Under the Company's centralized cash management system, cash requirements of
the Business were generally provided directly by the Company and cash generated
by the Business was generally remitted directly to the Company. Transaction
systems (e.g., payroll, employee benefits, accounts payable) used to record and
account for cash disbursements were provided by centralized Kraft organizations
outside the defined scope of the Business. Most of these corporate systems are
not designed to track assets/liabilities and receipts/payments on a business
specific basis. Given these constraints and since only certain assets of the
Business were sold, statements of financial position and cash flows could not be
prepared.
Net sales in the accompanying statements of operations represent net sales
directly attributable to the Business. Costs and expenses in the accompanying
statements of operations represent direct and allocated costs and expenses
related to the Business. Costs for certain functions and services performed by
centralized Company organizations outside the defined scope of the Business have
been allocated to the Business based on usage or sales of the Business, as
appropriate, compared to total usage or sales. The results of operations include
expense allocations for (1) selling costs for sales and customer service
functions and services performed on behalf of the Business by the centralized
sales group within the Company, (2) fixed manufacturing and distribution costs
of the facilities that produce and store the products of the Business, (3)
research and development expense, (4) administrative costs of the marketing
division responsible for the Business, including finance and accounting, and (5)
certain Kraft marketing and corporate expenses attributable to the Business,
including human resources,
F-20
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
1. DESCRIPTION OF BUSINESS (CONTINUED)
systems, legal, and risk management (see Notes 2 and 4 for a description of the
allocation methodologies employed). Kraft maintains all debt and notes payable
on a consolidated basis to fund and manage all of its operations. Debt and
related interest expense were not allocated to the Business.
The statements of operations of the Business exclude allocations of certain
expenses, primarily related to certain Kraft general corporate expenses.
Expenses not allocated include, but are not limited to, general overhead costs
related to corporate accounting, human resources, legal, systems, and risk
management.
Total cost of products sold includes $2,398, $2,401, and $2,091 in allocated
costs for the years ended December 28, 1996, December 30, 1995 and December 31,
1994, respectively. Freight and distribution expenses include $2,369, $2,597 and
$2,801 of allocated costs for the years ended December 28, 1996, December 30,
1995 and December 31, 1994, respectively. Selling, general and administrative
expenses include $7,388, $7,738 and $7,863 of allocated costs for the years
ended December 28, 1996, December 30, 1995 and December 31, 1994, respectively.
All of the allocations and estimates in the statements of operations are
based on assumptions that Company management believes are reasonable under the
circumstances. However, these allocations and estimates are not necessarily
indicative of the costs and expenses that would have resulted if the Business
had been operated as a separate entity or the future operating results of the
Business.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL PERIODS
The Business's fiscal year consists of 52 or 53 weeks, ending on the last
Saturday in December. The year ending December 31, 1994 consisted of 53 weeks.
Each of the years ended December 30, 1995 and December 28, 1996 consisted of 52
weeks.
INCOME RECOGNITION
Sales and related cost of products sold are included in income and expense,
respectively, when products are shipped to the customer.
INVENTORIES
Finished goods inventories are directly attributable to the Business. Raw
materials, packaging and supplies have been allocated to the Business on the
basis of usage during the preceding year. Inventories are priced at the lower of
cost or market with cost determined on a last-in, first-out (LIFO) basis.
Certain distribution and fixed costs have been included in inventory in
accordance with UNICAP rules.
MACHINERY AND EQUIPMENT
Machinery and equipment in the accompanying statement of assets to be
acquired (the "M&E") is stated at historical cost, net of accumulated
depreciation directly related to that machinery and equipment. Alterations and
major overhauls which extend the lives or increase the capacity of the M&E are
F-21
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
capitalized. The amounts for property disposals are removed from the M&E and
accumulated depreciation accounts and any resultant gain or loss is included in
earnings. Ordinary repairs and maintenance are charged to operating costs.
Depreciation is calculated using the straight-line method over the useful
lives of the M&E. Depreciation expense provided in costs and expenses in the
accompanying statements of operations for the M&E is directly attributable to
the Business. Depreciation expense provided in costs and expenses in the
accompanying statements of operations for the shared facilities is allocated to
the Business based on usage or occupancy of the Business compared to total usage
or occupancy.
COST OF PRODUCTS SOLD
Cost of products sold includes direct costs of materials, labor and overhead
and allocated costs for facilities, functions and services used by the Business
at shared sites. Overhead allocations are based on estimated time spent by
employees, relative use of facilities, estimated consumption of common supplies,
and sales of the Business compared to total Kraft sales.
FREIGHT AND DISTRIBUTION
Freight and distribution expenses include direct outbound freight and direct
and allocated costs related to the warehousing of products of the Business and
are included in cost of products sold.
TRADE PROMOTIONS
Trade promotions are directly attributable to the Business and represent
promotional incentives offered to retailers, including both performance and
non-performance trade deals.
CONSUMER MARKETING
Consumer marketing is directly attributable to the Business and consists
primarily of advertising and coupons. Advertising and promotional costs are
generally expensed as incurred. Production costs are expensed on the initial use
of the advertisement or the initial drop of the coupons.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative consists solely of allocated selling,
administrative and research and development expenses. The Business has allocated
these expenses based on various measures relevant to the expense being
allocated.
AMORTIZATION OF GOODWILL
Goodwill consists of an estimate of goodwill allocable to the Business
arising from Philip Morris's acquisition of General Foods, Inc. in 1985.
Goodwill is amortized over 40 years using the straight-line method.
F-22
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The taxable income of the Business was included in the tax returns of Philip
Morris. As such, separate income tax returns were not prepared or filed for the
Business. The provisions for income taxes included in the accompanying
statements of operations have been determined on a separate company basis. No
deferred income taxes have been attributed to the Business.
PENSIONS
The Company has noncontributory defined benefit plans covering substantially
all U.S. employees, including the employees of the Business. The benefits for
these plans are based primarily on employees' years of service and employees'
compensation during the last years of employment. It is the Company's policy to
fund at least the minimum amounts required by the Employee Retirement Income
Security Act of 1974. The Company maintains profit-sharing and savings plans for
full-time employees who meet certain eligibility requirements. The service and
interest costs allocated to the Business relative to the aforementioned plans
are based on pensionable earnings of employees directly attributable or
allocated to the Business.
OTHER POSTRETIREMENT BENEFITS
The Company provides certain health care and life insurance benefits
(postretirement benefits) to substantially all eligible retired U.S. employees
and their dependents. These benefits are accounted for as they are earned by
active employees. The postretirement costs allocated to the Business are based
on headcount of employees directly attributable or allocated to the Business.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates. Also, as
discussed in Note 1, these financial statements include allocations and
estimates that are not necessarily indicative of the costs and expenses that
would have resulted if the Business had been operated as a separate entity or
the future results of the Business.
3. PROVISION FOR INCOME TAXES
The provisions for income taxes for the years ended December 28, 1996,
December 30, 1995 and December 31, 1994 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Federal.................................................... $ 9,242 $ 8,610 $ 11,844
State...................................................... 1,987 1,851 2,547
--------- --------- ---------
Provision for income taxes................................. $ 11,229 $ 10,461 $ 14,391
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-23
<PAGE>
LOG CABIN SYRUP BUSINESS
(A COMPONENT OF KRAFT FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
3. PROVISION FOR INCOME TAXES (CONTINUED)
The Business's effective income tax rate differed from the U.S. federal
statutory rate for the following reasons:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Federal.................................................... 35.0% 35.0% 35.0%
State (net of federal tax benefit)......................... 4.8 4.8 4.7
Goodwill amortization...................................... 1.7 1.9 1.4
--------- --------- ---------
Provision for income taxes................................. 41.5% 41.7% 41.1%
--------- --------- ---------
--------- --------- ---------
</TABLE>
4. INVENTORIES
<TABLE>
<CAPTION>
1996
---------
<S> <C>
Raw materials, packaging and supplies............................................... $ 2,846
Finished products................................................................... 4,186
---------
7,032
Adjustment to LIFO basis............................................................ (315)
---------
$ 6,717
---------
---------
</TABLE>
The Company's application of LIFO is not attributable to individual product
lines. Accordingly, the results of applying LIFO have been allocated to the
Business based on sales of the Business compared to total sales. Management
believes such allocations are reasonable, but may not necessarily reflect the
cost that would have been incurred if LIFO had been applied on a business
specific basis.
5. COMMITMENTS AND CONTINGENCIES
The Business is currently subject to certain lawsuits and claims with
respect to matters such as product liability and other actions arising in the
normal course of business. Such lawsuits and claims, as defined in the
Agreement, are the responsibility of Kraft.
F-24
<PAGE>
LOG CABIN SYRUP BUSINESS
(PART OF KRAFT FOODS, INC.)
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
THREE MONTHS ENDED
MARCH 31,
--------------------
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Net Sales.......................................................... $ 28,584 $ 26,802
Costs and Expenses
Cost of products sold............................................ 8,116 9,305
Brokerage and distribution....................................... 1,952 1,972
Trade promotions................................................. 5,716 4,993
Consumer marketing............................................... 2,754 598
Selling, general and administrative.............................. 2,277 1,887
Amortization of goodwill......................................... 338 338
--------- ---------
Total costs and expenses........................................... 21,153 19,093
Income before taxes................................................ 7,431 7,709
Provision for income taxes......................................... 3,047 3,161
--------- ---------
Net income......................................................... $ 4,384 $ 4,548
--------- ---------
--------- ---------
</TABLE>
F-25
<PAGE>
NO PERSON HAS BEEN AUTHORIZED HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY OFFER OR 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 OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Available Information................. iii
<S> <C>
Glossary.............................. iv
Prospectus Summary.................... 1
Risk Factors.......................... 12
Use of Proceeds of the New Notes...... 18
Capitalization........................ 18
The Exchange Offer.................... 19
Selected Historical Financial
Data--The Company and MBW
Predeccessor........................ 28
Selected Historical Financial Data--LC
Business............................ 29
Pro Forma Financial Information....... 30
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 39
The Acquisitions...................... 46
Business.............................. 49
Management............................ 58
Security Ownership.................... 62
Certain Related Transactions.......... 64
Description of Senior Credit
Facilities.......................... 66
Description of Notes.................. 69
Certain United States Federal Income
Tax Considerations.................. 95
Old Notes Exchange and Registration
Rights Agreements................... 97
Plan of Distribution.................. 99
Legal Matters......................... 100
Experts............................... 100
Index to Financial Statements......... F-1
</TABLE>
AURORA FOODS INC.
OFFER TO EXCHANGE
9 7/8% SERIES B SENIOR
SUBORDINATED NOTES
DUE 2007
FOR ALL OUTSTANDING
9 7/8% SENIOR SUBORDINATED NOTES
DUE 2007
AND
9 7/8% SERIES C SENIOR
SUBORDINATED NOTES
DUE 2007
---------------------
PROSPECTUS
---------------------
, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation of the Company provides that no director
shall be personally liable to the Corporation or its stockholders for monetary
damages for any breach of fiduciary duty by such director as a director except
for those breaches and acts or omissions with respect to which the General
Corporation Law of the State of Delaware expressly provides that the Certificate
of Incorporation shall not eliminate or limit such personal liability of
directors.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation, a
"derivative action") if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, if they had no reasonable
cause to believe their conduct was unlawful. A similar standard is applicable in
the case of derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with the defense or
settlement of such actions, and the statute requires court approval before there
can be any indemnification where the person seeking indemnification has been
found liable to the corporation. The statute provides that it is not exclusive
of other indemnification that may be granted by a corporation's bylaws,
disinterested director vote, stockholder vote, agreement or otherwise.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------
<C> <S>
*1.1 Purchase Agreement dated February 5, 1997 by and between the Company and Chase Securities Inc.
1.2 Purchase Agreement dated June 18, 1997 by and between the Company, Chase Securities Inc. and
Credit Suisse First Boston Corporation.
*2.1 Asset Purchase Agreement dated as of December 18, 1996, by and between MBW Foods Inc. (as
successor-in-interest to MBW Acquisition Corp.) and Conopco, Inc., as amended.
2.2 Asset Purchase Agreement dated as of May 7, 1997 by and between the Company and Kraft Foods, Inc.
*3.1 Certificate of Incorporation of the Company, as amended to date, filed with the Secretary of State
of the State of Delaware on November 21, 1996.
*3.2 Amended and Restated By-laws of the Company.
*4.1 Indenture dated as of February 10, 1997, by and between the Company and Wilmington Trust Company
(the "Indenture").
*4.2 Specimen Certificate of 9 7/8% Series A Senior Subordinated Note due 2007 (included in Exhibit 4.1
hereto).
*4.3 Specimen Certificate of 9 7/8% Series B Senior Subordinated Note due 2007 (included in Exhibit 4.1
hereto).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------
*4.4 Form of Note Guarantee to be issued by future subsidiaries of the Company pursuant to the Series A
Indenture (included in Exhibit 4.1 hereto).
<C> <S>
*4.5 Exchange and Registration Rights Agreement dated as of February 10, 1997, by and between the
Company and Chase Securities Inc.
4.6 Indenture dated as of July 1, 1997 by and between the Company and Wilmington Trust Company (the
"Series C Indenture").
4.7 Specimen Certificate of 9 7/8% Series C Senior Subordinated Note due 2007 (included in Exhibit 4.6
hereto).
4.8 Form of Note Guarantee to be issued by future subsidiaries of the Company pursuant to the Series C
Indenture (included in Exhibit 4.6 hereto).
4.9 Exchange and Registration Rights Agreement dated as of July 1, 1997 by and between the Company,
Chase Securities Inc. and Credit Suisse First Boston Corporation.
**5.1 Opinion of White & Case regarding the legality of the New Notes.
**8.1 Opinion of White & case regarding certain tax matters.
*10.1 Management Services Agreement, dated as of December 31, 1996, by and between the Company and
Dartford Partnership L.L.C.
*10.2 Advisory Services Agreement, dated as of December 31, 1996, by and between the Company and MDC
Management Company III, L.P.
*10.3 Agreement dated as of December 31, 1996, by and between MBW Foods Inc. and Fenway Partners, Inc.
10.4 Amended and Restated Credit Agreement, dated as of July 1, 1997, by and among the Company, Aurora
Holdings Inc., as Guarantor, the Lenders listed therein, The Chase Manhattan Bank, as
Administrative Agent, Chase Securities Inc., as Arranging Agent and Exhibits thereto.
*10.5 Employment Agreement, dated as of December 31, 1996, by and between the Company and Thomas J.
Ferraro.
*10.6 Employment Agreement, dated as of December 31, 1996, by and between the Company and C. Gary
Willett.
*10.7 Co-Pack Agreement, dated as of December 31, 1996, by and between the Company and Van den Bergh
Foods Company.
*10.8 Flavor Supply Agreement, dated as of December 31, 1996, by and between the Company and Quest
International Flavors & Food Ingredients Company.
*10.9 Transition Services Agreement, dated as of December 31, 1996, by and between the Company and
Conopco, Inc.
*10.10 Shared Technology Licensing Agreement, dated as of December 31, 1996, by and between the Company
and Conopco, Inc.
*10.11 Amended & Restated Limited Liability Company Agreement of MBW Investors LLC, dated as of December
31, 1996.
**10.12 Employment Agreement, dated as of January 20, 1997, by and between the Company and Alan Mintz.
10.13 Transitional Co-Pack Agreement, dated as of July 1, 1997, by and between the Company and Kraft
Foods, Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------
10.14 Transition Services Agreement, dated as of July 1, 1997, by and between the Company and Kraft
Foods, Inc.
<C> <S>
10.15 Excluded Business Co-Pack Agreement, dated as of July 1, 1997, by and between the Company and
Kraft Foods, Inc.
**10.16 Red Wing Co-Pack Agreement, dated as of June 9, 1997 by and between the Company and The Red Wing
Company, Inc.
12.1 Statement re computation of ratios.
*21.1 Subsidiaries of Registrant.
23.1 Consent of Price Waterhouse LLP.
**23.2 Consent of White & Case (contained in the opinion filed as Exhibit 5.1 hereto).
**23.3 Consent of White & Case (contained in Exhibit 8.1 hereto).
23.4 Consent of Coopers & Lybrand L.L.P.
*24.1 Power of Attorney (see page II-4).
*25.1 Statement of eligibility of trustee.
99.1 Form of Letter of Transmittal for New Notes.
*99.2 Form of Notice of Guaranteed Delivery for New Notes.
*99.3 Letter to Brokers.
*99.4 Letter to Clients.
*99.5 Instructions to Registered Holder and/or Book Entry Transfer Participant from Beneficial Owner.
*99.6 Guidelines for Certificate of Taxpayer Identification Number on substitute Form W-9.
</TABLE>
- ------------------------
* previously filed
** to be filed by amendment
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim of
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 its is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into this prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail
II-3
<PAGE>
or other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) 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 the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on July 11, 1997.
<TABLE>
<S> <C> <C>
MBW FOODS INC.
By: *
------------------------------------------
James B. Ardrey
EXECUTIVE VICE PRESIDENT
AND DIRECTOR
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and
hereby authorizes James B. Ardrey and Tyler T. Zachem, and each of them, as
attorney-in-fact, to sign on such person's behalf, individually and in each
capacity stated below, and to file any amendments, including post-effective
amendments to the registration statement.
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 1
to this Registration Statement has been signed by the following persons in the
capacities indicated on July 11, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
*
-------------------------------------------- Director and President
Thomas J. Ferraro (Principal Executive Officer)
*
-------------------------------------------- Director and Executive Vice President
Ray Chung (Principal Financial and Accounting Officer)
*
-------------------------------------------- Chairman of the Board of Directors
Ian R. Wilson
*
-------------------------------------------- Director and Executive Vice President
James B. Ardrey
*
-------------------------------------------- Director
David E. De Leeuw
*
-------------------------------------------- Director
Charles Ayres
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------------------- --------------------------------------------------------
*
-------------------------------------------- Director
Tyler T. Zachem
<S> <C>
*
-------------------------------------------- Director
Peter Lamm
*
-------------------------------------------- Director
Richard C. Dresdale
*
-------------------------------------------- Executive Vice President
C. Gary Willett
*
-------------------------------------------- Vice President and Secretary
M. Laurie Cummings
*By: /S/ TYLER T. ZACHEM
---------------------------------------
Tyler T. Zachem
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
EX-1.2
Purchase Agreement
================================================================================
AURORA FOODS INC.
9 7/8% Series C Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
dated June 18, 1997
among
AURORA FOODS INC.
and
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
================================================================================
<PAGE>
AURORA FOODS INC.
$100,000,000
9 7/8% Series C Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
June 18, 1997
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
c/o Chase Securities Inc.
270 Park Avenue, 4th Floor
New York, New York 10017
Dear Ladies and Gentlemen:
AURORA FOODS INC., a Delaware corporation (as more fully defined
below, the "Company"), proposes to issue and sell to CHASE SECURITIES INC. and
CREDIT SUISSE FIRST BOSTON CORPORATION (the "Initial Purchasers") $100,000,000
aggregate principal amount of its 9 7/8% Series C Senior Subordinated Notes due
2007 (the "Notes"). The Notes will be issued pursuant to an Indenture to be
dated as of July 1, 1997 (the "Indenture"), among the Company and Wilmington
Trust Company, as trustee (the "Trustee"). This is to confirm the agreement
concerning the purchase of the Notes from the Company by the Initial Purchasers.
For all purposes of this Agreement, the term "Company" shall mean Aurora Foods
Inc. (formerly known as MBW Foods Inc.) and the LC Business (as defined in the
Offering Memorandum).
The Notes will be offered and sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance on an exemption therefrom. The Company has prepared a
preliminary offering memorandum, dated June 13, 1997 (the "preliminary offering
memorandum"), and will prepare an offering memorandum dated the date hereof
(such offering memorandum, in the form furnished to the Initial Purchasers for
use in connection with the offering of the Notes, the "Offering Memorandum"),
setting forth information concerning the Company and the Notes. Copies of the
preliminary offering memorandum have been, and copies of the Offering Memorandum
will be delivered by the Company to the Initial Purchasers pursuant to the terms
of this Agreement. Any references herein to the preliminary offering memorandum
and the Offering Memorandum shall be deemed to include all amendments and
supplements thereto and all documents incorporated therein by reference. The
Company hereby confirms that it has authorized the use of the preliminary
offering memorandum and the Offering Memorandum in connection with the offering
and resale of the Notes by the Initial Purchasers in accordance with Section 3
hereof.
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2
The Initial Purchasers and their direct and indirect transferees
will be entitled to the benefits of the Exchange and Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company will agree to
use its best efforts to commence an offer to exchange the Notes for securities
which have been registered under the Securities Act, and which are identical in
all material respects to the Notes (except with respect to transfer
restrictions), or to cause a shelf registration statement to become effective
under the Securities Act and to remain effective for the period designated in
such Registration Rights Agreement.
The Company intends to use the proceeds of the Offering to pay a
portion of the purchase price for the LC Business (as defined in the Offering
Memorandum), and to pay related fees and expenses incurred in connection with
the Offering.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company represents and warrants to and agrees with the Initial Purchasers that:
(a) Each of the preliminary offering memorandum and the Offering
Memorandum, as of its respective date, contains all the information that, if
requested by a prospective purchaser, would be required to be provided pursuant
to Rule 144A(d)(4) under the Securities Act. Each of the preliminary offering
memorandum and the Offering Memorandum, as of its date did not, and the Offering
Memorandum as of the Closing Date (as defined below), will not, contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading; provided, however, that
the Company makes no representation or warranty as to information contained in
or omitted from the preliminary offering memorandum or the Offering Memorandum,
as amended or supplemented, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Initial Purchasers
specifically for use therein (the "Initial Purchasers' Information"). The
parties acknowledge and agree that the Initial Purchasers' Information consists
solely of the statements relating to the Initial Purchasers in the second
sentence of the third paragraph, the third sentence of the fourth paragraph and
the seventh paragraph in its entirety under the heading "Plan of Distribution"
in the Offering Memorandum.
(b) It is not required by applicable law or regulation in connection
with the issuance and sale of the Notes to the Initial Purchasers and the offer,
resale and delivery of the Notes in the manner contemplated by this Agreement
and the Offering Memorandum, to register the Notes under the Securities Act or
to qualify the Indenture in respect of the Notes under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act").
(c) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware, is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which its ownership or lease of property or the conduct
of its business requires such qualification, except where the failure to so
qualify would not have, singularly or in the aggregate, a material adverse
effect on the condition (financial or otherwise), results of operations,
business or prospects of the Company (a "Material Adverse Effect"), and has the
corporate
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3
power and authority necessary to own or hold its respective properties and to
conduct the businesses in which it is engaged as described in the Offering
Memorandum. The Company has no subsidiaries.
(d) On the Closing Date the Company will have an authorized
capitalization of 3,000 shares of common stock, of which 1,000 are issued and
outstanding, and all of the issued shares of capital stock of the Company will
have been duly and validly authorized and issued, will be fully paid and
non-assessable.
(e) The Company has the corporate right, power and authority to
execute and deliver this Agreement, the Indenture, the Registration Rights
Agreement and the Notes (collectively, the "Transaction Documents") and to
perform its obligations hereunder and thereunder; and all corporate action
required to be taken for the due and proper authorization, execution and
delivery of the Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken.
(f) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding agreement of the
Company.
(g) The Registration Rights Agreement has been duly authorized by
the Company, and when duly executed and delivered by the Company on the Closing
Date, will constitute a valid and legally binding agreement of the Company
enforceable against the Company 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) or an implied covenant of good faith and fair dealing.
(h) The Indenture has been duly authorized by the Company, and when
duly executed and delivered by the Company and the Trustee on the Closing Date,
will constitute a valid and legally binding agreement of the Company enforceable
against the Company 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) or
an implied covenant of good faith and fair dealing. At the Closing Date, the
Indenture will conform in all material respects to the requirements of the Trust
Indenture Act and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
(i) The Notes have been duly authorized by the Company, and, when
duly executed, authenticated, issued and delivered as provided in the Indenture
and paid for as provided herein, will be duly and validly issued and
outstanding, and will constitute valid and legally binding obligations of the
Company enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture, 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
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4
considered in a proceeding in equity or at law) or an implied covenant of good
faith and fair dealing.
(j) The Transaction Documents and each of the LC Asset Purchase
Agreement, the MBW Asset Purchase Agreement, the LC Co-Pack Agreement, the LC
Excluded Co-Pack Agreement, the Red Wing Co-Pack Agreement, the MBW Co-Pack
Agreement, the LC Transition Services Agreement and the MBW Transition Services
Agreement (as defined in the Offering Memorandum) conform in all material
respects to the description thereof contained in the Offering Memorandum.
(k) The execution, delivery and performance of the Transaction
Documents by the Company, the issuance, authentication, sale and delivery of the
Notes, and compliance with the terms thereof will not conflict with or result in
a breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which the Company is bound or
to which any of the property or assets of the Company is subject, nor will such
actions result in any violation of the provisions of the certificate of
incorporation or by-laws of the Company or, assuming the accuracy of the
representations and warranties of the Initial Purchasers contained herein, any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its properties or assets;
and except for such consents, approvals, authorizations, registrations or
qualifications as may be required under the applicable state securities laws in
connection with the purchase and resale of the Notes by the Initial Purchasers,
no consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of the Transaction Documents by the Company, the
issuance, authentication, sale and delivery of the Notes, and compliance with
the terms thereof, and the consummation by the Company of the transactions
contemplated thereby.
(l) Price Waterhouse LLP are independent public accountants with
respect to the Company as required by the Securities Act and the rules and
regulations thereunder for financial statements included in a definitive
prospectus forming part of a registration statement on Form S-1 under the
Securities Act. The historical financial statements (including the related notes
and supporting schedules, if any) included in the Offering Memorandum comply in
all material respects with the requirements applicable to a Registration
Statement on Form S-1 and have been prepared, and fairly present the financial
position of the entity purported to be shown thereby at the respective dates
indicated and, as applicable, the results of its operations and its cash flows
for the respective periods indicated, in accordance with generally accepted
accounting principles consistently applied throughout such periods; and the
financial information and financial data set forth in the Offering Memorandum
under the captions "Summary Pro Forma Financial Data", "Capitalization",
"Selected Historical Financial" and "Pro Forma Financial Information" are
derived from the accounting records of the Company and fairly present the data
purported to be shown. The pro forma financial statements contained in the
Offering Memorandum have been prepared on a basis consistent with such
historical financial statements, except for the pro forma
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5
adjustments specified therein, and include all material adjustments to the
historical financial data required to reflect the transactions described in the
Offering Memorandum, and give effect to assumptions made on a reasonable basis
and present fairly the historical and proposed transactions contemplated by the
Offering Memorandum and this Agreement.
(m) There are no pending actions or suits or judicial, arbitral,
rule-making or other administrative or other proceedings to which the Company is
a party or of which any property or assets of the Company is the subject which,
singularly or in the aggregate could reasonably be expected to have a Material
Adverse Effect; and to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others.
(n) No action has been taken and no statute, rule or regulation or
order has been enacted, adopted or issued by any governmental agency or body
which prevents the issuance of the Notes or suspends the sale of the Notes in
any jurisdiction; no injunction, restraining order or order of any nature by a
federal or state court of competent jurisdiction has been issued with respect to
the Company which would prevent or suspend the issuance or sale of the Notes, or
the use of the preliminary offering memorandum or the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to the best
of the Company's knowledge, threatened against or affecting the Company, before
any court or arbitrator or any governmental body, agency or official, domestic
or foreign, which could reasonably be expected to interfere with or adversely
affect the issuance of the Notes or in any manner draw into question the
validity thereof or in any manner draw into question the validity of the
Transaction Documents or any action taken or to be taken pursuant thereto.
(o) The Company (i) is not in violation of its certificate of
incorporation or by-laws, (ii) is not in default in any material respect, and no
event has occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant or
condition contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by which it
is bound or to which any of its properties or assets is subject and (iii) is not
in violation in any material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may be subject.
(p) The Company possesses all material licenses, certificates,
authorizations or permits issued by, and has made all declarations and filings
with, the appropriate state, federal or foreign regulatory agencies or bodies
which are necessary for the ownership of its properties or the conduct of its
business as described in the Offering Memorandum, except where the failure to
possess or make the same would not have, singularly or in the aggregate, a
Material Adverse Effect, and the Company has not received notification of any
revocation or modification of any such license, certificate, authorization or
permit nor has any reason to believe that any such license, certificate,
authorization or permit will not be renewed.
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6
(q) The Company is not (i) an "investment company" or a company
"controlled by" an investment company within the meaning of the Investment
Company Act of 1940, as amended (the "Investment Company Act"), and the rules
and regulations of the Commission thereunder or (ii) a "holding company" or a
"subsidiary company" of a holding company, or an "affiliate" thereof within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(r) The Company owns or possesses adequate rights to use all
material patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) necessary for
the conduct of its business and has no reason to believe that the conduct of its
business will conflict with, and has not received any notice of any claim of
conflict with, any such rights of others.
(s) The Company has good and indefeasible title in fee simple to, or
has valid rights to lease or otherwise use, all items of real and personal
property which are material to the business of the Company, in each case free
and clear of all liens, encumbrances and defects except such as are described in
the Offering Memorandum or such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Company or such as would not reasonably be expected
to have a Material Adverse Effect.
(t) No labor disturbance by the employees of the Company exists or,
to the best knowledge of the Company, is imminent which might be expected to
have a Material Adverse Effect.
(u) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section 4975
of the Internal Revenue Code of 1986, as amended from time to time (the "Code"))
or "accumulated funding deficiency" (as defined in Section 302 of ERISA) or any
of the events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of the
Company which could have a Material Adverse Effect; each such employee benefit
plan is in compliance in all material respects with applicable law, including
ERISA and the Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any "pension plan"; and each "pension plan" (as defined in
ERISA) for which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
could cause the loss of such qualification.
(v) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any kind of toxic
or other wastes or other hazardous substances by, due to, or caused by the
Company (or, to the best knowledge of the
<PAGE>
7
Company, any other entity, including their predecessors, for whose acts or
omissions the Company is or may be liable) upon any of the property now or
previously owned or leased by the Company, or upon any other property, in
violation of any statute or any ordinance, rule, regulation, order, judgment,
decree or permit or which would, under any statute or any ordinance, rule
(including rule of common law), regulation, order, judgment, decree or permit,
give rise to any liability, except for any violation or liability which would
not have, singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; there has been no disposal, discharge,
emission or other release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other hazardous
substances with respect to which the Company has knowledge, except for any such
disposal, discharge, emission, or other release of any kind which would not
have, singularly or in the aggregate with all such discharges and other
releases, a Material Adverse Effect.
(w) Since March 31, 1997 there has not been any change in the
capital stock or long-term debt of the Company (other than scheduled redemptions
or payments) or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the management, financial
position, stockholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Offering Memorandum.
(x) The Company has filed all federal, state, local and foreign
income and franchise tax returns required to be filed through the date hereof
and has paid all material taxes due thereon, and no tax deficiency has been
determined adversely to the Company which has had (nor does the Company have any
knowledge of any tax deficiency which, if determined adversely to the Company,
might reasonably be expected to have) a Material Adverse Effect.
(y) Except as set forth in or contemplated by the Offering
Memorandum, since March 31, 1997, the Company has not (i) issued or granted any
securities (other than under plans, agreements and arrangements disclosed in,
and in effect on the date of, the Offering Memorandum), (ii) incurred any
liability or obligation, direct or contingent, other than liabilities and
obligations which were incurred in the ordinary course of business, (iii)
entered into any transaction not in the ordinary course of business or (iv)
declared or paid any dividend on its capital stock.
(bb) There are no securities of the Company registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or listed on a
national securities exchange or quoted in a U.S. automated inter-dealer
quotation system.
(cc) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act ("Regulation D")) of the Company
has directly, or through any agent (provided that no representation is made as
to the Initial Purchasers or any person acting on their behalf), (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) which is or will be integrated
with the offering and sale of the Notes in a manner that would require the
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8
registration of the Notes under the Securities Act or (ii) engaged in any form
of general solicitation or general advertising (within the meaning of Regulation
D) in connection with the offering of the Notes.
(dd) Neither the Company nor its affiliates has taken, and the
Company will not take, directly or indirectly, any action designed to, or that
might reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Notes.
(ee) None of the proceeds of the sale of the Notes will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any other
purpose which might cause any of the Notes to be considered a "purpose credit"
within the meanings of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
(ff) On the Closing Date, the Company (after giving effect to the
issuance of the Notes) will be Solvent. As used in this paragraph (ff), the term
"Solvent" means, with respect to a particular date, that on such date (i) the
aggregate fair value (or present fair salable value) of the assets of the
Company is not less than its total existing debts and liabilities (including
contingent liabilities) as they become absolute and matured in the normal course
of business and (ii) the Company does not have an unreasonably small amount of
capital with which to conduct its business. In computing the amount of such
contingent liabilities at any time, it is intended that such liabilities will be
computed at the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
(gg) Neither the Company nor to the best of the Company's knowledge,
any director, officer, agent, employee or other person associated with or acting
on behalf of the Company, has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
(hh) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(ii) The Company has and will maintain insurance covering its
properties, operations, personnel and businesses, which insurance is in amounts
and insures against such
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9
losses and risks, in each case as is adequate in its reasonable business
judgment to protect the Company and its businesses. The Company has not received
notice from any insurer or agent of such insurer that capital improvements or
other expenditures will have to be made in order to continue such insurance.
(jj) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Preliminary Offering Memorandum or the Offering Memorandum has been made or
reaffirmed without a reasonable basis or has been disclosed other than in good
faith.
(kk) Except as described in "Certain Related Transactions" in the
Offering Memorandum, the Company is not a party to any contract, agreement or
understanding with any person that would give rise to a valid claim against the
Company or the Initial Purchasers for a brokerage commission, finder's fee or
like payment.
(ll) The Notes satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
2. PURCHASE OF THE NOTES BY THE INITIAL PURCHASERS. (a) On the basis
of the representations, warranties and agreements herein contained, and subject
to the terms and conditions set forth herein, the Company agrees to issue and
sell to the Initial Purchasers, and the Initial Purchasers agree to purchase
from the Company, the aggregate principal amount of the Notes as set forth
opposite each Initial Purchaser's name in Schedule 1 hereto, at a purchase price
equal to 99.425% of the principal amount thereof by wire transfer of immediately
available funds.
(b) The Company shall not be obligated to deliver any of the Notes,
except upon payment for all of the Notes to be purchased as provided herein.
3. SALE AND RESALE OF THE NOTES BY THE INITIAL PURCHASERS. (a) The
Initial Purchasers have advised the Company that they propose to offer the Notes
for resale upon the terms and conditions set forth in this Agreement and in the
Offering Memorandum. The Initial Purchasers hereby represent and warrant to, and
agree with, the Company that they (i) are purchasing the Notes pursuant to a
private sale exempt from registration under the Securities Act, (ii) will not
solicit offers for, or offer or sell, the Notes by means of any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act, and (iii) will solicit offers
for the Notes only from, and will offer, sell or deliver the Notes, as part of
their initial offering, only to persons in the United States whom the Initial
Purchasers reasonably believe to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the Securities Act, as such
rule may be amended from time to time ("Rule 144A") or, if any such person is
buying for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to them that each such
account is a Qualified Institutional Buyer to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A and in each case,
in transactions under Rule 144A.
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10
(b) The Company acknowledges and agrees that the Initial Purchasers
may sell Securities to any affiliate of the Initial Purchasers and that any such
affiliate may sell Securities purchased by it to the Initial Purchasers.
4. DELIVERY OF AND PAYMENT FOR THE NOTES. (a) Delivery of and
payment for the Notes shall be made at the offices of Simpson Thacher &
Bartlett, New York, New York, or at such other place as shall be agreed upon by
the Initial Purchasers and the Company, at 10:00 A.M., New York City time, on
July 1, 1997 or at such other time or date, not later than seven full business
days thereafter, as shall be agreed upon by the Initial Purchasers and the
Company (such date and time of payment and delivery being herein called the
"Closing Date").
(b) On the Closing Date, payment of the purchase price for the Notes
shall be made to the Company by wire transfer of same-day funds to such account
or accounts as the Company shall specify prior to the Closing Date or by such
other means as the parties hereto shall agree prior to the Closing Date against
delivery to the Initial Purchasers of the certificates evidencing the Notes.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligations of the
Initial Purchasers hereunder. Upon delivery, the Notes shall be in global form,
registered in such names and in such denominations as the Initial Purchasers
shall request in writing not less than two full business days prior to the
Closing Date. For the purpose of expediting the checking and packaging of
certificates evidencing the Notes, the Company agrees to make such certificates
available for inspection by the Initial Purchasers at least 24 hours prior to
the Closing Date.
5. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the
Initial Purchasers:
(a) To furnish to the Initial Purchasers, without charge, as many
copies of the Offering Memorandum and any supplements and amendments thereto as
they may reasonably request.
(b) To advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes any
statement of a material fact made in the Offering Memorandum untrue or which
requires the making of any additions to or changes in the Offering Memorandum
(as amended or supplemented from time to time) in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and not to effect such amendment or supplementation without the
consent of the Initial Purchasers; to advise the Initial Purchasers promptly of
any order preventing or suspending the use of the preliminary offering
memorandum or the Offering Memorandum, or the suspension of the qualification of
the Securities for offering or sale in any jurisdiction and of the initiation or
threatening of any proceeding for any such purpose; and to use reasonable best
efforts to prevent the issuance of any such order preventing or suspending the
use of the preliminary offering memorandum or the Offering Memorandum or
suspending any such qualification and, if any such suspension is issued, to
obtain the lifting thereof at the earliest possible time.
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11
(c) Prior to making any amendment or supplement to the Offering
Memorandum, the Company shall furnish a copy thereof to the Initial Purchasers
and counsel to the Initial Purchasers and will not effect any such amendment or
supplement to which the Initial Purchasers shall reasonably object by notice to
the Company after a reasonable period to review, which shall not in any case be
longer than five business days after receipt of such copy.
(d) If, at any time prior to completion of the distribution of the
Notes by the Initial Purchasers to other purchasers, any event shall occur or
condition exist as a result of which it is necessary, in the opinion of counsel
for the Initial Purchasers or counsel for the Company, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances existing at the time it is delivered to a purchaser, or if it is
necessary to amend or supplement the Offering Memorandum to comply with
applicable law, to promptly prepare such amendment or supplement as may be
necessary to correct such untrue statement or omission or so that the Offering
Memorandum, as so amended or supplemented, will comply with applicable law and
to furnish to the Initial Purchasers such number of copies thereof as it may
reasonably request.
(e) So long as the Notes are outstanding and are "Restricted
Securities" within the meaning of Rule 144(a)(3) under the Securities Act, to
furnish to holders of the Notes and prospective purchasers of Notes designated
by such holders, upon request of such holders or such prospective purchasers,
the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to and in compliance with
Section 13 or 15(d) of the Exchange Act.
(f) For a period of five years following the Closing Date, to
furnish to the Initial Purchasers copies of any annual reports, quarterly
reports and current reports filed with the Commission on Forms 10-K, 10-Q and
8-K, or such other similar forms as may be designated by the Commission, and
such other documents, reports and information as shall be furnished by the
Company to the Trustee or to the holders of the Notes pursuant to the Indenture
or the Exchange Act or any rule or regulation of the Commission thereunder.
(g) To use its reasonable best efforts to qualify the Notes for sale
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may reasonably designate and to continue such qualifications in
effect so long as required for the distribution of the Notes. The Company will
also arrange for the determination of the eligibility for investment of the
Notes under the laws of such jurisdictions as the Initial Purchasers may
reasonably request. Notwithstanding the foregoing, the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in which they
are not so qualified or to file a general consent to service of process in any
jurisdiction.
(h) To use its reasonable best efforts to permit the Notes to be
designated Private Offerings, Resales and Trading through Automated Linkages
Market ("PORTAL") securities in accordance with the rules and regulations
adopted by the National Association of
<PAGE>
12
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL Market and
to permit the Notes to be eligible for clearance and settlement through the
Depository Trust Company (the "DTC").
(i) Not to, and will cause its affiliates (as such term is defined
in Rule 501(B) under the Securities Act) not to, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect (except as contemplated in the
Offering Memorandum or hereby) of any security (as defined in the Securities
Act) which could be integrated with the sale of the Notes in a manner which
would require the registration of the Notes under the Securities Act.
(j) Except following the effectiveness of the Exchange Offer or the
Shelf Registration Statement, as the case may be, not to, and will cause its
affiliates (as such term is defined in Rule 501(B) under the Securities Act) not
to, and will not authorize or knowingly permit any person acting on their behalf
to, solicit any offer to buy or offer to sell the Notes by means of any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.
(k) To apply the net proceeds from the sale of the Notes as set
forth in the Offering Memorandum.
(l) For a period of 90 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise dispose
of, directly or indirectly, or file a registration statement for, or announce
any offer, sale, contract for sale of or other disposition of any debt
securities issued or guaranteed by the Company or any of its subsidiaries (other
than the Notes and the Existing Notes) without the prior written consent of the
Initial Purchasers.
(m) In connection with the offering, until the Initial Purchasers
shall have notified the Company of the completion of the resale of the Notes,
neither the Company nor any of its affiliated purchasers (as defined in
Regulation M under the Exchange Act), either alone or with one or more other
persons, will bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Notes, or attempt to induce
any person to purchase any Notes; and neither it nor any of its affiliated
purchasers will make bids or purchase for the purpose of creating actual, or
apparent, active trading in or of raising the price of the Notes.
6. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations of
the Initial Purchasers hereunder are subject to the accuracy, on the date hereof
and on the Closing Date, of the representations and warranties of the Company
contained herein, to the accuracy of the statements of the Company made in any
certificates delivered pursuant to provisions hereof, to the performance by the
Company of its obligations hereunder, and to each of the following additional
terms and conditions:
<PAGE>
13
(a) The Initial Purchasers shall not have discovered and disclosed
to the Company on or prior to the Closing Date that the Offering Memorandum or
any amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of Simpson Thacher & Bartlett, counsel for the Initial
Purchasers, is material or omits to state a fact which, in the opinion of such
counsel is material and is required to be stated therein or is necessary to make
the statements therein not misleading; and no stop order suspending the sale of
the Securities in any jurisdiction shall have been issued and no proceeding for
that purpose shall have been commenced or shall be pending or threatened.
(b) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents, the
Notes and the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby shall be
reasonably satisfactory in all material respects to counsel for the Initial
Purchasers, and the Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters.
(c) White & Case shall have furnished to the Initial Purchasers
their written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth in
Exhibit B hereto.
(d) The Initial Purchasers shall have received from Simpson Thacher
& Bartlett, counsel for the Initial Purchasers, such opinion or opinions, dated
the Closing Date, with respect to such matters as the Initial Purchasers may
reasonably require, and the Company shall have furnished to such counsel such
documents and information as they reasonably request for the purpose of enabling
them to pass upon such matters.
(e) With respect to the letters of Price Waterhouse LLP delivered to
the Initial Purchasers concurrently with the execution of this Agreement (the
"Initial Letters"), the Company shall have furnished to the Initial Purchasers
letters (the "Bring-Down Letters") addressed to the Initial Purchasers and dated
the Closing Date (i) confirming that they are independent public accountants
within the meaning of Rule 101 of the American Institute of Certified Public
Accountants' Code of Professional Conduct and its rulings and interpretations;
(ii) stating, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Offering Memorandum, as of a
date not more than five days prior to the date of such Bring-Down Letters), that
the conclusions and findings of the firm with respect to the financial
information and other matters covered by the initial letter are accurate and
(iii) confirming in all material respects the conclusions and findings set forth
in their initial letters.
(f) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its President or any Vice President and
its chief financial officer stating that (A) such officers have carefully
examined the Offering Memorandum, (B) in their opinion, as of the date hereof
the Offering Memorandum did not include any untrue
<PAGE>
14
statement of a material fact and did not omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and since the date hereof, no event has occurred which should have been set
forth in a supplement or amendment to the Offering Memorandum and (C) to the
best of their knowledge after reasonable investigation, as of the Closing Date,
the representations and warranties of the Company in this Agreement are true and
correct, the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date, and subsequent to the date of the most recent financial statements
in the Offering Memorandum, there has been no material adverse change in the
financial position or results of operations of the Company, or any change, or
any development including a prospective change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects of the
Company, except as set forth in the Offering Memorandum.
(g) The Initial Purchasers shall have received on the date hereof
the Registration Rights Agreement executed and delivered by duly authorized
officers of the Company.
(h) The Notes shall have been approved by the NASD for trading in
the PORTAL Market.
(i) The Indenture shall have been duly executed and delivered by the
Company and the Trustee and the Notes shall have been duly executed and
delivered by the Company and duly authenticated by the Trustee.
(j) If any event shall have occurred that requires the Company under
Section 5(c) hereof to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the Initial
Purchasers shall have been given a reasonable opportunity to comment thereon,
and copies thereof shall have been delivered to the Initial Purchasers
reasonably in advance of the Closing Date.
(k) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed withdrawal
of any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the reasonable judgment of the Initial Purchasers would materially
impair the ability of the Initial Purchasers to purchase, hold or effect resales
of the Notes as contemplated hereby.
(l) At the Closing Date, there shall exist no default or event of
default under the Indenture or the Senior Credit Facilities (as defined in the
Offering Memorandum).
(m) Since March 31, 1997, except for the transactions contemplated
by the Offering Memorandum, there shall not have been any change in the capital
stock or long-term debt of the Company or any change, or any development
involving a prospective change, in or affecting the condition (financial or
otherwise), results of operations, business or prospects of the Company, the
effect of which, in any such case described above, is, in the reasonable
judgment of the Initial Purchasers, so material and adverse as to make it
<PAGE>
15
impracticable or inadvisable to proceed with the sale or delivery of the Notes
on the terms and in the manner contemplated in the Offering Memorandum
(exclusive of any supplement).
(n) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Notes by any
"nationally recognized statistical rating organization," as that term is defined
by the Commission for purposes of Rule 436(g)(2) of the rules and regulations of
the Commission under the Securities Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review (other than an
announcement with positive implications of a positive upgrading) its rating of
the Notes.
(o) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or limited, or minimum prices
shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, or trading in any securities of the Company on
any exchange or in the over-the-counter market shall have been suspended or,
(ii) a general moratorium on commercial banking activities shall have been
declared by Federal or New York State authorities, or (iii) an outbreak or
escalation of hostilities or a declaration by the United States of a national
emergency or war, or (iv) a material adverse change in general economic,
political or financial conditions (or the effect of international conditions on
the financial markets in the United States shall be such) the effect of which,
in the case of this clause (iv), is, in the reasonable judgment of the Initial
Purchasers, so material and adverse as to make it impracticable or inadvisable
to proceed with the sale or delivery of the Notes on the terms and in the manner
contemplated by this Agreement and the Offering Memorandum (exclusive of any
supplement).
(p) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental agency
which would, as of the Closing Date, prevent the issuance or sale of the Notes;
and no injunction, restraining order or order of any other nature by a federal
or state court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance or sale of the Notes.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
7. TERMINATION. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Notes if, prior to that time, any of the events described in Sections 6(k),
(m), (n), (o) or (p) shall have occurred and be continuing.
<PAGE>
16
8. DEFAULTING INITIAL PURCHASERS. (a) If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser agreed but
failed to purchase by other persons satisfactory to the Company and the
non-defaulting Initial Purchasers, but if no such arrangements are made within
36 hours after such default, this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers or the Company, except that
the Company will continue to be liable for the payment of expenses to the extent
set forth in Sections 9 and 13 and except that the provisions of Sections 10 and
11 shall not terminate and shall remain in effect. As used in this Agreement,
the term "Initial Purchasers" includes, for all purposes of this Agreement
unless the context otherwise requires, any party not listed in Schedule 1 hereto
that, pursuant to this Section 8, purchases Securities which a defaulting
Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or any non-defaulting
Initial Purchaser for damages caused by its default. If other persons are
obligated or agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchasers or the Company may postpone the
Closing Date for up to seven full business days in order to effect any changes
that in the opinion of counsel for the Company or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other document
or arrangement, and the Company agrees to promptly prepare any amendment or
supplement to the Offering Memorandum that effects any such changes.
9. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES. If (a) this
Agreement shall have been terminated pursuant to Section 7 or 8, (b) the Company
shall fail to tender the Notes for delivery to the Initial Purchasers for any
reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Notes for any reason permitted under this Agreement, the
Company shall reimburse the Initial Purchasers for the reasonable fees and
expenses of their counsel and for such other reasonable out-of-pocket expenses
as shall have been reasonably incurred by the Initial Purchasers in connection
with this Agreement and the proposed purchase of the Notes. If this Agreement is
terminated pursuant to Section 8 by reason of the default of one or more of the
Initial Purchasers, the Company shall not be obligated to reimburse any
defaulting Initial Purchaser on account of such expenses.
10. INDEMNIFICATION. (a) The Company shall indemnify and hold
harmless each Initial Purchaser, its affiliates, and its officers, directors,
employees, representatives and agents, and each person, if any, who controls
each Initial Purchaser within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 10 and Section 11 as
the Initial Purchasers) from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases and sales
of Notes), to which that Initial Purchaser may become subject, under the
Securities Act, the Exchange Act or any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue
<PAGE>
17
statement or alleged untrue statement of a material fact contained in any
preliminary offering memorandum or the Offering Memorandum or in any amendment
or supplement thereto or any information provided by the Company pursuant to
Section 5(e) hereof or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse the Initial Purchasers promptly upon
demand for any legal or other expenses reasonably incurred by the Initial
Purchasers in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with any Initial Purchasers' Information; and provided further that with respect
to any such untrue statement or omission made in the preliminary offering
memorandum, the indemnity agreement contained in this Section 10(a) shall not
inure to the benefit of the Initial Purchasers, to the extent that the sale to
the person asserting any such loss, claim, damage, liability or action was an
initial resale by the Initial Purchasers and any such loss, claim, damage,
liability or action is a result of the fact that both (i) to the extent required
by applicable law, a copy of the Offering Memorandum was not sent or given to
such person at or prior to the written confirmation of the sale of such Notes to
such person, and (ii) the untrue statement or omission in the preliminary
offering memorandum was corrected in the Offering Memorandum unless, in either
case, such failure to deliver the Offering Memorandum was a result of
non-compliance by the Company with Section 5(c).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its affiliates, and its officers,
directors, employees, representatives and agents, and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 10 and Section 11 as
the Company), from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company may become
subject, under the Securities Act, the Exchange Act or any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary offering memorandum or the Offering Memorandum or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with such Initial Purchaser's
Information, and shall reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 10 of notice of any claim or the commencement of any action, the
indemnified party shall, if a
<PAGE>
18
claim in respect thereof is to be made against the indemnifying party under this
Section 10, notify the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have
under this Section 10 except to the extent that such indemnifying party has been
materially prejudiced by such failure and, provided further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 10. If any
such claim or action shall be brought against an indemnified party, it shall
notify the indemnifying party thereof, and the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
each indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel will be at
the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party,
(2) the indemnified party has reasonably concluded (based on advice of counsel)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based on advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel to assume the defense of
such action within a reasonable time after receiving notice of the commencement
of the action, in each of which cases the reasonable fees, disbursements and
other charges of counsel will be at the expense of the indemnifying party or
parties. It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm of attorneys (in addition to any local counsel) at any one
time for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 10(a) and 10(b),
shall use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
The obligations of the Company and the Initial Purchasers in this
Section 10 and in Section 11 are in addition to any other liability which the
Company or the Initial Purchasers, as the case may be, may otherwise have.
<PAGE>
19
11. CONTRIBUTION. If the indemnification provided for in Section 10
is unavailable or insufficient to hold harmless an indemnified party under
Section 10(a) or 10(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Initial Purchasers on the other from the offering of the Notes or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Initial Purchasers on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchasers on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Notes purchased under this Agreement (before deducting expenses) received
by the Company, on the one hand, and the total discounts and commissions
received by the Initial Purchasers with respect to the Notes purchased under
this Agreement, on the other hand, bear to the total gross proceeds from the
offering of the Notes under this Agreement, in each case as set forth in the
table on the cover page of the Offering Memorandum. The relative fault 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 the Company on the one hand or
the Initial Purchasers' Information on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and the Initial
Purchasers agree that it would not be just and equitable if contributions
pursuant to this Section 11 were to be determined by pro rata allocation or by
any other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 11 shall be deemed to include, for
purposes of this Section 11, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 11, Initial
Purchasers shall not be required to contribute any amount in excess of the
amount by which the total price at which the Notes sold and distributed by it
was offered to purchasers exceeds the amount of any damages which the Initial
Purchasers have otherwise paid or become liable to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except as provided in
Sections 10 and 11 with respect to affiliates, officers, directors, employees,
representatives, agents and controlling persons of the Company and the Initial
Purchasers and in Section 5(f) with respect to holders and
<PAGE>
20
prospective purchasers of the Notes. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 12, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
13. EXPENSES. The Company agrees with the Initial Purchasers to pay
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Notes and any taxes payable in that connection, (b) the costs
incident to the preparation and printing of the preliminary offering memorandum
and the Offering Memorandum and any amendments or supplements thereto, (c) the
costs of distributing the preliminary offering memorandum and the Offering
Memorandum and any amendments or supplements thereto, (d) the costs of printing,
reproducing and distributing the Transaction Documents, (e) the costs incident
to the preparation, printing and delivery of the certificates representing the
Notes, including stamp duties and stock transfer taxes, if any, payable upon
issuance of any of the Notes, (f) the fees and disbursements of the Company's
counsel and accountants, (g) the fees and disbursements of accountants for the
Company and the LC Business (as defined in the Offering Memorandum), (h) any
fees charged by rating agencies for rating the Notes, (i) the fees and expenses
of qualifying the Notes under securities laws of the several jurisdictions as
provided in Section 5(g) and of preparing, printing and distributing a Blue Sky
memorandum (including related reasonable fees and expenses of Simpson Thacher &
Bartlett, counsel to the Initial Purchasers), (j) the fees and expenses of the
Trustee and any paying agent, (including related fees and expenses of any
counsel for such parties), (k) all expenses and listing fees incurred in
connection with the application for quotation of the Notes on the PORTAL Market
and the approval of the Notes for book-entry transfer by The Depository Trust
Company, and (l) all other reasonable costs and expenses incident to the
performance of the Company's obligations hereunder which are not otherwise
specifically provided for in this Section; provided, however, that except as
provided in this Section 13 and Section 9, the Initial Purchasers shall pay
their own costs and expenses, including the costs and expenses of its counsel.
14. SURVIVAL. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Initial
Purchasers contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Notes and shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement or any investigation made by
or on behalf of any of them or any person controlling any of them.
15. NOTICES. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent
by mail or facsimile transmission to Chase Securities Inc., 270 Park
Avenue, New York, New York 10017, Attention: James C. Neary (Fax:
212-270-0994) and to Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, New York 10010, Attention: Robert A.
Hansen (Fax: 212-325-8278); or
<PAGE>
21
(b) if to the Company, shall be delivered or sent by mail or
facsimile transmission to the address of the Company: 445 Hutchinson
Avenue, Columbus, Ohio 43235, Attn: Thomas Ferraro, with a copy to
Frank Schiff, Esq., White & Case, 1155 Avenue of the Americas, New
York, New York 10036.
provided, however, that any notice to the Initial Purchasers pursuant to Section
10(c) shall be delivered or sent by mail to the Initial Purchasers at 270 Park
Avenue, 39th Floor, New York, New York 10017, Attention: Legal Department. Any
such statements, requests, notices or agreements shall take effect at the time
of receipt thereof.
16. DEFINITION OF TERMS. For purposes of this Agreement, "business
day" means any day on which the New York Stock Exchange, Inc. is open for
trading.
17. GOVERNING LAW. This Agreement 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.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
19. AMENDMENTS. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
20. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument will become a binding agreement among the Company and the
Initial Purchasers in accordance with its terms.
Very truly yours,
AURORA FOODS INC.
By: /s/ James B. Ardrey
----------------------------------
Title: Executive Vice President
Accepted:
CHASE SECURITIES INC.
By: /s/ Joseph C. Purcell
----------------------------------
Authorized Signatory
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Richard Gallant
----------------------------------
Authorized Signatory
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SCHEDULE 1
Aggregate Principal
Initial Purchasers Amount of Notes
------------------ ---------------
Chase Securities Inc. $ 70,000,000
Credit Suisse First Boston Corporation $ 30,000,000
Total ============
$100,000,000
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EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
July 1, 1997
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
c/o Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Dear Sirs:
Aurora Foods Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to you (the "Initial Purchasers"), upon the terms set forth in
a purchase agreement dated June 18, 1997 (the "Purchase Agreement"),
$100,000,000 principal amount of its 9 7/8% Series C Senior Subordinated
Securities due 2007 (the "Securities") which Securities shall be unsecured and
will be subordinated to all existing and future Senior Indebtedness of the
Company and will be effectively subordinated to all obligations of each
subsidiary of the Company as may exist from time to time. Capitalized terms used
but not specifically defined herein have the respective meanings ascribed
thereto in the Purchase Agreement. As an inducement to the Initial Purchasers to
enter into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you, for the benefit of the
holders of the Securities (including the Initial Purchasers) (the "Holders"), as
follows:
1. Registered Exchange Offer. The Company shall prepare and, not
later than 60 days following the Issue Date (as hereinafter defined), shall file
with the Commission a registration statement (the "Exchange Offer Registration
Statement") on an appropriate form under the Securities Act with respect to a
proposed offer (the "Registered Exchange Offer") to the Holders to issue and
deliver to such Holders, in exchange for the Securities, a like aggregate
principal amount of debt securities of the Company (the "Exchange Securities")
identical in all material respects to the Securities, except for the transfer
restrictions relating to the Securities, shall use its reasonable best efforts
to cause the Exchange Offer Registration Statement to become effective under the
Securities Act no later than 150 days after the Issue Date and to be consummated
no later than 180 days after the Issue Date, and shall keep the Exchange Offer
Registration Statement effective for not less than 30 days (or longer, if
required by applicable law) after the date notice of the Exchange Offer is
mailed to the Holders (such period being called the "Exchange Offer Registration
Period"). The Exchange Securities will be issued under the Indenture or an
indenture (the "Exchange Securities Indenture") between the Company and the
Trustee or such other bank or trust company reasonably satisfactory to you, as
trustee (the "Exchange Securities Trustee"), such indenture to be identical in
all material respects to the Indenture except for the transfer restrictions
relating to the Securities (as described above).
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Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Securities (assuming that such Holder (a) is
not (i) an affiliate of the Company within the meaning of the Securities Act or
(ii) an Exchanging Dealer (as defined below) not complying with the requirements
of the next sentence, (b) acquires the Exchange Securities in the ordinary
course of such Holder's business and (c) has no arrangements or understandings
with any person to participate in the distribution of the Exchange Securities)
and to trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States. The Company, the Initial Purchasers and each Exchanging Dealer (as
defined below) acknowledge that, pursuant to current interpretations by the
Commission's staff of Section 5 of the Securities Act, (i) each Holder which is
a broker-dealer electing to exchange Securities, acquired for its own account as
a result of market making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required to deliver a prospectus
containing the information set forth in Annex A hereto on the cover, in Annex B
hereto in the "Exchange Offer Procedures" section and the "Purpose of the
Exchange Offer" section, and in Annex C hereto in the "Plan of Distribution"
section of such prospectus in connection with a sale of any such Exchange
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer and (ii) if the Initial Purchasers elect to sell Exchange
Securities acquired in exchange for Securities constituting any portion of an
unsold allotment it is required to deliver a prospectus containing the
information required by Items 507 or 508 of Regulation S-K under the Securities
Act, as applicable, in connection with such a sale.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Securities acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, the Company shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Securities in the Registered
Exchange Offer, issue and deliver to any such Holder, in exchange for the
Securities held by such Holder (the "Private Exchange"), a like aggregate
principal amount of debt securities of the Company (the "Private Exchange
Securities") that are identical in all material respects to the Exchange
Securities, except for the transfer restrictions relating to such Private
Exchange Securities. The Private Exchange Securities will be issued under the
same indenture as the Exchange Securities, and the Company shall use its
reasonable best efforts to cause the Private Exchange Securities to bear the
same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange offer open for not less than 30
days after the date notice of the Exchange Offer is mailed to the Holders
(or longer if required by applicable law);
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(c) utilize the services of a Depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last business day on which
the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws applicable to the
Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, the Company shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder of
Securities, Exchange Securities or Private Exchange Securities, as the
case may be, equal in principal amount to the Securities of such Holder so
accepted for exchange.
The Company shall make available for a period of 90 days after the
consummation of the Registered Exchange Offer, a copy of the prospectus forming
part of the Exchange Offer Registration Statement to any broker-dealer for use
in connection with any resale of any Exchange Securities.
Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Securities surrendered in exchange therefor or, if no interest has been paid
on the Securities, from the date of original issue of the Securities.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an affiliate of the Company
within the meaning of the Securities Act, or if it is an affiliate, it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration
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Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any prospectus forming part of any Exchange Offer Registration
Statement, and any supplement to such prospectus, does not include, as of the
consummation of the Registered Exchange Offer, an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
2. Shelf Registration. If (i) applicable interpretations of the
staff of the Commission do not permit the Company to effect the Registered
Exchange Offer as contemplated by Section 1 hereof, or (ii) for any other reason
the Registered Exchange Offer is not consummated within 165 days after the Issue
Date or (iii) any Holder either (A) is not eligible to participate in the
Registered Exchange Offer or (B) participates in the Registered Exchange Offer
and does not receive freely transferrable Exchange Securities in exchange for
tendered Securities the following provisions shall apply:
(a) The Company shall use all reasonable efforts to as promptly as
practicable file with the Commission and thereafter shall use its reasonable
best efforts to cause to be declared effective a shelf registration statement on
an appropriate form under the Securities Act relating to the offer and sale of
the Transfer Restricted Securities (as defined below) by the Holders from time
to time in accordance with the methods of distribution set forth in such
registration statement (hereafter, a "Shelf Registration Statement" and,
together with any Exchange Offer Registration Statement, a "Registration
Statement"); provided, however, that no Holder of Securities or Exchange
Securities (other than the Initial Purchasers) shall be entitled to have
Securities or Exchange Securities held by it covered by such Shelf Registration
Statement unless such Holder agrees in writing to be bound by all the provisions
of this Agreement applicable to such Holder.
(b) The Company shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by Holders for a period of three
years from the Issue Date or such shorter period that will terminate when all
the Securities and Exchange Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement (in any
such case, such period being called the "Shelf Registration Period"). The
Company shall be deemed not to have used its reasonable best efforts to keep the
Shelf Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Securities or
Exchange Securities covered thereby not being able to offer and sell such
Securities or Exchange Securities during that period, unless such action is
required by applicable law; provided, however, that the foregoing shall not
apply to actions taken by the Company in good faith and for valid business
reasons (not including avoidance of its obligations hereunder), including,
without limitation, the acquisition or divestiture of assets, so long as the
Company within 120 days thereafter complies with the requirements of Section
4(i) hereof. Any such period during which the Company fails to keep the
registration statement effective and usable for offers and sales of Securities
and Exchange Securities is referred to as a "Suspension Period." A Suspension
Period shall commence on and include the date that the Company gives notice that
the Shelf Registration Statement is no longer effective or the prospectus
included therein is no longer usable for offers and sales of Securities and
Exchange Securities and shall end on the date when each Holder of Securities and
Exchange Securities covered by such registration statement either receives the
copies of
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the supplemented or amended prospectus contemplated by Section 4(i) hereof or is
advised in writing by the Company that use of the prospectus may be resumed. If
one or more Suspension Periods occur, the three-year time period referenced
above shall be extended by the number of days included in each such Suspension
Period.
(c) Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Shelf Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in
either case, other than with respect to information included therein in reliance
upon or in conformity with written information furnished to the Company by or on
behalf of any Holder specifically for use therein (the "Holders' Information"))
does not, when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (iii) any prospectus forming
part of any Shelf Registration Statement, and any supplement to such prospectus
(in either case, other than with respect to Holders' Information), does not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the Holders
of Securities will suffer damages if the Company fails to fulfill its
obligations under Section 1 or Section 2, as applicable, and that it would not
be feasible to ascertain the extent of such damages. Accordingly, if (i) the
applicable Registration Statement is not filed with the commission on or prior
to 60 days after the Issue Date, (ii) the Exchange Offer Registration Statement
or the Shelf Registration Statement, as the case may be, is not declared
effective within 150 days after the Issue Date (or in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
the applicable interpretations of Commission's Staff, if later, within 45 days
after publication of the change in law or interpretation), (iii) the Registered
Exchange Offer is not consummated on or prior to 180 days after the Issue Date,
or (iv) the Shelf Registration Statement is filed and declared effective within
150 days after the Issue Date (or in the case of a Shelf Registration Statement
required to be filed in response to a change in law or the applicable
interpretations of Commission's Staff, if later, within 45 days after
publication of the change in law or interpretation) but shall thereafter cease
to be effective (at any time that the Company is obligated to maintain the
effectiveness thereof) without being succeeded within 60 days by an additional
Registration Statement filed and declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company will
generally be obligated to pay liquidated damages to each holder of Transfer
Restricted Securities (as defined below), during the period of such Registration
Default, in an amount equal to $0.192 per week per $1,000 principal amount of
the Securities constituting Transfer Restricted Securities held by such holder
until the applicable Registration Statement is filed or declared effective, the
Registered Exchange Offer is consummated or the Shelf Registration Statement
again becomes effective, as the case may be; provided, however, no liquidated
damages shall be payable for a Registration Default under clause (iii) above if
a Shelf Registration Statement covering the securities for which the Exchange
Offer was intended shall have been declared effective. Following the cure of all
Registration Defaults, the accrual of liquidated damages will cease. "Transfer
Restricted Securities" means each Security or Exchange Security until (i) the
date on which such Security or Exchange Security has been exchanged for a freely
transferrable Exchange
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Security in the Registered Exchange Offer, (ii) the date on which such Security,
Exchange Security or Private Exchange Security has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) the date on which such Security, Exchange
Security or Private Exchange Security is distributed to the public pursuant to
Rule 144 under the Securities Act or is salable pursuant to Rule 144(k) under
the Securities Act. Notwithstanding anything to the contrary in this Section
3(a), the Company shall not be required to pay liquidated damages to the holder
of Transfer Restricted Securities if such holder: (a) failed to comply with its
obligations to make the representations in the second to last paragraph of
Section 1; or (b) failed to provide the information required to be provided by
it, if any, pursuant to Section 4(m).
(b) The Company shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Company shall pay the liquidated damages due on the Transfer
Restricted Securities by depositing with the Paying Agent (which may not be the
Company for these purposes), in trust, for the benefit of the Holders thereof,
prior to 10:00 a.m., New York City time on the next interest payment date
specified by the Indenture and the Securities, sums sufficient to pay the
liquidated damages then due. The liquidated damages due shall be payable on each
interest payment date specified by the Indenture to the record holder entitled
to receive the interest payment to be made on such date. Each obligation to pay
liquidated damages shall be deemed to accrue from and including the applicable
Registration Default.
(c) The parties hereto agree that the liquidated damages provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by holders of Transfer
Restricted Securities by reason of the failure of the Shelf Registration
Statement or the Exchange Offer Registration Statement, as the case may be, to
be filed, to be declared effective or to remain effective, or the Exchange Offer
to be consummated, as the case may be, to the extent required by this Agreement.
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to you, prior to the filing
thereof with the Commission, a copy of the Registration Statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that the Initial Purchasers (with respect to any
portion of an unsold allotment from the original offering) are participating in
the Registered Exchange Offer or the Shelf Registration, shall use reasonable
efforts to reflect in each such document, when so filed with the Commission,
such comments as you reasonably may propose; (ii) if applicable, include the
information set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a part of the Exchange Offer Registration Statement, and
include the information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; and (iii) if requested by
the Initial Purchasers, include the information required by Items 507 or 508 of
Regulation S-K under the Securities Act, as applicable, in the prospectus
forming a part of the Exchange Offer Registration Statement.
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(b) The Company shall advise you and, if requested by the Holders,
but only as to events set forth in clauses (i) and (ii) below, the Holders and,
if requested by you, confirm such advice in writing (which advice pursuant to
clauses (ii)-(iv) hereof shall be accompanied by an instruction to suspend the
use of the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to any Registration Statement or the prospectus included therein or for
additional information;
(iii) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Securities, the Exchange
Securities or the Private Exchange Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose; and
(iv) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus so that, as of
such date, the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) The Company will furnish to each Holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits (including those
incorporated by reference).
(d) The Company will, during the Shelf Registration Period, promptly
deliver to each Holder of Transfer Restricted Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents to the use of the prospectus or
any amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Securities in connection with the offering and sale of the Transfer
Restricted Securities covered by the prospectus or any amendment or supplement
thereto.
(e) The Company will furnish to each Exchanging Dealer or any
Initial Purchaser, as applicable, which so requests, without charge, at least
one copy of the Exchange Offer Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if the
Exchanging Dealer or any Initial Purchaser, as applicable, so requests in
writing, all exhibits (including those incorporated by reference).
(f) The Company will, during the Exchange Offer Registration Period,
promptly deliver to each Exchanging Dealer or any Initial Purchaser, as
applicable, without charge, as many copies of the prospectus included within the
coverage of Exchange Offer
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Registration Statement and any amendment or supplement thereto as such
Exchanging Dealer or any Initial Purchaser, as applicable, may reasonably
request for delivery by (i) such Exchanging Dealer in connection with a sale of
Exchange Securities received by it pursuant to the Registered Exchange Offer or
(ii) the Initial Purchasers in connection with a sale of Exchange Securities
received by it in exchange for Securities constituting any portion of an unsold
allotment; and the Company consents to the use of the prospectus or any
amendment or supplement thereto by any such Exchanging Dealer or the Initial
Purchasers, as applicable, as aforesaid.
(g) Prior to any public offering of Securities or Exchange
Securities pursuant to any Registration Statement, the Company will use its
reasonable best efforts to register or qualify or cooperate with the Holders of
Securities included therein and its counsel in connection with the registration
or qualification of such securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Securities, the Exchange
Securities or the Private Exchange Securities covered by such Registration
Statement; provided, however, that the Company will not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
(h) The Company will cooperate with the Holders of Securities,
Exchange Securities or Private Exchange Securities to facilitate the timely
preparation and delivery of certificates representing Securities, Exchange
Securities or Private Exchange Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as Holders may request in writing prior to sales of
Securities, Exchange Securities or Private Exchange Securities pursuant to such
Registration Statement.
(i) If (i) any event contemplated by paragraphs (b)(ii) through (iv)
above occurs during the period in which the Company is required to maintain an
effective Registration Statement or (ii) any Suspension Period remains in effect
more than 120 days after the occurrence thereof, the Company will promptly
prepare a post-effective amendment to the Registration Statement or a supplement
to the related prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Securities, the Exchange Securities or
the Private Exchange Securities from a Holder, the prospectus will not include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(j) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities, the
Exchange Securities and the Private Exchange Securities, as the case may be, and
provide the applicable trustee with printed certificates for the Securities, the
Exchange Securities and the Private Exchange Securities, as the case may be, in
a form eligible for deposit with The Depository Trust Company.
(k) The Company will use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission and will make generally
available to its
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security holders as soon as practicable after the effective date of the
applicable Registration Statement an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act; provided that in no event
shall such earnings statement be delivered later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing after the effective
date of the applicable Registration Statement, which statements shall cover such
12-month period.
(l) The Company will cause the Indenture or the Exchange Securities
Indenture, as the case may be, to be qualified under the Trust Indenture Act as
required by applicable law in a timely manner.
(m) The Company may require each Holder of Transfer Restricted
Securities to be sold pursuant to any Shelf Registration Statement to furnish to
the Company such information regarding the Holder and the distribution of such
Transfer Restricted Securities as the Company may from time to time reasonably
require for inclusion in such Registration Statement, and the Company may
exclude from such registration the Transfer Restricted Securities of any Holder
that unreasonably fails to furnish such information within a reasonable time
after receiving such request.
(n) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 4(b)(ii) through (iv) hereof, such
Holder will discontinue disposition of such Transfer Restricted Securities until
such Holder's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(i) hereof, or until advised in writing (the "Advice")
by the Company that the use of the applicable prospectus may be resumed. If the
Company shall give any notice under Section 4(b)(ii) through (iv) during the
period that the Company is required to maintain an effective Registration
Statement (the "Effectiveness Period"), such Effectiveness Period shall be
extended by the number of days during such period from and including the date of
the giving of such notice to and including the date when each seller of Transfer
Restricted Securities covered by such Registration Statement shall have received
(x) the copies of the supplemental or amended prospectus contemplated by Section
4(i) (if an amended or supplemental prospectus is required) or (y) the Advice
(if no amended or supplemental prospectus is required).
5. Registration Expenses. The Company will bear all expenses
incurred in connection with the performance of its obligations under Sections 1,
2, 3 and 4 hereof and the Company will reimburse the Initial Purchasers and the
Holders for the reasonable fees and disbursements of one firm of attorneys
chosen by the Holders of a majority in aggregate principal amount of the
Securities, the Exchange Securities and the Private Exchange Securities to be
sold pursuant to each Registration Statement (the "Special Counsel") acting for
the Initial Purchasers or Holders in connection therewith.
6. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Exchanging Dealer or the Initial Purchasers,
as applicable, the Company shall indemnify and hold harmless each Holder, its
directors, officers, agents and employees and each person, if any, who controls
such Holder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act and the directors, officers, agents and
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10
employees of such controlling persons against any and all loss, liability, claim
and damage, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or any
prospectus forming part thereof or in any amendment or supplements thereto or
the omission or alleged omission therefrom of a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and shall reimburse each Holder promptly upon
demand for any and all expense (including, subject to Section 6(c) hereof, the
fees and disbursements of counsel chosen by the indemnified party), reasonably
incurred as such expenses are incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
or regulatory agency or body, commenced or threatened, or any claim based upon
any such untrue statement or omission, or any such alleged untrue statement or
omission; provided, however, that (i) this indemnity shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with Holders' Information and (ii) this
indemnity with respect to any untrue statement or alleged untrue statement or
omission or alleged omission in any related preliminary prospectus shall not
enure to the benefit of any indemnified party from whom the person asserting any
such loss, claim, damage or liability received Securities, Exchange Securities
or Private Exchange Securities if such persons did not receive a copy of the
final prospectus at or prior to the confirmation of the sale of such Securities,
Exchange Securities or Private Exchange Securities to such person in any case
where such delivery is required by the Securities Act and the untrue statement
or omission of material fact contained in the related preliminary prospectus was
corrected in the final prospectus unless such failure to deliver the final
prospectus was a result of noncompliance by the Company with Sections 4(c),
4(d), 4(e) or 4(f).
(b) In the event of a Shelf Registration Statement, each Holder
agrees to indemnify and hold harmless the Company, its directors, officers,
agents and employees and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act and the directors, officers, agents and employees of such controlling
persons against any and all loss, liability, claim, damage and expense described
in the indemnity contained in Section 6(a) hereof, as incurred, arising out of
or based upon any untrue statements or omissions, or alleged untrue statements
or omissions, made in the Registration Statement (or any amendment or supplement
thereto) in reliance on and in conformity with Holders' Information furnished to
the Company by such Holder; provided, however, that no such Holder shall be
liable for any indemnity claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Securities or Exchange
Securities pursuant to the Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any claim or action
commenced against it in respect of which indemnity may be sought hereunder;
provided, however, that failure to so notify an indemnifying party shall not
relieve such indemnifying party from any obligation that it may have pursuant to
this Section except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure;
provided further, however, that the failure to notify an indemnifying party
shall not relieve it from any liability that it may have to an indemnified party
otherwise than on account of this indemnity agreement. If any such claim or
action shall be brought against an indemnified party, the indemnified party
shall notify the indemnifying party thereof, and the indemnifying party
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11
shall be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 6 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof; provided, however, that an indemnified party will have
the right to employ its own counsel in any such action, but the fees, expenses
and other charges of such counsel will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based on the written advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (3) a conflict
or potential conflict exists (based on the written advice of counsel to the
indemnified party) between the indemnified party and indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel for the indemnified party will be at the expense of the indemnifying
party or parties. It is understood that the indemnifying party or parties shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges
of more than one separate firm of attorneys (in addition to any local counsel)
at any one time for all such indemnified party or parties. Each indemnified
party, as a condition of the indemnity agreements contained in Sections 6(a) and
6(b), shall use all reasonable efforts to cooperate with the indemnifying party
in the defense of any such action or claim. No indemnifying party shall be
liable for any settlement of any such action effected without its written
consent, but if settled with its written consent or if there be a final judgment
of the plaintiff in any such action, the indemnifying party agrees to indemnify
and hold harmless any indemnified party from and against any loss or liability
by reason of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If a claim by an indemnified party for indemnification under
this Section 6 is unenforceable even though the express provisions hereof
provide for indemnification in such case, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions,
statements or omissions that resulted in such losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such indemnifying party
or indemnified party, and the parties' relative intent, knowledge, access
<PAGE>
12
to information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any losses shall
be deemed to include, subject to the limitations set forth in Section 6(c)
herein, any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section, an indemnifying party that is a
holder of Transfer Restricted Securities, Exchange Securities or Private
Exchange Securities shall not be required to contribute any amount in excess of
the amount by which the total price at which the Transfer Restricted Securities,
Exchange Securities or Private Exchange Securities sold by such indemnifying
party and distributed to the public were offered to the public exceeds the
amount of any damages that such indemnifying party would have otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 10(f) of the Securities Act) shall be entitled to any
contribution from any person who was not guilty of such fraudulent
misrepresentation.
7. Miscellaneous. (a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the Company
has obtained the written consent of Holders of a majority in aggregate principal
amount of the Securities, the Exchange Securities and the Private Exchange
Securities, taken as a single class. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of the Holders of Securities, Exchange
Securities or Private Exchange Securities whose Securities, Exchange Securities
or Private Exchange Securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of a majority in aggregate principal amount of
the Securities, Exchange Securities or Private Exchange Securities being sold by
such Holders pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 7(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy
in like manner to Chase Securities Inc.;
(2) if to you, initially at your address set forth in the Purchase
Agreement; and
(3) if to the Company, initially at the address of the Company set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a
<PAGE>
13
next-day air courier; five business days after being deposited in the mail; and
when receipt is acknowledged by the recipient's telecopier machine, if
telecopied.
(c) Successors And Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopies) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law; Submission to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED 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.
(g) No Inconsistent Agreements. The Company has not and shall not,
on or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the holders of Transfer Restricted
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The Company has not previously entered into any agreement which remains in
effect granting any registration rights with respect to any of its debt
securities to any person. Without limiting the generality of the foregoing,
without the written consent of the holders of a majority in aggregate principal
amount of the then outstanding Transfer Restricted Securities, the Company shall
not grant to any person the right to request the Company to register any debt
securities of the Company under the Securities Act unless the rights so granted
are not in conflict or inconsistent with the provisions of the Agreement.
(h) No Piggyback on Registrations. Neither the Company, nor any of
its security holders (other than the holders of Transfer Restricted Securities
in such capacity) shall have the right to include any securities of the Company
in any Shelf Registration or Registered Exchange Offer other than Transfer
Restricted Securities.
(i) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions,
<PAGE>
14
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(j) Remedies. In the event of a breach by the Company, or by any
holder of Transfer Restricted Securities, of any of their obligations under this
Agreement, each holder of Transfer Restricted Securities or the Company, as the
case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages (other than the recovery of damages for a
breach by the Company of its obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of its rights under this Agreement. The Company
and each holder of Transfer Restricted Securities agree that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agree that,
in the event of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be adequate.
<PAGE>
15
Please confirm that the foregoing correctly sets forth the agreement
among the Company and you.
Very truly yours,
AURORA FOODS INC.
By:
----------------------------------
Name:
Title:
Accepted in New York, New York
CHASE SECURITIES INC.
By:
----------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
----------------------------------
Name:
Title:
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
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 Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company 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 "Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company 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 Exchange Securities may be
required to deliver a prospectus.*
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities 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 Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities 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 and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
- --------
* In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
<PAGE>
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
EXHIBIT B
FORM OF OPINION OF
WHITE & CASE
White & Case shall furnish to the Initial Purchasers their written
opinion, as counsel to the Company, addressed to the Initial Purchasers
and dated the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchasers, to the effect that:
1. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, and has the corporate power and authority
necessary to own or hold its properties and to conduct the
businesses in which it is engaged as described in the Offering
Memorandum. The Company has no subsidiaries.
2. The Company's authorized capitalization is 3,000
shares of common stock, of which 1,000 are issued and outstanding,
and all of the issued shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and
nonassessable.
3. The statements in the Offering Memorandum under the
caption "Certain United States Federal Income Tax Considerations",
insofar as they purport to constitute summaries of matters of United
States federal tax law and regulations or legal conclusions with
respect thereto, constitute accurate summaries of the matters
described therein in all material respects.
4. The Company has the corporate right, power and
authority to execute and deliver the Transaction Documents and to
perform its obligations thereunder; and all corporate action
required to be taken for the due and proper authorization, execution
and delivery of the Transaction Documents and the consummation of
the transactions contemplated thereby have been duly and validly
taken.
5. Each of the Purchase Agreement and the Registration
Rights Agreement has been duly authorized, executed and delivered by
the Company, and each constitutes a valid and legally binding
agreement, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency, or other similar laws affecting
creditors' rights generally or by general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law).
6. The Indenture has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution
and delivery thereof by the Trustee, constitutes a valid and legally
binding agreement of the Company enforceable in accordance with its
terms, except as the enforcement thereof may be limited by
applicable bankruptcy, reorganization, insolvency,
<PAGE>
2
or other similar laws affecting creditors' rights generally or by
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
7. The Notes have been duly authorized, executed and
issued by the Company and, assuming due authentication thereof by
the Trustee and upon payment and delivery in accordance with the
Purchase Agreement, will constitute valid and legally binding
obligations of the Company enforceable in accordance with their
respective terms, except as the enforcement thereof may be limited
by applicable bankruptcy, reorganization, insolvency, or other
similar laws affecting creditors' rights generally or by general
principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law). The statements made in the
Offering Memorandum under the caption "Description of Notes" and
"Exchange and Registration Rights Agreement," insofar as they
purport to constitute summaries of certain terms of the Indenture,
the Notes and the Registration Rights Agreement, constitute accurate
summaries of the terms of such documents in all material respects.
8. The execution, delivery and performance by the Company
of each of the Transaction Documents, the issuance, authentication,
sale and delivery of the Securities and compliance by the Company
with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents will not conflict with or
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to, any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or
instrument known to us to which the Company is a party or by which
the Company is bound or to which any of the property or assets of
the Company is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws of the Company
or any statute or any judgment, order, decree, rule or regulation of
any court or governmental agency or body having jurisdiction over
the Company or any of its properties or assets except for such
conflicts, breaches, violations, defaults, liens, charges or
encumbrances as would not have a Material Adverse Effect; and to our
knowledge no consent, approval, authorization or order of, or filing
or registration with, any such court or arbitrator or governmental
agency or body under any such statute, judgment, order, decree, rule
or regulation is required for the execution, delivery and
performance by the Company of each of the Transaction Documents, the
issuance, authentication, sale and delivery of the Securities and
compliance by the Company with the terms thereof and the
consummation of the transactions contemplated by the Transaction
Documents, except for such consents, approvals, authorizations,
filings, registrations or qualifications (i) which have been
obtained or made prior to the Closing Date and (ii) as may be
required to be obtained or made under the Securities Act and
applicable state securities laws as provided in the Registration
Rights Agreement.
<PAGE>
3
9. Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or
delivery of the Notes will violate Regulation G, T, U or X of the
Federal Reserve Board.
10. To the knowledge of such counsel, there are no pending
actions or suits or judicial, arbitral, rule-making, administrative
or other proceedings to which the Company is a party or of which any
property or assets of the Company is the subject which questions the
validity or enforceability of any of the Transaction Documents or
any action taken or to be taken pursuant thereto; and to the
knowledge of such counsel, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
11. The Company is not an "investment company" or a
company "controlled" by an investment company within the meaning of
the Investment Company Act.
12. Assuming (i) the accuracy of the representations,
warranties and agreements of the Company and of the Initial
Purchasers contained in the Purchase Agreement and (ii) that the
persons who buy the Notes in the initial resale thereof are
Qualified Institutional Buyers, the issuance and sale of the Notes
and the offer, resale and delivery of the Notes in the manner
contemplated in the Offering Memorandum and the Purchase Agreement,
are exempt from the registration requirements of the Securities Act
and it is not necessary to qualify the Indenture under the Trust
Indenture Act.
Such counsel shall state that they have participated in conferences
with representatives of the Company and with representatives of its
independent accountants, at which conferences the contents of the Offering
Memorandum, any amendment thereof and supplement thereto and related
matters were discussed, and, although such counsel assume no
responsibility for the factual accuracy or completeness of the Offering
Memorandum, any amendment thereof or supplement thereto (except as
expressly provided above), such counsel believes that the Offering
Memorandum or any amendment thereof or supplement thereto (other than the
financial statements and other financial and statistical information
contained therein, as to which such counsel need express no belief)
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials which are
furnished to the Initial Purchasers.
<PAGE>
EX-2.2
Asset Purchase Agreement
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
by and between
KRAFT FOODS, INC.
and
MBW FOODS INC.
-----------------------------------
Dated as of May 7, 1997
-----------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions; Purchase and Sale of Assets;
Assumption of Liabilities.......................................1
(a) Certain Definitions.......................................1
(b) Purchase and Sale of Assets...............................2
(c) Assets....................................................2
(d) Excluded Assets...........................................3
(e) Assumed Liabilities.......................................4
(f) Excluded Liabilities......................................5
(g) Allocation of Purchase Price..............................6
2. Closing; Purchase Price Adjustment..............................6
(a) Closing...................................................6
(b) Purchase Price Adjustment.................................9
(c) Inventory Transfer.......................................10
(d) Personal Property Tax Apportionment......................10
3. Conditions to Closing..........................................11
(a) Buyer's Obligation.......................................11
(b) Seller's Obligation......................................12
4. Representations and Warranties of Seller.......................12
(a) Authority; No Conflicts..................................12
(b) Financial Schedules......................................13
(c) Title to Assets..........................................13
(d) Intellectual Property....................................14
(e) Contracts................................................14
(f) Litigation; Decrees......................................15
(g) Absence of Changes or Events.............................16
(h) Compliance with Applicable Laws..........................16
(i) Taxes....................................................16
(j) Trade Deals and Promotions...............................16
(k) Major Customers..........................................17
(l) Tangible Personal Property...............................17
(m) Permits..................................................17
(n) Equipment................................................17
(o) Ingredients..............................................17
5. Covenants of Seller............................................17
(a) Access...................................................17
(b) Ordinary Conduct.........................................17
(c) Confidentiality..........................................18
(d) Covenant Not To Compete..................................18
(e) Board Approval...........................................19
(f) Exclusivity..............................................19
(g) License..................................................19
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<PAGE>
(h) Accounts Receivable......................................20
(i) Delivery of Financial Information........................20
(j) Right of First Refusal...................................20
6. Representations and Warranties of Buyer........................20
(a) Authority; No Conflicts..................................20
(b) Actions and Proceedings, etc.............................21
(c) Availability of Funds....................................21
7. Covenants of Buyer.............................................21
(a) Confidentiality..........................................21
(b) No Additional Representations............................22
(c) Notification.............................................22
(d) Customer and Supplier Notification; UPC
Codes....................................................22
(e) Litigation...............................................23
(f) Company Stores...........................................23
(g) Reservation of Rights....................................23
(h) Accounts Receivable......................................23
8. Mutual Covenants...............................................23
(a) Consents.................................................23
(b) Cooperation..............................................24
(c) Publicity................................................24
(d) Best Efforts.............................................25
(e) HSR Act Compliance.......................................25
(f) Sales and Transfer Taxes.................................25
(g) Promotional Materials and Customer
Information; Records.....................................25
(h) Use of Trademarks........................................27
(i) Transitional Co-Pack Agreement...........................27
(j) Excluded Business Co-Pack Agreement......................27
(k) Transition Services Agreement............................27
(l) Employees................................................27
(m) Off-Invoice Trade Promotions.............................27
(n) Variable (Post-Paid) Promotions..........................28
(o) Fixed Trade Promotions...................................29
(p) Customer Deductions......................................30
(q) Coupons..................................................31
(r) Audited Financials.......................................31
9. Further Assurances.............................................32
10. Indemnification................................................32
(a) Indemnification by Seller................................32
(b) Exclusive Remedy.........................................32
(c) Indemnification by Buyer.................................33
(d) Losses Net of Insurance..................................33
(e) Termination of Indemnification...........................33
(f) Procedures Relating to Indemnification...................34
-ii-
<PAGE>
11. Assignment.....................................................34
12. No Third-Party Beneficiaries...................................35
13. Termination; Break-Up Fees.....................................35
14. Survival of Representations....................................36
15. Expenses.......................................................36
16. Amendment and Waiver...........................................36
17. Notices........................................................37
18. Interpretation.................................................38
19. No Strict Construction.........................................38
20. Counterparts...................................................38
21. Entire Agreement...............................................38
22. Brokerage......................................................38
23. Disclaimer Regarding Estimates and Projections.................39
24. Schedules......................................................39
25. Representation by Counsel; Interpretation......................39
26. Severability...................................................39
27. Bulk Transfer Laws.............................................39
28. Governing Law..................................................39
29. Exhibits and Schedules.........................................40
30. Dispute Resolution.............................................40
(a) Negotiation..............................................40
(b) Arbitration..............................................40
-iii-
<PAGE>
LIST OF DEFINED TERMS
Page
----
Accounting Firm.......................................................9
Adjustment Date......................................................10
Adjustment Principles.................................................9
affiliate............................................................19
Agreement.............................................................1
Alliant Business......................................................1
Alliant Distribution Agreement........................................1
Ancillary Agreements.................................................12
Applicable Accounting Principles.....................................13
Applicable Rate......................................................10
Assets................................................................2
Assumed Liabilities...................................................4
Audited Financials...................................................31
Business..............................................................1
Buyer.................................................................1
Buyer's Fixed Trade Sales............................................30
Buyer's Straddle Sales...............................................28
C&L..................................................................31
Closing...............................................................6
Closing Date..........................................................6
Closing Inventory Amount..............................................9
Closing Statement.....................................................9
Code..................................................................6
Confidentiality Agreement............................................21
Contracts.............................................................2
Customer Information.................................................26
Deduction Notice.....................................................30
Equipment ..........................................................2
equitable manner.....................................................10
Estimated Final Purchase Price........................................7
Excluded Assets.......................................................3
Excluded Business.....................................................1
Excluded Business Co-Pack Agreement..................................27
Excluded Liabilities..................................................5
File Plan............................................................26
Final Purchase Price.................................................10
Final Straddle Date..................................................28
Financial Schedules..................................................13
Fiscal Half..........................................................29
Fixed Trade Promotions...............................................29
Fixed Trade Schedule.................................................29
HSR Act..............................................................11
indemnified party....................................................34
Information .........................................................18
Initial Inventory Amount.............................................13
Initial Inventory Amount Statement...................................13
Initial Purchase Price................................................2
Initial Straddle Date................................................28
-iv-
<PAGE>
Institute............................................................40
Intellectual Property.................................................2
Interim Period.......................................................17
Inventory.............................................................2
Inventory Amount.....................................................10
knowledge.............................................................1
Kraft Materials......................................................26
Losses...............................................................32
Mexican Business......................................................1
Nontransferred Assets.................................................8
Notice of Disagreement................................................9
Off-Invoice Trade Promotions.........................................27
Offering Memorandum..................................................22
Other Intellectual Property...........................................2
Permitted Liens......................................................14
Person................................................................1
Products..............................................................2
Promotional Materials................................................26
Proprietary Information...............................................2
Prorated Amounts.....................................................10
Public Filings.......................................................31
Purchase Orders.......................................................2
Records..............................................................26
Representatives......................................................40
Restricted Business..................................................18
Seller................................................................1
Seller Information...................................................22
Seller's Fixed Trade Sales...........................................29
Seller's Straddle Sales..............................................28
Shared Contracts.....................................................24
Statement of Operations..............................................31
Straddle Deductions..................................................28
Straddle Promotions..................................................28
Third Party Claim....................................................34
Transition Services Agreement........................................27
Transitional Co-Pack Agreement.......................................27
Variable (Post-Paid) Promotions......................................28
Variable Share.......................................................29
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<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of May 7,
1997, by and between KRAFT FOODS, INC., a Delaware corporation ("Seller"), and
MBW FOODS INC., a Delaware corporation ("Buyer");
W I T N E S S E T H:
WHEREAS, Seller desires to sell all of the Assets, and Buyer desires
to purchase the Assets and to assume all of the Assumed Liabilities, upon the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
I. Definitions; Purchase and Sale of Assets; Assumption of
Liabilities.
A. Certain Definitions. As used in this Agreement (including the
Schedules and Exhibits hereto), the following definitions shall apply:
1. "Alliant Distribution Agreement" shall mean the Distribution
Agreement, dated as of February 13, 1995, by and among Seller, Kraft Food
Service, Inc. and CDRF Acquisition Corporation, as amended.
2. "Business" shall mean the business currently conducted by
Seller relating to the manufacture, marketing, distribution and sale of the
Products, including export sales, but specifically excluding (A) the
manufacturing, marketing, distribution and sale of maple-flavored syrups in
Mexico (the "Mexican Business") and (B) the manufacturing, marketing,
distribution and sale of maple-flavored syrups under the Kraft brand name
pursuant to the Alliant Distribution Agreement (the "Alliant Business").
3. "Excluded Business" shall mean any business currently or
hereafter conducted by Seller, its affiliates and/or their licensees other than
the Business, including the Mexican Business and the Alliant Business.
4. The term "knowledge," when used in the phrase "to the
knowledge of Seller," shall mean, and shall be limited to, the actual knowledge
of any one or more of the following individuals: George Wishart (Director of the
Business); Robert Scheuer (Financial Director of the Business); Barry Haberman
(Process Team Leader); Jane Leary (Counsel to Seller's Enhancer's Division);
Wilbur Pell (Chief Litigation Counsel of Seller); and Edward Thompson (Chief
Food and Drug Counsel of Seller).
<PAGE>
5. "Person" shall mean any individual, corporation, partnership,
limited liability company, business trust, joint stock company, trust,
unincorporated organization, joint venture, firm or other entity, or a
government or any political subdivision or agency, department or instrumentality
thereof.
6. "Products" shall mean maple-flavored syrups that are
manufactured or processed with the Equipment or by third party contract
manufacturers or co-packers pursuant to any of the Contracts or are marketed
under the "Log Cabin", "Country Kitchen" or "Wigwam" trademarks in the United
States or exported from the United States.
B. Purchase and Sale of Assets. On the terms and subject to the
conditions of this Agreement, at the Closing Seller shall sell, convey, transfer
and assign to Buyer, and Buyer shall purchase from Seller, the Assets, which
Seller covenants shall be free and clear of any liens (other than Permitted
Liens), for an aggregate cash purchase price of $220,000,000.00 (the "Initial
Purchase Price"), payable and subject to adjustment as set forth in Section 2.
C. Assets. The term "Assets" shall mean all right, title and interest
of Seller in the following assets relating to the Business:
1. all inventories of finished Products (including warehoused
inventories) and, as provided in Section 2(c) below, $2.9 million of raw
materials, packaging materials and work in process, in each case, to the extent
used exclusively in connection with the conduct of the Business as of the
Closing (the "Inventory");
2. all machinery, equipment, spare parts, furniture, fixtures,
supplies and other tangible assets (other than the items excluded pursuant to
Section 1(d)) listed or described on Schedule 1(c)(ii) attached hereto (the
"Equipment"); provided that Equipment leased by Seller shall be included in the
Assets only if the lease agreement relating thereto constitutes a Contract;
3. all contracts, agreements, licenses, leases and other legally
binding arrangements, whether oral or written, (A) that are listed or described
on Schedule 1(c)(iii) attached hereto, and (B) if not so listed or described,
that relate exclusively to the Business and (x) are in existence on the date
hereof or
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<PAGE>
(y) are entered into in the ordinary course of business on or prior to the
Closing Date (collectively, the "Contracts"), and all commitments and orders for
the purchase and sale of goods and equipment (including Inventory and supplies)
and services (including advertising, maintenance and other incidental services)
to the extent relating exclusively to the Business (collectively, the "Purchase
Orders");
4. all copyrights, trademarks, trade names and service marks,
trade dress and any applications and registrations therefor, that (A) are listed
or described on Schedule 1(c)(iv)-1 attached hereto, and any goodwill associated
therewith (collectively, the "Intellectual Property"), (B) are listed or
described on Schedule 1(c)(iv)-2 attached hereto, and any goodwill associated
therewith or (C) if not so listed or described, relate exclusively to the
Business (the items included in (B) and (C) collectively referred to as the
"Other Intellectual Property");
5. all existing trade secrets, know-how, flavors, processing
procedures and finished product specifications relating exclusively to the
Business and all recipes and product formulations used to produce the Products
sold or distributed by the Business (collectively, the "Proprietary
Information");
6. subject to Section 8(g), all existing promotional materials,
point-of-sale materials and advertising copy used by Seller exclusively in
connection with the Business, all existing customer and vendor lists and price
lists to the extent relating exclusively to the Business and, subject to Section
2(a)(iii), all archival materials relating exclusively to the Products that are
manufactured, marketed, distributed and sold by the Business;
7. to the extent transferable, any permits or licenses issued by
any governmental agency that are used exclusively in the Business;
8. all goodwill relating exclusively to the Business;
9. any warranty claims relating to the Inventory or Equipment;
10. any claims under the Contracts relating to periods on or
after Closing;
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<PAGE>
11. infringement claims relating to the Intellectual Property
relating to periods on or after the Closing; and
12. subject to Section 1(d) and Section 8(g), all books and
records relating exclusively to the Business, including books of account.
Prior to the Closing, Seller shall have the right to update the
description of the Assets (including the Schedules referred to above) to reflect
changes in the ordinary course of the Business prior to the Closing or items of
the type referred to in Section 4(f); provided that such changes shall not, in
the aggregate, reflect a material adverse effect on the Business taken as a
whole or reflect a sale, license or other disposition or agreement to sell,
license or dispose of any of the Intellectual Property, any material item of the
Other Intellectual Property or any material item of the Equipment.
D. Excluded Assets. The Assets shall not include any assets other
than the assets specifically listed or described in Section 1(c), and, without
limiting the generality of the foregoing, shall expressly exclude the following
(collectively, the "Excluded Assets"):
1. all cash and cash equivalents of Seller;
2. all accounts and notes receivable and prepaid expenses of
Seller;
3. all insurance policies and claims thereunder of Seller, claims
for and rights to receive tax refunds relating to the Business, all of Seller's
tax returns relating to the Business and any notes, worksheets, files or
documents relating thereto, and any legal files or other documents covered by an
evidentiary privilege that are not exclusively related to the Assumed
Liabilities;
4. all books, documents, records and files prepared in connection
with or relating to the transactions contemplated by this Agreement, including
bids received from other parties and analyses relating to the Assets, the
Assumed Liabilities and the Business;
5. all of Seller's rights under or pursuant to this Agreement and
the other agreements between Buyer and Seller contemplated hereby;
-4-
<PAGE>
6. all minute books and stockholder and stock transfer records
and similar corporate records of Seller;
7. the trademarks "KRAFT", "KRAFT FOODS", "KRAFT GENERAL FOODS"
and "KRAFT IN ELONGATED HEXAGON" and all other trademarks and service marks of
Seller not included in the Intellectual Property or the Other Intellectual
Property and all logos, designs and goodwill associated therewith, and all
Universal Product Codes relating to the Products;
8. all patents, patent applications and invention disclosures of
Seller and all trade secrets, know-how, recipes, product formulations,
processing procedures, and finished product specifications other than the
Proprietary Information;
9. all computer software and systems, including electronic mail
applications; and
10. the assets listed or described on Schedule 1(d)(x) attached
hereto and any other assets which are not exclusively related to the Business
(together with any and all claims relating to any of the foregoing described in
this Section 1(d)).
E. Assumed Liabilities. Buyer shall assume on the Closing Date and
shall pay, perform and discharge when due the following obligations and
liabilities of Seller relating to the Business of whatever kind and nature,
primary or secondary, direct or indirect, absolute or contingent, known or
unknown, whether or not accrued (collectively, together with all other
obligations and liabilities of Seller assumed by Buyer pursuant to this
Agreement and the Schedules hereto, the "Assumed Liabilities"):
1. all obligations and liabilities of Seller under the Contracts
arising on or after the Closing Date;
2. all obligations, liabilities and commitments in respect of any
and all Products manufactured at any time on or after the Closing Date
(including all obligations, liabilities and commitments in connection with the
manufacture thereof) in connection with the Business, including product
liability and infringement claims, and obligations and liabilities arising out
of or relating to the activities and operations of third-party contract
-5-
<PAGE>
manufacturers and co-packers, other than as set forth in the Transitional
Co-Pack Agreement or Excluded Business Co-Pack Agreement;
3. all obligations and liabilities in respect of Inventory sold
on or after the Closing Date, including (except with respect to Excluded Assets)
with respect to product liability and infringement claims;
4. liabilities for refunds, adjustments, exchanges, returns and
warranty and merchantability claims; provided, however, that Buyer shall have no
liability for returns of defective products sold prior to the Closing and
returned within 60 days after the Closing Date to the extent the value of such
products exceeds $100,000;
5. liabilities for advertising, trade promotion and trade
allowance programs and consumer promotions (including coupons and free-standing
inserts), as provided in Sections 8(m), 8(n), 8(o), 8(p) and 8(q);
6. all obligations and liabilities of Seller under Purchase
Orders that are outstanding as of the Closing Date (it being understood that any
Inventory covered by such Purchase Orders shall not be included in the Inventory
Amount or the calculation of raw materials or packaging supplies to be
transferred pursuant to Section 2(c) below to the extent that Buyer must pay for
such Inventory after the Closing);
7. the obligations and liabilities listed or described on
Schedule 1(e)(vii) attached hereto; and
8. all other obligations and liabilities relating to the Business
or the Assets which arise out of the conduct of the Business on or after the
Closing Date.
Buyer's obligations under this Section 1(e) shall not be subject to
offset or reduction by reason of any actual or alleged breach of any
representation, warranty or covenant contained in this Agreement or any
agreement or document delivered in connection herewith or any right or alleged
right to indemnification hereunder.
F. Excluded Liabilities. Except as specifically provided in this
Agreement and the Schedules hereto, Buyer shall not assume any obligations or
liabilities of Seller (the obligations and liabilities of Seller not
specifically assumed by Buyer being referred to collectively herein as the
"Excluded Liabilities").
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<PAGE>
Without limiting the generality of the foregoing, Buyer shall not assume or be
liable for any of the following obligations or liabilities:
1. any of Seller's obligations or liabilities under this
Agreement and the other agreements with Buyer contemplated hereby;
2. any of Seller's obligations or liabilities for expenses or
fees incident to or arising out of the negotiation, preparation, approval or
authorization of this Agreement and the other agreements contemplated hereby or
the consummation (or preparation for the consummation) of the transactions
contemplated hereby and thereby, including attorneys' and (except as otherwise
provided in Section 2(b)(i) and 8(r)) accountants' fees;
3. subject to Section 1(e)(iv) and (v), any of Seller's accounts
payable arising before the Closing Date;
4. all of Seller's obligations and liabilities with respect to
any and all products sold or distributed prior to the Closing Date for product
liability and infringement;
5. any of Seller's obligations or liabilities with respect to
federal, state, local or foreign taxes and any liabilities for interest,
penalties or additions to any such taxes (except taxes specifically allocated
to, prorated to or assumed by Buyer under this Agreement);
6. any liabilities arising out of or relating to the Excluded
Assets; and
7. any suit, action or other legal proceeding pending as of the
Closing Date.
G. Allocation of Purchase Price. As promptly as practicable following
the date hereof, but in any event within 30 days after the Closing Date, Buyer
shall deliver to Seller copies of all appraisals of the Assets prepared for
Buyer and Buyer's reasonable, good faith determination of the fair market value
of the Assets, which determination shall be made in accordance with applicable
tax laws and shall be subject to Seller's consent (which consent shall not be
unreasonably withheld or delayed). Buyer and Seller shall then mutually agree
upon the fair market value of the Assets. For tax purposes, the Final Purchase
Price and
-7-
<PAGE>
Assumed (noncontingent) Liabilities shall be allocated among the Assets based
upon such determination of fair market value and in accordance with Section 1060
of the Code. Neither Buyer nor Seller, nor any of their respective affiliates,
shall take any position for income tax purposes which is inconsistent with the
allocation of the Final Purchase Price and Assumed (noncontingent) Liabilities
unless required to do so by applicable law. The parties shall exchange drafts of
any information returns required by Section 1060 of the Code and any similar
state statute at least 60 days prior to filing such returns and shall discuss in
good faith any modifications suggested by the receiving party. For purposes of
this Agreement, the term "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any reference to any particular Code provision shall be interpreted
to include any revision of or successor to such provision regardless of how
numbered or classified.
II. Closing; Purchase Price Adjustment.
A. Closing. The closing (the "Closing") of the purchase and sale of
the Assets and the assumption of the Assumed Liabilities shall be held at the
offices of Richards & O'Neil, LLP, 885 Third Avenue, New York, New York at 10:00
a.m., local time, on July 1, 1997, or, if later, on the first Monday that is at
least 22 days following satisfaction of the conditions set forth in Sections
3(a)(iii) and (iv) and 3(b)(iii) or such other Monday that the parties mutually
agree (it being understood that Buyer will not unreasonably withhold its consent
to close on a fiscal month end (determined with reference to Seller's accounting
policies)). The date on which the Closing shall occur is hereinafter referred to
as the "Closing Date," and the Closing shall be deemed effective as of the
opening of business on the Closing Date. On the business day immediately
preceding the Closing Date, Buyer and Seller shall conduct a pre-Closing at the
same location as the Closing, commencing at 10:00 a.m., local time, at which
each party shall present for review by the other party copies in execution form
of all documents and all other instruments required to be delivered by such
party at the Closing.
1. At the Closing, subject to and on the terms and conditions set
forth in this Agreement, Buyer shall deliver to Seller (A) by wire transfer to a
bank account designated in writing by Seller immediately available funds in an
amount equal to the Initial Purchase Price, plus or minus an estimate, prepared
in good faith by
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<PAGE>
Seller and delivered to Buyer at least three business days prior to the Closing
Date, of any adjustment to the Initial Purchase Price required pursuant to
Section 2(b) (the Initial Purchase Price, plus or minus any estimated
adjustments thereto, being referred to herein as the "Estimated Final Purchase
Price"), (B) instruments of assumption in form and substance reasonably
satisfactory to Seller and its counsel evidencing and effecting the assumption
by Buyer of the Assumed Liabilities (it being understood, however, that such
instruments shall not require Seller or any other Person to make any additional
representations, warranties or covenants, express or implied, not contained in
this Agreement) and such other documents as are specifically required by this
Agreement, (C) certified copies of resolutions duly adopted by Buyer's board of
directors authorizing the execution, delivery and performance of this Agreement
and the other agreements contemplated hereby, (D) certified copies of Buyer's
certificate of incorporation and bylaws, (E) a certificate of the Secretary or
an Assistant Secretary of Buyer as to the incumbency of the officer(s) of Buyer
(who shall not be such Secretary or Assistant Secretary) executing this
Agreement or any Ancillary Agreement, (F) a short-form certificate of good
standing of Buyer, certified by the Secretary of State of Buyer's state of
incorporation as of a date not more than three business days prior to the
Closing Date and (G) an opinion of Buyer's counsel with respect to the due
authorization, execution and delivery of this Agreement by Buyer and matters of
similar import.
2. At the Closing, subject to and on the terms and conditions set
forth in this Agreement, Seller shall deliver or cause to be delivered to Buyer
(A) such appropriately executed instruments of sale, assignment, transfer and
conveyance in form and substance reasonably satisfactory to Buyer and its
counsel evidencing and effecting the sale and transfer to Buyer of the Assets
(it being understood, however, that such instruments shall not require Seller or
any other Person to make any additional representations, warranties or
covenants, express or implied, not contained in this Agreement), (B) certified
copies of resolutions duly adopted by Seller's board of directors authorizing
the execution, delivery and performance of this Agreement and the other
agreements contemplated hereby, (C) certified copies of Seller's certificate of
incorporation and bylaws, (D) a certificate of the Secretary or an Assistant
Secretary of Seller as to the incumbency of the officer(s) of Seller (who shall
not be such Secretary or Assistant Secretary) executing this Agreement or any
Ancillary Agreement, (E) a short-form
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<PAGE>
certificate of good standing of Seller, in each case certified by the Secretary
of State of the State of Delaware as of a date not more than three business days
prior to the Closing Date and (F) an opinion of Seller's inside counsel upon
which Buyer's lenders will be expressly entitled to rely with respect to the due
authorization, execution and delivery of this Agreement by Seller and matters of
similar import. With respect to the Intellectual Property and the Other
Intellectual Property included in the Assets, such instruments to be delivered
at the Closing shall consist of assignments of such Intellectual Property and
Other Intellectual Property in form appropriate for recordation with
governmental agencies or authorities responsible for intellectual property in
the countries listed on Schedule 1(c)(iv)-1 and Schedule 1(c)(iv)-2 attached
hereto, it being understood that the cost of recording any such documents shall
be borne by Buyer.
3. Prior to the Closing, Seller and Buyer shall agree on
reasonable procedures to transfer possession of the Assets to Buyer as soon as
practicable after the Closing Date, and Seller shall provide commercially
reasonable assistance to Buyer in connection with the transfer thereof. Except
as otherwise provided below, all out-of-pocket costs incurred by Seller and
Buyer in connection with transferring such Assets shall be borne by Buyer. Prior
to the Closing representatives of Buyer and Seller shall jointly review all
archival materials relating exclusively to the Products, and the representative
of Buyer shall determine which materials shall be included in the Assets and
transferred to Buyer after the Closing Date. Any such materials that are not
included in the Assets may be retained by Seller following the Closing or, at
Seller's option, destroyed following the Closing. Seller shall, at Seller's cost
and expense, prepare the Assets for shipping to Buyer (including removing and
packing or crating and making such packaged or crated Assets available for
pick-up by Buyer's shipper) within a reasonable period after the Closing Date
or, in the case of Assets to be used by Seller under the Transitional Co-Pack
Agreement, within the period provided in such agreement. Buyer shall promptly
take delivery of and ship such Assets at its own cost, risk and expense and
without interference to Seller's normal operations. Seller shall provide Buyer
reasonable access to Seller's facilities for such purpose at reasonable times
and upon reasonable notice and will otherwise cooperate with Buyer to permit
such prompt removal. Notwithstanding the foregoing, title and risk of loss with
respect to all of the Assets (excluding any archival materials not
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<PAGE>
selected by Buyer) shall pass from Seller to Buyer at the Closing.
4. Notwithstanding any other provision of this Agreement to the
contrary (other than the provisions of Sections 8(a), 8(d) and 8(e)), the
purchase and sale of the Assets as contemplated by this Agreement shall be
subject to the additional provisions of this paragraph (iv). Seller and Buyer
shall cooperate with each other regarding, and shall use their respective best
efforts to cause, the sale to Buyer of all of the Assets on the Closing Date on
the terms and conditions set forth in this Agreement; provided, however, that
such cooperation and best efforts shall not include any requirement to expend
money, commence any litigation or offer or grant any accommodation (financial or
otherwise) to any third party. If, notwithstanding such cooperation and best
efforts, for any reason (including any legal impediment or the failure to obtain
any necessary consent or approval) the sale of any Assets (any such Assets being
referred to herein as the "Nontransferred Assets") cannot be effected on the
Closing Date, Buyer and Seller shall (A) on the Closing Date, consummate the
sale and purchase of the Assets (other than the Nontransferred Assets) on the
terms and conditions set forth in this Agreement, provided such Assets represent
all of the Intellectual Property and material Other Intellectual Property, all
material items of Equipment and all other material assets of the Business, and
(B) as soon as reasonably practicable after the Closing Date, consummate the
sale and purchase of the Nontransferred Assets. Neither the Initial Purchase
Price nor the Final Purchase Price shall be subject to adjustment by reason of
any Nontransferred Assets. In the event of any Nontransferred Assets, (x) prior
to the Closing Date, Seller and Buyer shall, to the extent feasible, negotiate
in good faith and agree upon reasonable interim arrangements relating to the
ownership and operation of the Nontransferred Assets between the Closing Date
and the date such assets are actually sold by Seller to Buyer and (y) following
the Closing Date, Seller and Buyer shall cooperate with each other regarding,
and shall use their respective best efforts to cause, the sale of the
Nontransferred Assets as soon as reasonably practicable after the Closing Date;
provided, however, that such cooperation and best efforts shall not include any
requirement to expend money, commence any litigation or offer or grant any
accommodation (financial or otherwise) to any third party.
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<PAGE>
B. Purchase Price Adjustment. 1. Within 45 days after the Closing
Date, Seller shall prepare and deliver to Buyer a statement (in its final and
binding form, the "Closing Statement") setting forth the Inventory Amount as of
the opening of business on the Closing Date (the "Closing Inventory Amount").
Upon Seller's request, Buyer shall assist Seller in the preparation of the
Closing Statement and shall provide Seller and its representatives access at all
reasonable times to the personnel, properties, inventories, books and records of
Buyer for such purpose and during the period of any dispute with respect
thereto. In connection with the preparation of the Closing Statement, Seller
shall take and prepare a physical count of the finished goods Inventory as of
the opening of business on the Closing Date. Buyer and Seller shall engage
Coopers & Lybrand L.L.P. to observe the physical count of the finished goods
Inventory, and the fees and expenses of Coopers & Lybrand L.L.P. in connection
therewith shall be borne 50% by Buyer and 50% by Seller. Representatives of
Buyer shall be entitled to observe such physical count. The Closing Inventory
Amount shall be calculated in accordance with the Applicable Accounting
Principles set forth in Schedule 4(b) in a manner consistent with the
calculation of the Initial Inventory Amount and the principles set forth on
Schedule 2(b) attached hereto (the "Adjustment Principles") which, in a conflict
with the Applicable Accounting Principles, shall control. The Closing Statement
shall be accompanied by a special purpose report by Coopers & Lybrand L.L.P. to
the effect that the Closing Inventory Amount has been calculated in accordance
with the immediately preceding sentence. During the 30 days immediately
following Buyer's receipt of the Statement, Buyer shall be permitted to review
Seller's and Coopers & Lybrand L.L.P.'s working papers relating to the Closing
Statement. The Statement shall become final and binding upon the parties on the
thirtieth day following receipt thereof by Buyer unless Buyer gives written
notice of its disagreement (a "Notice of Disagreement") to Seller prior to such
date. Any Notice of Disagreement shall (A) specify in reasonable detail the
nature and amount of any disagreement so asserted and (B) be accompanied by a
certificate of Buyer that it has complied with the covenants set forth in
paragraph (iv) of this Section 2(b). If a timely Notice of Disagreement is
received by Seller, then the Closing Statement (as revised in accordance with
clause (x) or (y) below) shall become final and binding upon the parties on the
earlier of (x) the date the parties hereto resolve in writing any differences
they have with respect to any matter specified in the Notice of Disagreement or
(y) the date any matters
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<PAGE>
properly in dispute are finally resolved in writing by the Accounting Firm.
During the 30 days immediately following the delivery of a Notice of
Disagreement, Seller and Buyer shall seek in good faith to resolve in writing
any differences which they may have with respect to any matter specified in the
Notice of Disagreement. During such period, Seller shall have full access to the
working papers of Buyer prepared in connection with Buyer's preparation of the
Notice of Disagreement. At the end of such 30-day period, Seller and Buyer shall
submit to a "Big Six" accounting firm mutually agreed upon (the "Accounting
Firm") for review and resolution of any and all matters which remain in dispute
and which were properly included in the Notice of Disagreement, and the
Accounting Firm shall make a final determination of the Closing Inventory Amount
in accordance with this Section 2(b), which determination shall be binding on
the parties (it being understood, however, that the Accounting Firm shall act as
an arbitrator to determine, based solely on presentations by Buyer and Seller
(and not by independent review), only those matters which remain in dispute and
which were properly included in the Notice of Disagreement). The Closing
Statement shall become final and binding on Buyer and Seller on the date the
Accounting Firm delivers its final resolution to the parties (which final
resolution shall be delivered as soon as practicable following the selection of
the Accounting Firm). The Accounting Firm shall be selected by Seller and Buyer
or, if the parties are unable to agree, by Seller's and Buyer's independent
accountants. The fees and expenses of the Accounting Firm pursuant to this
Section 2(b) shall be borne 50% by Buyer and 50% by Seller.
2. The Initial Purchase Price shall be either increased by the
amount by which the Closing Inventory Amount exceeds the Initial Inventory
Amount or decreased by the amount by which the Initial Inventory Amount exceeds
the Closing Inventory Amount (the Initial Purchase Price, as so increased or
decreased, being referred to herein as the "Final Purchase Price"). If the
Estimated Final Purchase Price is less than the Final Purchase Price, Buyer
shall, and if the Estimated Final Purchase Price is greater than the Final
Purchase Price, Seller shall, within five business days after the Statement
becomes final and binding on the parties, make payment to the other party by
wire transfer in immediately available funds of the amount of such difference,
together with interest thereon at an annual rate of 8.5% (the "Applicable Rate")
calculated on the basis of the number of days elapsed from the Closing Date to
the date of payment.
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<PAGE>
3. The term "Inventory Amount" shall mean the total book value of
the finished goods Inventory calculated in accordance with paragraph (i) of this
Section 2(b) and computed without regard to any purchase accounting adjustments
arising out of the consummation of the transactions contemplated hereby.
4. Buyer agrees that following the Closing it will not take any
actions with respect to Buyer's accounting books, records, policies and
procedures or the Inventory that would obstruct or prevent the preparation of
the Closing Statement and the determination of the Closing Inventory Amount as
provided in this Section 2(b). Buyer and Seller will cooperate in the
preparation of the Closing Statement, including providing customary
certifications, if requested, to Seller's auditors or the Accounting Firm.
C. Inventory Transfer. Seller agrees to transfer to Buyer as of the
Closing raw materials and packaging supplies having an aggregate book value of
$2.9 million, computed in accordance with Section 2(b)(i), to be used in
accordance with the terms of the Transitional Co-Pack Agreement.
D. Personal Property Tax Apportionment. The following items (the
"Prorated Amounts") relating to the Assets constituting personal property shall
be apportioned at the Closing in an equitable manner as of the close of business
on the day immediately preceding the Closing Date (the "Adjustment Date") so
that the income and expense items with respect to the period up to and including
the Adjustment Date shall be for Seller's account and the income and expense
items with respect to the period after the Adjustment Date shall be for Buyer's
account. For purposes of this Section, the term "equitable manner" shall mean
that Seller shall be allocated such items based on a fraction, the numerator of
which is the number of days in the applicable taxable period ending on the
Adjustment Date and the denominator of which is the total number of days in such
taxable period, and Buyer shall be allocated the remainder.
1. Personal property taxes, if any, on the basis of the fiscal
year for which assessed. If the Closing Date shall occur before the tax rate or
assessment is fixed for any fiscal year, the apportionment of such taxes at the
Closing shall be based upon a reasonable estimate mutually agreed upon by Buyer
and Seller; provided that Buyer and Seller shall recalculate and reprorate said
taxes and make the necessary cash adjustments promptly upon
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the issuance, and on the basis, of the actual tax bills received for any such
fiscal year.
2. To the extent any taxes described in subparagraph (i) above are
adjusted as a result of any governmental tax audit or administrative or court
proceeding initiated by a governmental entity or agency with jurisdiction over
the Properties, Buyer and Seller shall recalculate and reprorate such taxes and
make the necessary cash adjustments promptly upon the resolution of such audit
or proceeding.
III. Conditions to Closing.
A. Buyer's Obligation. The obligation of Buyer to purchase and pay for
the Assets and assume the Assumed Liabilities is subject to the satisfaction (or
waiver by Buyer) as of the Closing of the following conditions:
1. The representations and warranties of Seller made in this
Agreement shall be true and correct as of the date hereof and, except to the
extent of changes or developments expressly contemplated by the terms of this
Agreement, on and as of the Closing Date, as though made on and as of the
Closing Date, except to the extent of changes caused by the transactions
expressly contemplated hereby and except for representations and warranties that
speak as of a specific date or time (which need only be true and correct as of
such date or time), and Seller shall have performed or complied with all
obligations and covenants required by this Agreement to be performed or complied
with by Seller by the time of the Closing, except for breaches of such
representations and warranties and covenants that, in the aggregate (without
giving effect to any supplements, modifications and updates to the Schedules by
Seller prior to the Closing as permitted by this Agreement) would not have a
material adverse effect on the Business taken as a whole; and Seller shall have
delivered to Buyer a certificate dated the Closing Date and signed by a Vice
President of Seller confirming the foregoing.
2. No injunction or order of any court or administrative agency
of competent jurisdiction shall be in effect as of the Closing which restrains
or prohibits the purchase and sale of the Assets or the exercise by Buyer of
control over the Assets.
3. The waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), shall have expired or been
terminated.
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4. No judicial or administrative proceeding shall be pending or
overtly threatened by the DOJ or FTC which seeks to challenge or enjoin the
transactions contemplated hereunder under the antitrust laws, which proceeding
presents a reasonable likelihood that Buyer will be required to hold separate or
divest any material products or assets; provided that, prior to any denial of a
request for a preliminary injunction, no such proceeding shall be pending or
overtly threatened, irrespective of the likelihood of success.
5. Seller shall have executed and delivered the Transitional
Co-Pack Agreement, the Excluded Business Co-Pack Agreement and the Transition
Services Agreement (collectively, the "Ancillary Agreements").
6. Coopers & Lybrand, LLP shall have signed and delivered its
audit report with respect to the Audited Financials (as defined below), and
there shall be no material differences between the information reflected in the
Financial Schedules and the corresponding information reflected in the Audited
Financials except as described in the Financial Schedules (including the notes
thereto).
B. Seller's Obligation. The obligation of Seller to sell and deliver
the Assets to Buyer is subject to the satisfaction (or waiver by Seller) as of
the Closing of the following conditions:
1. The representations and warranties of Buyer made in this
Agreement shall be true and correct in all material respects as of the date
hereof and on and as of the Closing Date, as though made on and as of the
Closing Date, except for representations and warranties that speak as of a
specific date or time (which need only be true and correct as of such date or
time), and Buyer shall have performed or complied in all material respects with
the obligations and covenants required by this Agreement to be performed or
complied with by Buyer by the time of the Closing; and Buyer shall have
delivered to Seller a certificate dated the Closing Date and signed by the
President or a Vice President of Buyer confirming the foregoing.
2. No injunction or order of any court or administrative agency
of competent jurisdiction shall be in effect as of the Closing which restrains
or prohibits the purchase and sale of the Assets.
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3. The waiting period under the HSR Act shall have expired or
been terminated.
4. Buyer shall have executed and delivered each of the Ancillary
Agreements.
5. The board of directors of Philip Morris Companies, Inc., a
Virginia corporation ("Philip Morris"), shall have approved the consummation of
the transactions contemplated by this Agreement.
IV. Representations and Warranties of Seller. Seller hereby represents
and warrants to Buyer as follows:
A. Authority; No Conflicts. 1. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Seller has all requisite corporate power and authority to enter into this
Agreement and such Ancillary Agreements as are contemplated hereby to be
executed and delivered by it and to consummate the transactions contemplated
hereby and thereby. All corporate acts and other proceedings required to be
taken by Seller to authorize the execution, delivery and performance of this
Agreement and such Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly and properly taken. This
Agreement has been duly executed and delivered by Seller, and such Ancillary
Agreements as are contemplated hereby to be executed and delivered by Seller
shall be duly and validly executed and delivered by Seller. This Agreement and
such Ancillary Agreements constitute, or will constitute, as the case may be,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms.
2. Subject to the matters disclosed on Schedule 1(c)(iii)
attached hereto, the execution and delivery by Seller of this Agreement and such
Ancillary Agreements as are contemplated hereby to be executed and delivered by
Seller do not, and the consummation by Seller of the transactions contemplated
hereby and thereby and compliance by Seller with the terms hereof and thereof
will not, conflict with, or result in any violation of or default under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a benefit under, or result in the creation of any lien, claim,
encumbrance, security interest, option, charge or restriction of any kind upon
any of the Assets under, or require any consent, authorization or approval under
(A) any provision of the certificate of incorporation or bylaws
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of Seller, (B) any Contract or (C) any material judgment, order or decree or any
material statute, law, rule or regulation applicable to the Business or the
Assets, other than, in the case of clauses (B) and (C) above, any such
conflicts, violations, defaults, rights or liens, claims, encumbrances, security
interests, options, charges or restrictions that, individually or in the
aggregate, would not have a material adverse effect on the Business taken as a
whole or on the ability of Seller to consummate the transactions contemplated
hereby, and other than any such consents, authorizations or approvals required
under the HSR Act or that may be required solely by reason of Buyer's
participation in the transactions contemplated hereby.
B. Financial Schedules. Schedule 4(b) attached hereto sets forth pro
forma schedules of net revenue, marginal contribution and marginal contribution
less advertising and promotion for the Business for the 52-week period ended
December 30, 1995, the 52-week period ended December 28, 1996, and the 13-week
period ended March 29, 1997 and a statement (the "Initial Inventory Amount
Statement") setting forth the Inventory Amount as of December 28, 1996 (the
"Initial Inventory Amount"), and book value of the Inventory and Equipment as of
December 28, 1996 in accordance with Seller's historical practices, in each case
together with the notes thereto (such schedules, together with the Initial
Inventory Amount Statement, being referred to herein as the "Financial
Schedules"). The Financial Schedules have been derived from the accounting books
and records of Seller and its affiliates used as a basis for the preparation of
the consolidated financial statements of Philip Morris and present fairly in all
material respects the net revenue, marginal contribution and marginal
contribution less advertising and promotion for the Business on the basis
described in the notes thereto for the respective periods covered thereby and
the Initial Inventory Amount on the basis described in the notes thereto, in
each case in accordance with United States generally accepted accounting
principles, consistently applied, except as otherwise provided in Schedule 4(b)
attached hereto or in the Financial Schedules (such accounting principles,
together with the exceptions thereto, being referred to herein as the
"Applicable Accounting Principles").
C. Title to Assets. Seller has good and valid title to all the
material assets included in the Assets, except those sold or otherwise disposed
of since the date hereof in the ordinary course of business and except for
Intellectual Property, Other Intellectual Property and
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Proprietary Information (which are covered in Section 4(d) below), free and
clear of all liens, security interests or encumbrances of any nature whatsoever,
except (i) such as are disclosed on Schedule 4(c) attached hereto or the other
Schedules attached hereto, (ii) mechanics', carriers', workmen's, repairmen's or
other like liens arising or incurred in the ordinary course of business, liens
arising under original purchase price conditional sales contracts and equipment
leases with third parties entered into in the ordinary course of business, liens
for taxes and other governmental charges which are not due and payable or which
may thereafter be paid without penalty and (iii) other imperfections of title,
restrictions or encumbrances, if any, which imperfections of title, restrictions
or encumbrances do not, individually or in the aggregate, materially impair the
continued use and operation of the Assets to which they relate in the operation
of the Business as currently conducted (collectively, the "Permitted Liens").
D. Intellectual Property. Except as set forth on Schedule 4(d)
attached hereto, Seller owns the Intellectual Property and owns or has the right
to use, without payment to, or the consent of, any other party, all material
Proprietary Information. To Seller's knowledge, except as indicated on Schedule
1(c)(iv)-2, Seller has filed or been assigned the trademark application and
trademark registrations set forth on Schedule 1(c)(iv)-2, and Seller has not
transferred any such trademark application or trademark registration to any
unrelated third party. Except as set forth on Schedule 4(d), no material claims
are pending in writing or, to the knowledge of Seller, threatened in writing
against Seller by any Person with respect to the ownership or use of any of the
Intellectual Property and, to the knowledge of Seller there are no grounds for
the same. Except as set forth on Schedule 4(d), no material claims are pending
in writing or, to the knowledge of Seller, threatened in writing against Seller
by any Person with respect to the ownership or use of any of the Other
Intellectual Property. Except as set forth in the footnotes on Schedule
1(c)(iv), to the knowledge of the Seller, the Intellectual Property is valid and
enforceable. Except as set forth on Schedule 1(c)(iii) or on Schedule 4(d), to
the knowledge of the Seller, there are no licenses, sublicenses or agreements
pertaining to any of the Intellectual Property or Other Intellectual Property to
which Seller is a party and which are currently in effect, other than any
intercompany licenses which shall be terminated as of the Closing Date. Except
as set forth on Schedule 4(d) or in the footnotes on Schedule 1(c)(iv),
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to the knowledge of Seller, Seller has taken all reasonable steps in accordance
with customary industry standards to maintain the confidentiality of the
material Proprietary Information and to maintain and protect the Intellectual
Property. Except as set forth on Schedule 4(d) or Schedule 1(c)(iii), and except
for the Excluded Assets, the Intellectual Property, Other Intellectual Property
and Proprietary Information, together with Buyer's rights under Section 5(g),
the Transition Services Agreement and the Transitional Co-Pack Agreement,
include all of the material intellectual property assets that would enable the
Buyer to conduct the Business in substantially the same manner as conducted
prior to Closing.
E. Contracts. Schedule 1(c)(iii) attached hereto includes the
following types of written contracts relating exclusively to the Business:
1. all covenants not to compete that materially impair the
Business;
2. all leases under which (A) Seller is lessee of, or holds or
uses, any machinery, equipment, or other tangible personal property owned by a
third party or (B) Seller is a lessor or sublessor of, or makes available for
use by any third party, any tangible personal property owned or leased by
Seller, in each case which has future liability in excess of $50,000 per annum
and is not terminable by notice of not more than 60 calendar days for a cost of
less than $50,000; and
3. all other agreements, contracts and leases (other than
purchase contracts and orders for inventory in the ordinary course of business,
food service bids that have been accepted and trade deals and other liabilities
covered by Section 8(m), (n), (o), (p) and (q)) (collectively, the "Other
Agreements"), in each case not included in clauses (i) and (ii) above, to which
Seller is a party or by or to which any of its assets is bound or subject, which
has future liability in excess of $50,000 per annum and is not terminable by
notice of not more than 60 calendar days for a cost of less than $50,000;
provided, however, that the future liabilities for all Other Agreements not
required to be listed pursuant to this clause (iii) shall not exceed $250,000 in
the aggregate.
The list of contracts constitutes all of the Contracts in effect on
the date hereof, except for those which do not meet the applicable disclosure
threshold. Seller has delivered true and correct copies of all of the
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listed Contracts to Buyer. Except as disclosed on Schedule 1(c)(iii) or Schedule
4(e), each Contract is a valid and binding obligation of Seller and, to the
knowledge of Seller, is in full force and effect and is enforceable by Seller in
accordance with its terms. Except as disclosed on Schedule 1(c)(iii) or Schedule
4(e), Seller has performed all material obligations required to be performed by
it to date under the Contracts and is not, nor, to the knowledge of Seller, is
any other party to any of the Contracts (with or without the lapse of time or
the giving of notice, or both) in breach or default in any material respect
thereunder.
F. Litigation; Decrees. Schedule 4(f) attached hereto sets forth a
list of all pending lawsuits or claims relating to the Business with respect to
which Seller has received service of process or, to the knowledge of Seller, is
threatened in writing and which (i) involve a claim against Seller of, or which
involve an unspecified amount which could reasonably be expected to result in
liability of, more than $100,000, (ii) seek any material injunctive relief which
would affect Buyer's acquisition, ownership or operation of the Assets or (iii)
directly relate to the transactions contemplated by this Agreement. Except as
may be set forth on Schedule 4(f), there are no (i) outstanding judgments,
orders, writs, injunctions or decrees of any court, governmental agency or
arbitration tribunal against Seller which have or could have a material adverse
effect on the ability of Seller to consummate the transactions contemplated
hereby or (ii) actions, suits, claims or legal, administrative or arbitration
proceedings or investigations pending or, to the knowledge of Seller, threatened
against Seller, which have or could have a material adverse effect on the
ability of Seller to consummate the transactions contemplated hereby. To the
knowledge of Seller, except as disclosed on Schedule 4(f), Seller, with respect
to the Business, is not in default under any material judgment, order or decree
of any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, applicable to the Business or
the Assets.
G. Absence of Changes or Events. Except as set forth on Schedule 4(g)
attached hereto or the other Schedules hereto, since December 28, 1996, there
has been no material adverse change in the Business taken as a whole, other than
changes relating to United States or foreign economies in general or the
Business's industry in general and not specifically relating to the Business,
and other than changes that are the result of actions taken by
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Buyer prior to the Closing Date that have an effect on the Business. Since
December 28, 1996, Seller has operated the Business substantially in the
ordinary course and has not, with respect to the Business, (i) mortgaged,
pledged or subject to or permitted the imposition of any encumbrance upon any
items of Intellectual Property or Other Intellectual Property, any material
items of Equipment or any other material Assets, (ii) sold or otherwise disposed
of any items of Intellectual Property or Other Intellectual Property, any
material items of Equipment or any other material Assets, except for sales of
Inventory in the ordinary course, (iii) disposed of or permitted to lapse any
rights to the use of any Intellectual Property or Other Intellectual Property or
(iv) agreed to any of the foregoing.
H. Compliance with Applicable Laws. Except as set forth on Schedule
4(h) attached hereto or the other Schedules hereto or as previously disclosed to
Buyer in writing, to the knowledge of Seller, the Business is being conducted in
compliance in all material respects with all material statutes, laws,
ordinances, rules, orders and regulations of any governmental authority or
instrumentality. Notwithstanding the disclosure in Schedule 4(h), to the
knowledge of the Seller, the products, packaging and labels with respect to the
Business are in all material respects in compliance with the Federal Food, Drug
and Cosmetic Act, including the Nutrition Labeling and Education Act of 1990 and
the regulations issued thereunder. Except as set forth on Schedule 4(h) or the
other Schedules hereto or as previously disclosed to Buyer in writing, since
December 31, 1995, Seller has not received any written communication from a
governmental authority that alleges that the Business is not in compliance, in
all material respects, with any material federal, state or local laws, rules and
regulations.
I. Taxes. All returns, reports and declarations of every nature
required to be filed with respect to federal, state or foreign taxes by or on
behalf of Seller (either separately or as part of a consolidated group) prior to
the Closing Date with respect to the Business have been timely filed (taking
into account any extensions) and such returns, reports and declarations as so
filed are complete and accurate and disclose all taxes required to be paid for
the periods covered thereby, except for any such failures to file and such
errors which would not have a material adverse effect on the Business taken as a
whole. All taxes relating to any period ending prior to the Closing Date and due
and payable prior to the Closing
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Date (taking into account any extensions) with respect to the Business shall be
paid by Seller as of or prior to the Closing Date.
J. Trade Deals and Promotions. Seller has not, with respect to the
Business, offered, become bound by and/or is not a party to any trade deals,
trade promotions or programs, trade refunds or cooperative programs or consumer
promotions and programs (including, without limitation, coupon, premiums and
rebate programs), with respect to the period from July 1, 1997 to December 31,
1997, whether oral or written, except for those items into which Seller has
entered in the ordinary course of business substantially consistent with past
practice and the historic relationship of such items to sales volume of the
Products.
K. Major Customers. Since December 31, 1996, to the knowledge of
Seller, Seller has not received oral or written notice from any of the top ten
customers of the Business (as measured by sales volume during the preceding
fiscal year) expressing its current intention to terminate 25% or more of its
purchases from the Business.
L. Tangible Personal Property. To the knowledge of Seller, all items
of tangible personal property material to the conduct of the Business are in
normal condition and repair in all material respects (normal wear and tear
excepted) and are adequate in all material respects for the uses to which they
are being put in the ordinary course of the Business.
M. Permits. To the knowledge of Seller, Seller possesses all licenses,
permits and other governmental approvals necessary to enable it to carry on the
Business as currently conducted, except where the lack of such license, permit
or other approval would not materially adversely affect Seller's ability to
conduct the Business or would not have a material adverse effect on the Business
taken as a whole.
N. Equipment. The Equipment includes all material equipment used in
the Business to produce the Products, other than equipment included in the
Excluded Assets.
O. Ingredients. No ingredient, including, but not limited to, a flavor
used in the recipes of the Business is owned or procurable exclusively through
Seller and/or its affiliates.
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V. Covenants of Seller. Seller covenants and agrees as follows:
A. Access. For the period from the date hereof through the Closing
(the "Interim Period"), Seller shall grant to Buyer or cause to be granted to
Buyer and its representatives, financing sources, employees, counsel and
accountants reasonable access, during normal business hours and upon reasonable
notice, to the personnel, properties, books and records of Seller relating to
the transition of the Business to Buyer; provided, however, that such access
does not unreasonably interfere with the normal operations of Seller or the
Business; and provided further, that all requests for access shall be directed
to William J. Eichar (Vice President, Mergers and Acquisitions of Seller), or
such other person as Seller may designate from time to time. Notwithstanding
anything to the contrary in this Section 5(a), during the Interim Period Buyer
shall not contact or communicate with any customers, suppliers or distributors
of the Business without Seller's prior written consent. Buyer shall indemnify
and hold Seller and its affiliates, officers, shareholders, directors and
employees harmless against any and all Losses suffered or incurred by Seller and
any of its affiliates, officers, shareholders, directors and employees for
personal injury or property damage arising out of or with respect to Buyer's or
its representatives', agents', financing sources' or employees' exercise of
Buyer's rights to reasonable access under this Section 5(a). Notwithstanding any
provision in this Agreement to the contrary, Buyer's obligations under this
Section 5(a) shall survive the termination of this Agreement and the
consummation of the transactions contemplated hereby.
B. Ordinary Conduct. Except as permitted by the terms of this
Agreement or as set forth in Schedule 5(b) attached hereto, during the Interim
Period, Seller shall cause the Business to be conducted in the ordinary course
and shall make all reasonable efforts consistent with past practices to preserve
its relationships with customers and suppliers with whom Seller deals in
connection with the Business. Except as provided in this Agreement or Schedule
5(b), during the Interim Period, Seller shall not do any of the following
without the prior written consent of Buyer:
1. make any material change in the conduct of the Business,
except as specifically contemplated by this Agreement;
2. sell, lease, license or otherwise dispose of, or agree to
sell, lease, license or otherwise dispose of, any interest in any items of
Intellectual Property or Other Intellectual Property, any material items of
Equipment or any
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other Assets that are material, individually or in the aggregate, to the
Business, except for sales of inventory in the ordinary course of business;
3. permit, allow or subject any items of Intellectual Property or
Other Intellectual Property or Proprietary Information, any material items of
Equipment or any other material Assets or any part thereof to any material
pledge, security interest, encumbrance or lien or suffer such to be imposed,
except for Permitted Liens; or
4. amend or terminate any Contracts, other than in the ordinary
course of business or as necessary for the maintenance of property relating to
the Business.
C. Confidentiality. Seller agrees to use all reasonable efforts after
the Closing Date to cause its directors, officers, employees, advisors and
affiliates to keep the Information confidential for a period of five years from
the Closing Date, except that any Information required by law or legal or
administrative process to be disclosed may be disclosed without violating the
provisions of this Section 5(c), and except that any Information may be used and
disclosed (i) in connection with the performance by Seller of its obligations
under the Ancillary Agreements, (ii) in connection with any Excluded Business,
(iii) as provided in Section 7(h) and (iv) in Mexico, in each case without
violating the provisions of this Section 5(c). For purposes hereof, the term
"Information" means all information exclusively concerning the Business, the
Assets and the Assumed Liabilities, other than any such information that is
available to the public on the Closing Date, or thereafter becomes available to
the public other than as a result of a breach of this Section 5(c), or is
developed independently by Seller or its affiliates or is obtained from third
parties.
D. Covenant Not To Compete. Seller agrees that for a period of three
years following the Closing Date, it shall not, either for itself or for any
other Person controlled by it, engage in any enterprise engaged in, the business
of manufacturing, marketing or selling maple-flavored syrups anywhere in the
United States and Canada (the "Restricted Business"); provided that,
notwithstanding the foregoing, Seller and its affiliates may (i) hereafter
purchase, or otherwise become affiliated with or participate in, any enterprise
engaged in the Restricted Business if less than 25% of the aggregate gross
revenues of such enterprise for its most recently completed fiscal year were
derived from the Restricted Business (and Seller and its affiliates may
hereafter acquire a controlling interest in any enterprise that is engaged in
the Restricted Business, even if more than 25% of the aggregate gross revenues
of such enterprise for its most recently completed fiscal year were derived from
the Restricted Business, so long as Seller shall use reasonable efforts to
divest, as soon as reasonably practicable, a portion of its interest in such
enterprise relating
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to the Restricted Business such that the 25% gross revenues test set forth above
would not be exceeded after giving effect to such divestiture), (ii) engage in
any Excluded Business currently conducted by Seller or manufacture, directly or
through any co-packing arrangement, product for export to Mexico, (iii) continue
to own and operate or hereafter own, operate, acquire or otherwise become
affiliated with or participate in any wholesale or retail grocery business, any
grocery distribution business or any foodservice distribution business which is
not engaged in the manufacture of maple-flavored syrups, (iv) manufacture,
market and sell products which contain syrups as an ingredient thereof, (v)
engage in any joint marketing, promotion or in-store merchandizing program for
any of Seller's or its affiliate's products and any products produced by or for
any Person not bound by this Section 5(d), and (vi) perform their respective
obligations under the Ancillary Agreements. For purposes hereof, the term
"affiliate" means, with respect to any entity, any other entity controlling,
controlled by or under common control with such entity.
E. Board Approval. Seller shall present this Agreement, together with
the Schedules and Exhibits attached hereto, to the board of directors of Philip
Morris (or an appropriate committee thereof) for approval of the consummation of
the transactions contemplated hereby on or prior to May 28, 1997. Seller's
senior management shall recommend that such board (or appropriate committee
thereof) authorize the consummation of the transactions contemplated hereby. If
(i) the board of directors of Phillip Morris shall fail to approve the
transaction contemplated hereby, (ii) the Closing shall not occur solely as a
result of such failure, and (iii) the Buyer shall be ready, willing and able to
close, then Seller agrees to promptly reimburse Buyer for its reasonable fees
and expenses (including reasonable attorneys' and accountants' fees) incurred in
connection with the transaction, upon the written request of Buyer (which
request shall include appropriate supporting documentation in connection
therewith); provided, however, that in no event shall Seller have any obligation
to reimburse Buyer for any such fees and expenses in excess of $500,000.
F. Exclusivity. From the date of this Agreement until the earlier of
(i) the termination of this Agreement pursuant to Section 13 and (ii) the
Closing Date, Seller shall not, and shall cause its subsidiaries, affiliates,
representatives and any other Person acting on behalf of Seller not to, directly
or indirectly, solicit, negotiate with respect to, actively facilitate or accept
any offers for the purchase or sale of or otherwise transfer the Business or all
or substantially all of the Assets or agree to do any of the foregoing, and
Seller shall terminate any existing activities or discussions with any party
other than Buyer and its representatives.
G. License. Pursuant to a mutually-agreeable license agreement to be
executed at Closing, Seller shall grant to Buyer, as of the Closing, a
royalty-free,
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perpetual license to use in the Business any patents, trade secrets, know-how,
processes and other technology used as of the Closing in the Business and that
are not Proprietary Information, which license may be assigned in whole or in
part in connection with a sale or transfer of all or any portion of the
Business, without the consent of the Seller. Such license agreement will contain
provisions relating to the protection of confidential information and other
provisions customary in an agreement of this type.
H. Accounts Receivable. Seller shall promptly forward or cause to be
forwarded to Buyer any and all proceeds from accounts receivable relating to
sales of the Business occurring after the Closing that are received by Seller or
its affiliates after the Closing Date, except as provided in the Transition
Services Agreement.
I. Delivery of Financial Information. Seller shall, prior to the
Closing, furnish or cause to be furnished to Buyer monthly statements of net
revenue, marginal contribution and marginal contribution less advertising and
promotion for the Business similar in form and content to those contained in the
Financial Schedules and any other financial and operating data and other
information readily available to Seller with respect to the Business as Buyer
shall from time to time reasonably request. After the Closing, Seller agrees to
provide Buyer with unaudited quarterly financial information for each fiscal
quarter in 1996 not previously provided to Buyer for use in Buyer's Public
Filings. Such information shall be similar in form and content to the
corresponding financial information included in the Audited Financials.
J. Right of First Refusal. Seller agrees to negotiate in good faith
with Buyer with respect to the possible sale to Buyer of the "LOG CABIN"
trademark registration and related Mexican trademark rights relating exclusively
to the Mexican Business (the "Mexican IP"). Notwithstanding the foregoing, at
least 60 days prior to effecting any sale, transfer or other disposition (a
"Transfer") of the Mexican IP, Seller agrees to deliver written notice to Buyer
describing in reasonable detail the terms of the proposed Transfer, including
the form and amount of consideration, the identity of the prospective purchaser
and the anticipated date of the consummation of the proposed Transfer (the
"Seller Notice"). At any time more than 30 days prior to the anticipated date of
consummation set forth in the Seller Notice, Buyer may notify Seller in writing
of its desire to purchase the Mexican IP on terms no less favorable than those
identified in the Seller Notice, and shall have the right for a period of 60
days thereafter to purchase the Mexican IP from Seller or its affiliates on such
terms. If Buyer shall fail to purchase the Mexican IP during such 60-day period,
Seller may thereafter Transfer the Mexican IP to the prospective purchaser set
forth in the Seller Notice on terms no less favorable than those set
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forth in the Seller Notice. The rights of first refusal of Buyer under this
Section 5(j) shall not apply to any Transfer involving the sale or transfer to a
third party, in one transaction or any related series of transactions, of all or
substantially all of the Latin American food business of Seller or its
affiliates (regardless of the form of the transaction or transactions), and
shall in any event terminate upon the tenth anniversary of the Closing Date.
VI. Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller as follows:
A. Authority; No Conflicts. 1. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Buyer has all requisite corporate power and authority to enter into this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. All corporate acts and other proceedings
required to be taken by Buyer to authorize the execution, delivery and
performance of this Agreement and the Ancillary Agreements and the consummation
of the transactions contemplated hereby and thereby have been duly and properly
taken. This Agreement has been duly executed and delivered by Buyer, and the
Ancillary Agreements to be executed and delivered by Buyer shall be duly and
validly executed and delivered by Buyer. This Agreement and the Ancillary
Agreements constitute, or will constitute, as the case may be, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their terms.
2. The execution and delivery by Buyer of this Agreement and the
Ancillary Agreements do not, and the consummation by Buyer of the transactions
contemplated hereby and thereby and compliance by Buyer with the terms hereof
and thereof will not, conflict with, or result in any violation of or default
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a benefit under, or result in the creation of any
lien, claim, encumbrance, security interest, option, charge or restriction of
any kind upon any of the properties or assets of Buyer under, or require any
consent, authorization or approval under any provision of (A) the certificate of
incorporation or bylaws of Buyer, (B) any material note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, agreement or
arrangement to which Buyer is a party or by which any of its properties or
assets are bound, or (C) any material judgment, order or decree, or any material
statute, law, rule or regulation applicable to Buyer or its property or assets,
other than any such consent, authorization or approval required under the HSR
Act.
B. Actions and Proceedings, etc. There are no (i) outstanding
judgments, orders, writs, injunctions or decrees of any court, governmental
agency
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or arbitration tribunal against Buyer which have or could have a material
adverse effect on the ability of Buyer to consummate the transactions
contemplated hereby or (ii) actions, suits, claims or legal, administrative or
arbitration proceedings or investigations pending or, to the knowledge of Buyer,
threatened against Buyer, which have or could have a material adverse effect on
the ability of Buyer to consummate the transactions contemplated hereby.
C. Availability of Funds. Buyer has cash available, or irrevocable
debt and equity financing commitments (true and correct copies of which have
been delivered to Seller), to enable it to consummate the transactions
contemplated by this Agreement. Buyer has no reason to believe that the
financing will not be completed.
VII. Covenants of Buyer. Buyer covenants as follows:
A. Confidentiality. 1. Buyer acknowledges that all information
provided to any of it and its affiliates, agents and representatives by Seller
and its affiliates, agents and representatives is subject to the terms of a
confidentiality agreement between or on behalf of Seller and Buyer or one or
more of its affiliates or other beneficial owners (the "Confidentiality
Agreement"), the terms of which are hereby incorporated herein by reference.
Notwithstanding the terms of such agreement, Buyer may use information subject
to the Confidential Agreement as reasonably required by Buyer to obtain private
or public financing, including the use of such information in any related
offering memorandum or similar marketing materials, provided, that Seller shall
have the opportunity to review any such materials prior to their use. Effective
upon, and only upon, the Closing, the Confidentiality Agreement shall terminate;
provided, however, that Buyer acknowledges that the Confidentiality Agreement
shall terminate only with respect to information provided to any of Buyer and
its affiliates, agents or representatives that relates solely to the Business,
the Assets and the Assumed Liabilities; and provided further, however, that
Buyer acknowledges that any and all information provided or made available to
any of it and its affiliates, agents and representatives by or on behalf of
Seller (other than information relating solely to the Business, the Assets and
the Assumed Liabilities) shall remain subject to the terms and conditions of the
Confidentiality Agreement after the Closing Date.
2. Buyer agrees that, after the Closing Date, Buyer shall, and
shall use all reasonable efforts to cause its directors, officers, employees,
advisors and affiliates to, keep the Seller Information confidential following
the Closing Date, except that any such Seller Information required by law or
legal or administrative process to be disclosed may be disclosed without
violating the provisions of this Section 7(a)(ii). For purposes of this
Agreement, the term "Seller
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Information" shall mean all information concerning Seller, other than
information that relates exclusively to the Business, the Assets and the Assumed
Liabilities and other than any such information that is available to the public
on the Closing Date, or thereafter becomes available to the public other than as
a result of a breach of this Section 7(a)(ii).
B. No Additional Representations. Buyer acknowledges that neither
Seller nor any other Person has made any representation or warranty, express or
implied, as to the accuracy or completeness of any information regarding the
Assets, the Assumed Liabilities or the Business, except as expressly set forth
in this Agreement or the Schedules hereto, and Buyer further agrees that neither
Seller nor any other Person will have or be subject to any liability to Buyer or
any other Person resulting from the distribution to Buyer, or Buyer's use of,
any such information, including the Information Memorandum prepared by Credit
Suisse First Boston Corporation, dated April 1997 (the "Offering Memorandum"),
and any information, document or material made available to Buyer in certain
"data rooms," management presentations or any other form in expectation of the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, Seller makes no representation or warranty with respect to the
Assets, express or implied, beyond those expressly made in Section 4, including
any implied representation or warranty as to the condition, merchantability,
suitability or fitness for a particular purpose of any of the Assets, and it is
understood that, except for the express representations and warranties of Seller
contained in Section 4, Buyer takes the Assets on an "as is" and "where is"
basis.
C. Notification. Prior to the Closing, Buyer shall promptly notify
Seller if Buyer obtains knowledge that any representation or warranty of Seller
in this Agreement or the Schedules hereto is not true and correct in all
material respects, or if Buyer obtains knowledge of any material errors in, or
omissions from, the Schedules to this Agreement (and in any event shall notify
Seller no later than one week prior to Closing with respect to any knowledge of
Buyer obtained by Buyer at or prior to such time). Notwithstanding the
foregoing, Buyer will have no monetary liability to Seller for failure to
provide such notice.
D. Customer and Supplier Notification; UPC Codes. Promptly following
the Closing, Buyer shall (i) notify all customers and suppliers of the Business
in writing of the consummation of the transactions contemplated hereby and
request that all such customers and suppliers change their respective billing
and invoicing codes as appropriate to reflect the change in ownership of the
Business and (ii) change all Uniform Product Codes relating to the Products.
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E. Litigation. With respect to all litigation matters, including any
disclosed on Schedule 4(f) attached hereto, that constitute Excluded
Liabilities, Buyer will cooperate with Seller in its efforts to conduct or
resolve such litigation, including by making available to Seller such documents
and witnesses as may be deemed necessary or useful therefor in Seller's sole but
reasonable discretion. Seller shall reimburse Buyer for all material
out-of-pocket expenses reasonably incurred by Buyer in connection therewith.
F. Company Stores. Buyer agrees to supply, for a period of two years
after the Closing Date, the Products listed on Schedule 7(f) attached hereto to
the company stores located at facilities of Seller and its affiliates on the
terms set forth on Schedule 7(f).
G. Reservation of Rights. Notwithstanding anything to the contrary
contained herein or in any other agreement to be entered into in connection
herewith, Buyer hereby acknowledges and agrees that Seller and its affiliates
hereby retain a nonexclusive, perpetual, irrevocable, worldwide, royalty-free
right and license to use the Proprietary Information included in the Assets
(other than the recipes and formulations used exclusively in the Business) in
connection with (i) any Excluded Business currently conducted by Seller and (ii)
subject to the provisions of Section 5(d), the manufacture, packaging,
distribution, marketing and sale of syrup and syrup products as part of any food
service distribution business. Seller and its affiliates may assign, transfer or
grant sublicenses to all or any portion of the rights retained pursuant to this
Section 7(g). Buyer hereby covenants not to sue, or take any action, legal or
otherwise, against Seller or its affiliates or any of their respective
stockholders, directors, officers, employees, agents, assignees, sublicensees
and transferees for exercising any of the rights retained pursuant to this
Section 7(g). This reservation of rights shall be included in any subsequent
documentation executed by the parties for recordation or perfection purposes.
H. Accounts Receivable. Buyer shall promptly forward or cause to be
forwarded to Seller any and all proceeds from accounts receivable relating to
pre-Closing sales of the Business that are received by Buyer or its affiliates
after the Closing Date.
VIII. Mutual Covenants. Seller and Buyer covenant and agree as
follows:
A. Consents. 1. Buyer acknowledges that certain consents to the
transactions contemplated by this Agreement may be required from parties to the
Contracts and such consents have not been obtained. Buyer agrees Seller and its
affiliates shall not have any liability whatsoever to Buyer arising out of or
relating to
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the failure to obtain any such consents that may have been or may be required in
connection with the transactions contemplated by this Agreement or because of
the default, acceleration or termination of any Contract as a result thereof.
Buyer further agrees that no representation, warranty or covenant of Seller
contained herein shall be breached or deemed breached and no condition of Buyer
shall be deemed not to be satisfied as a result of (A) the failure to obtain any
such consent or as a result of any such default, acceleration or termination or
(B) any lawsuit, action, claim, proceeding or investigation commenced or
threatened by or on behalf of any Person arising out of or relating to the
failure to obtain any such consent or any such default, acceleration or
termination. At Buyer's written request prior to the Closing, Seller shall
cooperate with Buyer in any reasonable manner in connection with Buyer's
obtaining any such consents; provided, however, that such cooperation shall not
include any requirement of Seller to expend money, commence any litigation or
offer or grant any accommodation (financial or otherwise) to any Person.
2. Buyer acknowledges that the contracts and arrangements that
are listed or described on Schedule 1(c)(iii) attached hereto under the heading
"Shared Contracts" shall not constitute Assets and shall not be assigned by
Seller to Buyer (such contracts and arrangements being referred to herein as the
"Shared Contracts"). All liabilities under the Shared Contracts shall constitute
Excluded Liabilities. With respect to any Shared Contract, at Buyer's written
request prior to the Closing, Seller shall cooperate with Buyer in any
reasonable manner in connection with Buyer's efforts to obtain the agreement of
the other party or parties to any such Shared Contract to enter into a separate
agreement with Buyer with respect to the matters covered by such Shared Contract
as they relate to the Business; provided, however, that such cooperation shall
not include any requirement of Seller or any of its affiliates to expend money,
commence any litigation or offer or grant any accommodation (financial or
otherwise) to any Person. Buyer agrees that Seller and its affiliates shall not
have any liability whatsoever to Buyer arising out of or relating to the failure
to obtain any such separate agreement. Buyer further agrees that no
representation, warranty or covenant of Seller contained herein shall be
breached or deemed breached, and no condition of Buyer shall be deemed not
satisfied, as a result of the failure to obtain any such separate agreement or
as a result of any facts relating to the Shared Contracts.
B. Cooperation. Except as provided in the Transition Services
Agreement, Buyer and Seller shall cooperate with each other and shall cause
their respective officers, employees, agents and representatives to cooperate
with each other for a period of 60 days after the Closing or, in the case of
Assets to be used by Seller under the Transitional Co-Pack Agreement, within the
period provided in
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such agreement, to provide for an orderly transition of the Assets and the
Assumed Liabilities to Buyer and to minimize the disruption to the respective
businesses of the parties hereto resulting from the transactions contemplated
hereby. Each party shall reimburse the other for reasonable out-of-pocket costs
and expenses incurred in assisting the other pursuant to this Section 8(b),
except as provided in the Transition Services Agreement. No party shall be
required by this Section 8(b) to take any action that would unreasonably
interfere with the conduct of its business.
C. Publicity. Seller and Buyer agree that, from the date hereof
through the Closing Date, no public release or announcement concerning the
transactions contemplated hereby shall be issued or made by any party without
the prior consent of the other party (which consent shall not be unreasonably
withheld), except (i) as such release or announcement may be required by law or
the rules or regulations of any United States securities exchange, in which case
the party required to make the release or announcement shall allow the other
party reasonable time to comment on such release or announcement in advance of
such issuance, and (ii) that Seller may make such an announcement to its
employees. Notwithstanding the foregoing, Buyer and Seller shall cooperate to
prepare joint press releases to be issued on May 8, 1997 and on the Closing
Date.
D. Best Efforts. Subject to the terms of this Agreement (including the
limitations set forth in Section 8(a)), each party will use its best efforts to
cause the Closing to occur; provided, however, that Buyer shall not be required
to hold separate or divest any material products or assets to obtain the
agreement of any governmental agency or authority not to seek an injunction
against or otherwise oppose the transactions contemplated hereby, or to have
vacated or terminated any such injunction or opposition.
E. HSR Act Compliance. Buyer and Seller shall each file or cause to be
filed with the Federal Trade Commission ("FTC") and the United States Department
of Justice ("DOJ") any notifications required to be filed under the HSR Act with
respect to the transactions contemplated hereby, and Buyer and Seller shall bear
the costs and expenses of their respective filings; provided that Buyer shall
pay the filing fee in connection therewith. Buyer and Seller shall use their
respective best efforts to make such filings promptly (and in any event by May
9, 1997) following the date hereof, to arrange a meeting or other presentation
with the appropriate agency with regard to such filings, to respond to any
requests for additional information made by either of such agencies and to cause
the waiting periods under the HSR Act to terminate or expire at the earliest
possible date and to resist in good faith, at each of their respective cost and
expense (including the institution or defense of legal proceedings), any
assertion that the transactions contemplated hereby constitute a violation of
the antitrust laws, all to the end of
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expediting consummation of the transactions contemplated hereby. Such filings
and any additional information required to be furnished shall be in substantial
compliance with the requirements of the HSR Act. Buyer and Seller shall keep
each other fully apprised of any communications with, and inquiries or requests
for additional information from, the FTC and the DOJ and any other governmental
authorities, and shall comply promptly with any such inquiry or request. In
addition, Buyer and Seller shall give each other notice in advance of any
meetings (including telephonic meetings) with the FTC or the DOJ or any other
governmental authorities and shall permit the other party to participate
therein.
F. Sales and Transfer Taxes. Buyer and Seller shall each pay one
half of all sales, use, excise, value-added, business, goods and services,
transfer, stamp, recording, documentary, registration, conveyancing or similar
taxes, duties or expenses that may be imposed as a result of the sale and
transfer of the Assets (including any taxes, filing fees or expenses payable in
connection with the sale and transfer of the Intellectual Property and the Other
Intellectual Property, and any stamp, duty or other tax chargeable in respect of
any instrument transferring assets, together with any and all penalties,
interest and additions to tax with respect thereto, and Seller and Buyer shall
cooperate in timely making all filings, returns, reports and forms as may be
required to comply with the provisions of such tax laws. Buyer and Seller shall
also cooperate in providing each other with appropriate resale exemption
certifications and other similar tax and fee documentation.
G. Promotional Materials and Customer Information; Records. 1. On or
as soon as reasonably practicable following the Closing Date, Seller shall use
best efforts to deliver or cause to be delivered to Buyer all existing print
materials (excluding any letterhead, stationery or business cards bearing the
words "KRAFT", "KRAFT FOODS" or "KRAFT GENERAL FOODS"), promotional materials,
point of sale materials and advertising copy used by Seller exclusively in
connection with the Business (collectively, the "Promotional Materials"), and
all existing customer and vendor lists and price lists to the extent relating
exclusively to the Business (collectively, the "Customer Information"), in each
case to the extent that such Promotional Materials and Customer Information are
in the possession of Seller and not then in the possession of Buyer (it being
understood, however, that any failure of Seller to deliver or cause to be
delivered any of the foregoing shall not constitute a breach of any provision of
this Agreement except to the extent that such failure shall be knowing or
willful). After the Closing, Seller shall have the continuing obligation to
deliver or cause to be delivered to Buyer items in the possession of Seller that
are identified by Seller or Buyer after the Closing as constituting Promotional
Materials or Customer Information and Seller shall deliver or cause to be
delivered to Buyer such items as soon as reasonably practicable after such
identification to the extent such items are not then in possession of Buyer.
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Notwithstanding the foregoing, Buyer acknowledges that (A) Seller shall have the
right to use any existing print materials, promotional materials, point of sale
materials and advertising copy used by Seller on or prior to the Closing Date in
connection with the Business, to the extent such print materials, promotional
materials, point of sale materials and advertising copy do not relate
exclusively to the Business ("Kraft Materials"), until such time, which in no
event shall be more than one year after the Closing Date, as Seller shall
generate Kraft Materials that do not refer or relate to the Business; and (B)
certain books and records and other materials in the possession of Seller may
contain incidental information relating to the Assets, the Assumed Liabilities
and the Business or may relate to other subsidiaries or divisions of Seller, and
that Seller may retain such books and records and other materials, except that
Seller shall use reasonable efforts to provide or cause to be provided to Buyer
copies (which may be redacted) of the portions of such books, records and other
materials that contain Promotional Materials or Customer Information, and Buyer
further acknowledges that Seller shall have no obligation to deliver to Buyer
(or provide Buyer with access to or copies of) any legal files or other
documents covered by an evidentiary privilege exercisable by Seller or any of
its affiliates, unless such legal files or documents relate exclusively to an
Assumed Liability.
2. Buyer shall be permitted, for a period of one year
following the Closing Date, to use in commerce or publicly display the
Promotional Materials that bear the words "KRAFT", "KRAFT FOODS" or "KRAFT
GENERAL FOODS". From and after such date, Buyer shall not use in commerce (or
otherwise) or publicly display any such Promotional Materials.
3. Seller may maintain copies of any books and records and
other financial data (collectively, the "Records") that are included in the
Assets and that are delivered to Buyer hereunder and Seller may prepare a
comprehensive index and file plan of such Records (the "File Plan"). Buyer
agrees to retain and maintain such Records in a manner consistent with the File
Plan for a period of not less than ten years from the Closing Date (plus any
additional time during which a party has been advised that (A) there is an
ongoing tax audit with respect to periods prior to the Closing Date, or (B) such
period is otherwise open to assessment). During such period, Buyer agrees to
give Seller and its representatives reasonable cooperation, access (including
copies) and staff assistance, as needed, during normal business hours and upon
reasonable notice, with respect to the Records delivered to Buyer hereunder, and
Seller agrees to give Buyer and its representatives reasonable cooperation,
access and staff assistance, as needed, during normal business hours and upon
reasonable notice, with respect to the books and records and other financial
data relating to the Business and retained by Seller, in each case as may be
necessary for general business purposes, including the preparation of tax
returns and
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financial statements and the management and handling of tax audits; provided
that such cooperation, access and assistance does not unreasonably disrupt the
normal operations of Buyer or Seller. Buyer shall not destroy or otherwise
dispose of the Records for the period set forth in the immediately preceding
sentence without the written consent of Seller.
H. Use of Trademarks. Buyer shall be permitted, for a period of one
year following the Closing Date, to use exclusively on and in connection with
the manufacture, packaging, distribution, marketing and sale of the Products,
the existing packaging materials included in the Inventory that bear the words
"KRAFT", "KRAFT FOODS" or "KRAFT GENERAL FOODS" or any of the trademarks listed
in Section 1(d)(vii). From and after such date, Buyer shall not use any such
packaging materials for any purpose and shall destroy such packaging materials
upon Seller's request.
I. Transitional Co-Pack Agreement. At the Closing, Buyer and Seller
shall negotiate, execute and deliver a Transitional Co-Pack Agreement which
shall include the terms attached hereto as Exhibit A and such other terms as the
parties shall mutually agree upon (the "Transitional Co-Pack Agreement"), which
Buyer and Seller shall, as soon as practicable following the date hereof,
negotiate in good faith.
J. Excluded Business Co-Pack Agreement. At the Closing, Buyer and
Seller shall negotiate, execute and deliver an Excluded Business Co-Pack
Agreement which shall include the terms attached hereto as Exhibit B and such
other terms as the parties shall mutually agree upon (the "Excluded Business
Co-Pack Agreement"), which Buyer and Seller shall, as soon as practicable
following the date hereof, negotiate in good faith.
K. Transition Services Agreement. At the Closing, Buyer and Seller
shall execute and deliver the form of Transition Services Agreement attached
hereto as Exhibit C (the "Transition Services Agreement"). Promptly following
the execution of this Agreement, representatives of Buyer and Seller shall meet
to develop a transition plan which will identify services, service periods and
service charges to be provided pursuant to the Transition Service Agreement and
which will, to the extent practicable, be completed prior to the Closing.
L. Employees. No employees of Seller shall be transferred to Buyer
pursuant to the transactions contemplated by this Agreement.
M. Off-Invoice Trade Promotions. Following the Closing Date, except as
otherwise provided in the following sentence, all deductions taken or made
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against Buyer's accounts receivable or against Buyer's invoices in connection
with any off-invoice trade promotion or trade allowance programs relating to the
Business (collectively, "Off-Invoice Trade Promotions") shall be for the account
of Buyer, and, except as otherwise provided in the following sentence, Seller
shall have no obligation to reimburse Buyer for any such deductions, and, except
as otherwise provided in the following sentence, all deductions taken or made
against Seller's accounts receivable or against Seller's invoices in connection
with any Off-Invoice Trade Promotions shall be for the account of Seller, and,
except as otherwise provided in the following sentence, Buyer shall have no
obligation to reimburse Seller for any such deductions. Notwithstanding the
foregoing, if any customer of Seller deducts from Seller's accounts receivable
or against Seller's invoices any amount on account of Off-Invoice Trade
Promotions that relate to sales of the Business on or after the Closing Date,
Buyer shall promptly reimburse Seller for such amounts upon request (which
request shall be accompanied by reasonable supporting documentation in
connection therewith), and if any customer of Buyer deducts from Buyer's
accounts receivable or against Buyer's invoices any amount on account of
Off-Invoice Trade Promotions that relate to sales of the Business for periods
prior to the Closing Date, Seller shall promptly reimburse Buyer for such
amounts upon request (which request shall be accompanied by reasonable
supporting documentation in connection therewith). This Section 8(m) does not
relate to Variable (Post-Paid) Promotions, such Promotions being the subject of
Section 8(n).
N. Variable (Post-Paid) Promotions. 1. The aggregate amount of all
variable (post-paid) trade promotion and trade allowance programs (including
in-ad coupons) relating to the Business (collectively, "Variable (Post-Paid)
Promotions") shall be allocated between Buyer and Seller as follows: (A) all
Variable (Post-Paid) Promotions relating to periods ending prior to the Closing
Date shall be for the account of Seller; (B) all Variable (Post-Paid) Promotions
authorized by Seller that relate to periods that begin prior to the Closing Date
and end after the Closing Date shall be paid by Seller and shall then be
allocated between Buyer and Seller based upon their respective volume of sales
of the Products into the retail channel during the period that each such
Variable (Post-Paid) Promotion is in effect (such Variable (Post-Paid)
Promotions being referred to herein as "Straddle Promotions," the date on which
each such Straddle Promotion begins being referred to herein as the "Initial
Straddle Date" for such Straddle Promotion, and the date on which each such
Straddle Promotion ends being referred to herein as the "Final Straddle Date"
for such Straddle Promotion); and (C) all Variable (Post-Paid) Promotions
relating to periods beginning on or subsequent to the Closing Date shall be for
the account of Buyer. As soon as reasonably practicable following the Closing,
Seller shall deliver to Buyer a list (including deal numbers and scheduled
dates) of all Variable (Post-Paid) Promotions relating to periods beginning on
or
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after January 1, 1997 and ending prior to the Closing Date and all Straddle
Promotions.
2. Promptly following the close of Seller's books for the month
which includes the last to end of the Straddle Promotions, Seller shall deliver
to Buyer a statement (certified by a financial officer of Seller) setting forth
the aggregate amount of retail sales of Products by Seller beginning on the
Initial Straddle Date for such Straddle Promotion and ending on the day
immediately prior to the Closing Date (such retail sales for each such Straddle
Promotion being referred to herein as "Seller's Straddle Sales"), and Buyer
shall deliver to Seller a statement (certified by a financial officer of Buyer)
setting forth the aggregate amount of retail sales of Products by Buyer and its
affiliates beginning on the Closing Date and ending on the Final Straddle Date
for such Straddle Promotion (such retail sales for each such Straddle Promotion
being referred to herein as "Buyer's Straddle Sales"). As soon as reasonably
practicable following the end of each fiscal quarter of Seller following the
Closing Date, Seller shall deliver to Buyer a statement (which statement shall
be certified by a financial officer of Seller) setting forth (A) all amounts
deducted from Seller accounts receivable or against Seller invoices or invoiced
to Seller by customers on account of each Straddle Promotion (such amounts being
referred to herein as "Straddle Deductions") and (B) Buyer's Variable Share of
each such Straddle Deduction set forth in Seller's statement. For purposes of
this Agreement, Buyer's "Variable Share" of each Straddle Deduction shall be
equal to the amount determined by multiplying the amount of each such Straddle
Deduction by a fraction, the numerator of which is Buyer's Straddle Sales with
respect to the Straddle Promotion relating to such Straddle Deduction and the
denominator of which is the sum of Buyer's Straddle Sales and Seller's Straddle
Sales with respect to the Straddle Promotion relating to such Straddle
Deduction. Promptly following receipt of Seller's statement, Buyer shall deliver
to Seller by wire transfer of immediately available funds an aggregate amount
equal to Buyer's Variable Share of each such Straddle Deduction.
3. Following the Closing, Seller shall pay to Buyer, promptly
upon request (which request shall be accompanied by reasonable supporting
documentation in connection therewith), any amounts deducted from Buyer's
accounts receivable or against Buyer's invoices or invoiced to Buyer by
customers on account of any Variable (Post-Paid) Promotions relating to periods
ending prior to the Closing Date, and Buyer shall pay to Seller promptly upon
request (which request shall be accompanied by reasonable supporting
documentation in connection therewith), any amounts deducted from Seller's
accounts receivable or against Seller's invoices or invoiced to Seller by
customers on account of any Variable (Post-Paid) Promotions relating to periods
beginning on or subsequent to the Closing Date.
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O. Fixed Trade Promotions. 1. The aggregate amount of the liabilities
for all fixed trade promotion and trade allowance programs relating to the
Business (collectively, "Fixed Trade Promotions") shall be allocated between
Buyer and Seller as follows: (A) all liabilities for merchandising activities
relating to Fixed Trade Promotions that take place during periods ending prior
to the beginning of the fiscal half of Seller which includes the Closing Date
(the fiscal half including the Closing Date hereinafter referred to as the
"Fiscal Half") shall be for the account of Seller; (B) all liabilities for
merchandising activities relating to Fixed Trade Promotions that take place
during the Fiscal Half shall be allocated between Buyer and Seller based upon
their respective sales of the Products during the Fiscal Half as provided below
in this Section 8(o); and (C) all liabilities for merchandising activities
relating to Fixed Trade Promotions that take place during periods subsequent to
the end of the Fiscal Half shall be for the account of Buyer. As soon as
reasonably practicable following the Closing, Seller shall deliver to Buyer a
schedule (the "Fixed Trade Schedule") setting forth the aggregate amount of all
Fixed Trade Promotions authorized by Seller for the Fiscal Half and for the
fiscal half of Seller immediately following the Fiscal Half. Buyer shall pay
Seller one-sixth of the amount due under (B) and (C) above with respect to such
aggregate amount of all Fixed Trade Promotions on the last day of each month for
each month beginning in the month in which the Closing occurs and ending on the
sixth month thereafter.
2. As soon as reasonably practicable (and in any event within 30
days) following the end of the Fiscal Half, Seller shall deliver to Buyer a
statement (certified by a financial officer of Seller) setting forth the
aggregate amount of all sales of the Products by Seller into the retail channel
during the period beginning on the first day of the Fiscal Half and ending on
the day immediately prior to the Closing Date ("Seller's Fixed Trade Sales"),
and Buyer shall deliver to Seller a statement (certified by a financial officer
of Buyer) setting forth the aggregate amount of all sales of the Products by
Buyer and its affiliates into the retail channel during the period beginning on
the Closing Date and ending on the last day of the Fiscal Half ("Buyer's Fixed
Trade Sales"). Promptly following receipt of the statement setting forth
Seller's Fixed Trade Sales, Buyer shall pay to Seller an amount equal to the
amount determined by multiplying (A) the aggregate amount of all Fixed Trade
Promotions authorized by Seller but not paid by Buyer and in effect with respect
to the Fiscal Half (as set forth on the Fixed Trade Schedule) by (B) a fraction,
the numerator of which is the aggregate amount of Buyer's Fixed Trade Sales
during the Fiscal Half and the denominator of which is the aggregate amount of
Buyer's Fixed Trade Sales and Seller's Fixed Trade Sales during the Fiscal Half,
reduced by the payments made by Buyer to Seller under clause (i) above. Seller
shall promptly reimburse Buyer for any amounts paid directly by Buyer with
respect to any Fixed Trade Promotions set forth on the Fixed
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Trade Schedule upon provision by Buyer of reasonable documentation in support of
such payment, and shall pay to Buyer the amount, if any, by which the amount of
the payments made by Buyer to Seller under clause (i) above exceed the amount to
be paid by Buyer pursuant to the preceding sentence (without giving effect to
the payment under clause (i) above).
P. Customer Deductions. 1. Following the Closing, but subject to
Section 8(m), (n), (o) and (q), Buyer shall reimburse Seller for all deductions
taken or made by customers or other third parties against any accounts
receivable or invoices of Seller and its affiliates or otherwise charged to the
account of Seller or its affiliates to the extent relating to the Business after
the Closing, including any of the foregoing, which arise out of any trade
promotion or trade allowance programs or consumer promotion programs of the type
described in Sections 8(m), (n), (o) and (q) (including coupons and
free-standing inserts) relating to the Business.
2. Each party shall comply with the following procedures in
dealing with such deductions and other charges to the account of Seller or its
affiliates for which Seller seeks reimbursement from Buyer:
a. Seller shall give written notice (the "Deduction Notice")
to Buyer of any such deductions and other charges to the account of Seller
or its affiliates within 90 days following Seller's (or its applicable
affiliate's) receipt and identification thereof; provided that the failure
to give such notice within 90 days shall not affect Seller's rights
hereunder, except to the extent that Buyer is actually prejudiced thereby;
and
b. Within ten (10) business days following delivery of a
Deduction Notice, Buyer shall tender to Seller a check or wire transfer in
the aggregate amount of such deductions or other charges to the account of
Seller or its affiliates that are set forth therein. Late payments of any
such amounts shall bear interest at the Applicable Rate.
3. Nothing in this Section 8(p) shall restrict Buyer from
contesting any deductions or charges that a customer or third party has taken or
made; provided that Buyer reimburses Seller for the deductions or charges so
made or taken and seeks to recover the alleged wrongful deductions or charges
directly from the customer or third party.
Q. Coupons. Coupons relating to the Business (collectively, "Coupons")
that are presented to clearinghouses by retailers within 45 days following the
Closing Date shall be for the account of Seller and Coupons that are presented
to clearinghouses by retailers more than 45 days after the Closing Date
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shall be for the account of Buyer. Promptly following the Closing, Buyer and
Seller shall jointly notify CMS, Inc. ("CMS") in writing of the consummation of
the transactions contemplated hereby and shall request that CMS deliver to Buyer
all invoices for Coupons that are presented to CMS more than 45 days after the
Closing Date. Buyer shall pay all such invoices in accordance with the terms
thereof. Seller shall promptly upon written notice of Buyer reimburse Buyer for
all Coupons that are charged to the account of Buyer that are for the account of
Seller pursuant to this Section 8(q) (which request shall be accompanied by
reasonable supporting documentation in connection therewith), and Buyer shall
promptly upon the written request of Seller reimburse Seller for all Coupons
that are charged to the account of Seller that are for the account of Buyer
pursuant to this Section 8(q) (which request shall be accompanied by reasonable
supporting documentation in connection therewith).
R. Audited Financials. Seller shall use commercially reasonable
efforts to prepare and deliver, as promptly as reasonably practicable but in any
event on or prior to the Closing Date, Statements of Operations of the Business
on a fully allocated basis through and including net income (each, a "Statement
of Operations") for the years ended December 31, 1994, December 30, 1995 and
December 28, 1996 and for the three month period ended March 31, 1997, and a
Statement of Assets as of December 28, 1996, in each case prepared from the
books and records of Seller relating to the Business in accordance with
generally accepted accounting principles, together with a report thereon
prepared and certified by Coopers & Lybrand LLP ("C&L") and appropriate C&L
consents and comfort letters, when required, with respect to each such statement
other than the Statement of Operations for the three month period March 31, 1997
(such statements, collectively, the "Audited Financials"), at Buyer's sole cost
and expense, so that the Audited Financials can be used in Rule 144A offering
memoranda and registration statements filed under the Securities Act of 1933, as
amended, and reports under the Securities Exchange Act of 1934, as amended (the
"Public Filings") issued or filed by Buyer. Seller shall also cooperate in a
commercially reasonable manner with Buyer so Buyer can obtain information
sufficient for Buyer to comply with the requirements for the Management's
Discussion and Analysis portion of the Public Filings. The foregoing cooperation
of Seller shall include (i) compiling the requisite financial information,
including supplying financial information for purposes of comfort letters to be
issued in connection with Public Filings, (ii) granting Buyer or C&L full and
complete access to the books and records of Seller with respect to the Business
and any relevant books and records of affiliated entities and to personnel
knowledgeable about such books and records, in each case, to the extent
reasonably required by C&L, (iii) using commercially reasonable efforts to cause
C&L to give full and complete access to Buyer to its work papers and any other
supporting information relating to the Audited Financials, and (iv) signing
customary
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management representation letters relating to the Audited Financials and any
comfort letters. In the event Buyer requires audited and unaudited financial
information for additional periods subsequent to March 31, 1997 and prior to
Closing in connection with financings necessary to consummate the Closing,
Seller shall use commercially reasonable efforts of the type described above to
furnish such financials and cause C&L, at Buyer's sole cost and expense, to
prepare a report and certification thereon.
IX. Further Assurances. From time to time, as and when requested by
any party hereto, the other party hereto shall execute and deliver, or cause to
be executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions (subject to the limitations
set forth in Section 8(a) and Section 8(b)), as such other party may reasonably
deem necessary or desirable to consummate the transactions contemplated by this
Agreement.
X. Indemnification.
A. Indemnification by Seller. From and after the Closing, Seller
shall indemnify Buyer, its affiliates and each of their respective officers,
directors, employees and agents and hold them harmless from any loss, liability,
damage or expense (including reasonable legal fees and expenses) ("Losses")
suffered or incurred by any such indemnified party to the extent arising from
(i) any breach of any representation or warranty of Seller contained in this
Agreement or the other agreements contemplated hereby which survives the
Closing, (ii) any breach of any covenant of Seller contained in this Agreement
or the other agreements contemplated hereby requiring performance after the
Closing Date and (iii) any of the Excluded Liabilities; provided, however, that
Seller shall not have any liability under clause (i) above unless the aggregate
of all Losses relating thereto for which Seller would, but for this proviso, be
liable exceeds on a cumulative basis an amount equal to $1,000,000 and then only
to the extent of any such excess; provided further, however, that Seller shall
not have any liability under clause (i) above for any breach of a representation
or warranty contained in this Agreement or the other agreements contemplated
hereby if Seller can demonstrate that Buyer had actual knowledge of such breach
at the time of Closing and failed to notify Seller of such breach in accordance
with Section 7(c), and no Losses related thereto shall be aggregated for
purposes of the first proviso to this Section 10(a); and provided further,
however, that Seller's aggregate liability under this Section 10(a) shall in no
event exceed 25% of the Final Purchase Price.
B. Exclusive Remedy. Except as otherwise expressly provided in
Sections 22 and 27, Buyer acknowledges and agrees that, from and after the
Closing, its sole and exclusive remedy with respect to any and all claims
relating to
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the subject matter of this Agreement shall be pursuant to the indemnification
provisions set forth in this Section 10; provided, however, that Buyer shall not
be precluded from seeking injunctive relief. In furtherance of the foregoing,
Buyer hereby waives, from and after the Closing, to the fullest extent permitted
under applicable law, any and all rights, claims and causes of action (other
than tort claims of, or causes of action arising from, fraudulent
misrepresentation) it may have against Seller relating to the subject matter of
this Agreement and the other agreements contemplated hereby arising under or
based upon any federal, state, local or foreign statute, law, ordinance, rule or
regulation or otherwise. Buyer further acknowledges and agrees that, other than
the representations and warranties of Seller specifically contained in this
Agreement, there are no representations or warranties of Seller or its
representatives or any other Person either express or implied with respect to
the Business, the Assets or the Assumed Liabilities and it shall have no claim
or right to indemnification with respect to any information, documents or
materials furnished by Seller or its representatives or any other Person or any
of their officers, directors, employees, agents or advisors, including the
Offering Memorandum, the Supplemental Information Package and any information,
documents or material made available to Buyer in certain "data rooms,"
management presentations or any other form in expectation of the transactions
contemplated by this Agreement. Notwithstanding anything to the contrary
contained in this Agreement, Buyer shall have no right to indemnification under
Section 10(a) with respect to any Loss or alleged Loss if (A) Buyer shall have
requested a reduction in the Inventory Amount reflected on the Closing Statement
on account of any matter forming the basis for such Loss or alleged Loss and
shall have agreed, or the Accounting Firm shall have determined, that no such
reduction is appropriate or (B) any matter forming the basis for such Loss or
alleged Loss could have been asserted as a reduction in the Inventory Amount
reflected on the Closing Statement pursuant to the provisions of Section 2(b)
and Buyer failed on a timely basis to assert the same.
C. Indemnification by Buyer. From and after the Closing, Buyer shall
indemnify Seller and its affiliates and each of their respective officers,
directors, employees and agents against and hold them harmless from any Losses
suffered or incurred by any such indemnified party to the extent arising from
(i) any breach of any representation or warranty of Buyer contained in this
Agreement or the other agreements contemplated hereby which survives the
Closing, (ii) any breach of any covenant of Buyer contained in this Agreement or
the other agreements contemplated hereby requiring performance after the Closing
Date, (iii) any failure of Buyer to pay, discharge or perform any of the Assumed
Liabilities, (iv) any guarantee or obligation to assure performance given or
made by Seller or any of its affiliates with respect to any of the Assumed
Liabilities, (v) any obligation, liability, commitment, action, suit, claim or
other proceeding which
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arises directly or indirectly out of the operation of the Business or use of the
Assets after the Closing or the manufacture, distribution, marketing or sale of
the Products at any time after the Closing and (vi) subject to Buyer's rights
under Section 10(a), any liability, action, suit, claim or other proceeding
which arises directly or indirectly in connection with Buyer's financing or
refinancing of the Initial Purchase Price or Final Purchase Price, including as
a result of the use of the Audited Financials by Buyer in any Public Filing or
otherwise.
D. Losses Net of Insurance. The amount of any and all Losses under
this Section 10 shall be determined net of any amounts recovered or recoverable
by the indemnified party under insurance policies with respect to such Losses,
less the reasonably anticipated present value of any increase in insurance
premiums to be incurred by the indemnified party on account thereof, as
determined in good faith by such indemnified party. Each party hereby waives, to
the extent permitted under its applicable insurance policies, any subrogation
rights that its insurer may have with respect to any indemnifiable Losses. Any
indemnity payment under this Agreement shall be treated as an adjustment to the
Final Purchase Price for tax purposes.
E. Termination of Indemnification. The obligations to indemnify and
hold harmless a Person pursuant to Sections 10(a)(i) and 10(c)(i) shall
terminate when the applicable representation or warranty terminates pursuant to
Section 14; provided, however, that such obligations to indemnify and hold
harmless shall not terminate with respect to any item as to which the Person to
be indemnified or the related party thereto shall have, prior to the expiration
of the applicable period, previously made a claim by delivering a written notice
(stating in reasonable detail the nature of, and factual and legal basis for,
any such claim for indemnification, and the provisions of this Agreement upon
which such claim for indemnification is made) to the indemnifying party. The
obligation to indemnify and hold harmless any Person pursuant to the other
clauses of Sections 10(a) and 10(c) shall not terminate.
F. Procedures Relating to Indemnification. 1. In order for a Person
(the "indemnified party") to be entitled to any indemnification provided for
under this Agreement in respect of, arising out of or involving a claim or
demand made by any Person against the indemnified party (a "Third Party Claim"),
such indemnified party must notify the indemnifying party in writing, and in
reasonable detail, of the Third Party Claim as promptly as reasonably possible
after receipt by such indemnified party of notice of the Third Party Claim;
provided, however, that failure to give such notification on a timely basis
shall not affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure. Thereafter, the indemnified party
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shall deliver to the indemnifying party, within five business days after the
indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the Third
Party Claim.
2. If a Third Party Claim is made against an indemnified party,
the indemnifying party shall be entitled to participate in the defense thereof
and, if it so chooses and acknowledges its obligation to indemnify the
indemnified party therefor, to assume the defense thereof with counsel selected
by the indemnifying party and reasonably satisfactory to the indemnified party.
Notwithstanding any acknowledgment made pursuant to the immediately preceding
sentence, the indemnifying party shall continue to be entitled to assert any
limitation on its indemnification responsibility contained in the provisos to
Section 10(a). Should the indemnifying party so elect to assume the defense of a
Third Party Claim, the indemnifying party shall not be liable to the indemnified
party for legal expenses subsequently incurred by the indemnified party in
connection with the defense thereof. If the indemnifying party assumes such
defense, the indemnified party shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the indemnifying party, it being understood, however, that
the indemnifying party shall control such defense. The indemnifying party shall
be liable for the fees and expenses of counsel employed by the indemnified party
for any period during which the indemnifying party has not assumed the defense
thereof. If the indemnifying party chooses to defend any Third Party Claim, all
the parties hereto shall cooperate in the defense or prosecution of such Third
Party Claim. 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 indemnified party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the indemnifying party's
prior written consent (which consent shall not be unreasonably withheld).
XI. Assignment. Except as set forth below, this Agreement and any
rights and obligations hereunder shall not be assignable or transferable by
Buyer or Seller (including by operation of law in connection with a merger or
sale of stock, or sale of substantially all the assets, of Buyer or Seller)
without the prior written consent of the other party and any purported
assignment without such consent shall be void and without effect; provided,
however, that without the consent of Seller, Buyer may assign its rights
hereunder (i) to one or more wholly-owned subsidiaries of Buyer upon written
notice of such assignment to Seller (ii) to Buyer's secured lenders as
collateral to secure indebtedness of Buyer, or (iii) in
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connection with the sale of all or substantially all of the assets of the
Business to any unaffiliated third party (regardless of the form of transaction)
(it being understood, however, that no such assignment shall limit or otherwise
affect Buyer's obligations hereunder).
XII. No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein
express or implied (including Section 10) shall give or be construed to give to
any Person, other than the parties hereto and such permitted assigns, any legal
or equitable rights hereunder.
XIII. Termination; Break-Up Fees.
A. Anything contained herein to the contrary notwithstanding, this
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing Date:
1. by the mutual written consent of Seller and Buyer;
2. by Buyer if any of the conditions set forth in Section 3(a)
shall have become incapable of fulfillment, and shall not have been waived by
Buyer;
3. by Seller if any of the conditions set forth in Section 3(b)
shall have become incapable of fulfillment, and shall not have been waived by
Seller;
4. by Seller if the Closing does not occur on or prior to August
31, 1997; or
5. by Buyer if the Closing does not occur on or prior to August
31, 1997, unless the Closing shall not have occurred as a result of the failure
of satisfaction of the conditions set forth in Section 3(a)(iii) or (iv), in
which case the Buyer shall not be permitted to terminate under this clause (v)
until December 31, 1997;
provided, however, that the party seeking termination pursuant to clause (ii),
(iii), (iv) or (v) above is not in material breach of its representations,
warranties, covenants or agreements contained in this Agreement.
B. Notwithstanding any other provisions of this Agreement to the
contrary, if, as of the scheduled Closing Date, all of the conditions set forth
in
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Section 3(a) shall have been satisfied (or shall be capable of performance) and
the Closing shall have failed to occur primarily as a result of the Buyer's
inability to secure the financing required to consummate the transactions
contemplated hereunder (a "Financing Breach"), (i) Buyer shall promptly pay to
Seller upon demand a break-up fee of $2,500,000 (the "Break-up Fee"), (ii)
Seller shall have the right to immediately terminate this Agreement, and (iii)
Buyer shall indemnify Seller for any Losses resulting from a Financing Breach
(including, without limitation, losses based upon a subsequent sale of the
Business at a reduced purchase price) in an amount not to exceed $2,500,000. In
the event Seller elects not to terminate this Agreement pursuant to the
preceding sentence and Buyer subsequently acquires the Business pursuant to or
in accordance with the terms of this Agreement, any Break-up Fee previously paid
to Seller shall be credited against the Initial Purchase Price.
C. In the event of termination by Seller or Buyer pursuant to this
Section 13, written notice thereof shall forthwith be given to the other party
and the transactions contemplated by this Agreement shall be terminated, without
further action by any party. If the transactions contemplated by this Agreement
are terminated as provided herein:
1. Buyer shall return all documents and copies and other
materials received from or on behalf of Seller relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to Seller; and
2. all confidential information received by Buyer with respect to
the Assets, the Assumed Liabilities and the Business shall be treated in
accordance with the Confidentiality Agreement, which shall remain in full force
and effect in accordance with its terms notwithstanding the termination of this
Agreement.
D. If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Section 13, this Agreement shall
become void and of no further force and effect, except for the provisions of (i)
Section 7(a) relating to the obligation of Buyer to keep confidential certain
information and data obtained by it, (ii) Section 8(c) relating to publicity,
(iii) Section 5(a) relating to indemnification in connection with the matters
contemplated thereby, (iv) Section 15 relating to certain expenses, (v) Section
22 relating to finder's fees and broker's fees and (vi) this Section 13. Nothing
in this Section 13 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement or to
impair the right of any party to compel specific performance by another party of
its obligations under this Agreement.
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XIV. Survival of Representations. The representations and warranties
in this Agreement and in any other document delivered in connection herewith
shall survive the Closing solely for purposes of Sections 10(a) and 10(c) and
shall terminate at the close of business on the 18-month anniversary of the
Closing Date; provided, however, that the representations and warranties set
forth in Section 4(d) shall not terminate until the third anniversary of the
Closing Date.
XV. Expenses. Whether or not the transactions contemplated hereby are
consummated, and except as otherwise specifically provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
or expenses.
XVI. Amendment and Waiver. This Agreement may be amended, or any
provision of this Agreement may be waived; provided that any such amendment or
waiver shall be binding upon Seller only if set forth in a writing executed by
Seller and referring specifically to the provision alleged to have been amended
or waived, and any such amendment or waiver shall be binding upon Buyer only if
set forth in a writing executed by Buyer and referring specifically to the
provision alleged to have been amended or waived. No course of dealing between
or among any Persons having any interest in this Agreement shall be deemed
effective to modify, amend or discharge any part of this Agreement or any rights
or obligations of any Person under or by reason of this Agreement.
XVII. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the case
of express mail or overnight courier service), as follows:
1. if to Buyer,
MBW Foods, Inc.
445 Hutchinson Avenue, Suite 800
Columbus, Ohio 43235
Telecopy: (614) 436-6655
Attention: President
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with a copy to:
Dartford Partnership, L.L.C.
456 Montgomery Street
Suite 2200
San Francisco, California 94133
Attention: Ian Wilson
2. if to Seller,
Kraft Foods, Inc.
Three Lakes Drive
Northfield, Illinois 60093
Telecopy No. (847) 646-2950
Attention: General Counsel
with a copy to:
Kraft Foods, Inc.
Three Lakes Drive
Northfield, Illinois 60093
Telecopy No. (847) 646-4431
Attention: Theodore Banks, Associate General
Counsel
XVIII. Interpretation. The headings and captions contained in this
Agreement, in any Exhibit or Schedule hereto and in the table of contents to
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Any capitalized terms used in
any Schedule or Exhibit and not otherwise defined therein shall have the
meanings set forth in this Agreement. The use of the word "including" herein
shall mean "including without limitation."
XIX. No Strict Construction. Notwithstanding the fact that this
Agreement has been drafted or prepared by one of the parties, Buyer and Seller
confirm that both they and their respective counsel have reviewed, negotiated
and adopted this Agreement as the joint agreement and understanding of the
parties, and the language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any Person.
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XX. Counterparts. This Agreement may be executed in one or more
counterparts (including by means of telecopied signature pages), all of which
shall be considered one and the same agreement, and shall become effective when
one or more such counterparts have been signed by each of the parties and
delivered to the other party.
XXI. Entire Agreement. This Agreement and the other agreements
referred to herein (including the Confidentiality Agreement) contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior agreements and
understandings, whether written or oral, relating to such subject matter.
XXII. Brokerage. Buyer has not used a broker or finder in connection
with the transactions contemplated by this Agreement, and there are no claims
for brokerage commissions, finders' fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement or
agreement by or on behalf of Buyer, except pursuant to any arrangement for which
Buyer is solely responsible. Seller has not retained any broker or finder or
incurred any liability or obligation for any brokerage fees, commissions or
finder's fees with respect to this Agreement or the transactions contemplated
hereby, except pursuant to an arrangement with Credit Suisse First Boston
Corporation, for which Seller is solely responsible. Notwithstanding anything to
the contrary in Section 10, Buyer shall indemnify and hold Seller harmless for
any breach of its representation in this Section 22, and Seller shall indemnify
and hold Buyer harmless for any breach of its representation in this Section 22.
XXIII. Disclaimer Regarding Estimates and Projections. In connection
with Buyer's investigation of the Business, Buyer has received from or on behalf
of Seller certain projections, including projected statements of operating
results of the Business for the fiscal year ending in December 1997 and for
subsequent fiscal years and certain business plan information for such fiscal
year and succeeding fiscal years. Buyer acknowledges that there are
uncertainties inherent in attempting to make such estimates, projections and
other forecasts and plans, that Buyer is familiar with such uncertainties, that
Buyer is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all estimates, projections and other forecasts and
plans so furnished to it (including the reasonableness of the assumptions
underlying such estimates, projections and forecasts), and that Buyer shall have
no claim against Seller with respect thereto. Accordingly, Seller makes no
representation or warranty with respect to such estimates, projections and other
forecasts and plans (including the reasonableness of the assumptions underlying
such estimates, projections and forecasts).
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XXIV. Schedules. The disclosures in the Schedules hereto are to be
taken as relating to the representations and warranties of Seller as a whole.
The inclusion of information in the Schedules hereto shall not be construed as
an admission that such information is material to the Assets, the Business or
Seller. In addition, matters reflected in the Schedules are not necessarily
limited to matters required by this Agreement to be reflected in such Schedules.
Such additional matters are set forth for informational purposes only and do not
necessarily include other matters of a similar nature. Prior to the Closing,
Seller shall have the right to supplement, modify or update the Schedules hereto
to reflect changes in the ordinary course of the Business prior to the Closing;
provided, however, that any such supplements, modifications or updates shall be
subject to Buyer's rights under Section 3(a)(i).
XXV. Representation by Counsel; Interpretation. Seller and Buyer
acknowledge that each of them has been represented by counsel in connection with
this Agreement and the transactions contemplated hereby. Accordingly, any rule
of law or any legal decision that would require interpretation of any claimed
ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived.
XXVI. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid and effective under
applicable law, but if any provision of this Agreement or the application of any
such provision to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof.
XXVII. Bulk Transfer Laws. Buyer hereby waives compliance by Seller
with the provisions of any so-called bulk transfer laws of any jurisdiction in
connection with the sale of the Assets. Notwithstanding anything to the contrary
in Section 10, Seller shall indemnify and hold Buyer harmless from any Losses
which Buyer may incur due to the failure to so comply.
XXVIII. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Illinois
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
XXIX. Exhibits and Schedules. All Exhibits and Schedules annexed
hereto or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein.
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XXX. Dispute Resolution.
A. Negotiation. In the event of any controversy, dispute or claim
between Seller and Buyer as to the interpretation of any provision of this
Agreement (or the performance of obligations hereunder), the matter, upon
written request of either party, shall be referred to representatives of the
parties for decision, each party being represented by a senior executive officer
who has no direct operational responsibility for the matters contemplated by
this Agreement (the "Representatives"). The Representatives shall promptly meet
in a good faith effort to resolve the dispute. If the Representatives do not
agree upon a decision within 30 days after reference of the matter to them, each
of Buyer and Seller shall be free to exercise the remedies available to it under
Section 30(b).
B. Arbitration. Any controversy, dispute or claim arising out of or
relating in any way to this Agreement or the other agreements contemplated
hereby or the transactions arising hereunder or thereunder that cannot be
resolved by negotiation pursuant to Section 30(a) shall, except as otherwise
provided in Section 2(b), be settled exclusively by arbitration in the City of
Chicago, Illinois, except for the injunctive relief referred to in Section
10(b). Such arbitration shall be administered by the Center for Public Resources
(the "Institute") in accordance with its then prevailing Rules for
Non-Administered Arbitration of Business Disputes (except as otherwise provided
herein), by three arbitrators, one of whom shall be chosen by Buyer, one of whom
shall be chosen by Seller, and the third who shall be chosen by such first two
arbitrators. Notwithstanding anything to the contrary provided in Section 28
hereof, the arbitration shall be governed by the United States Arbitration Act,
9 U.S.C. ss. 1 et seq. The fees and expenses of the Institute and the
arbitrators shall be shared equally by the parties and advanced by them from
time to time as required; provided that at the conclusion of the arbitration,
the arbitrators shall award costs and expenses (including the costs of the
arbitration previously advanced and the fees and expenses of attorneys,
accountants and other experts) and interest at the Applicable Rate to the
prevailing party. No pre-arbitration discovery (other than document discovery as
authorized by the arbitrators on specific application therefor for reasonable
cause) shall be permitted, except that the arbitrators shall have the power in
their sole discretion, on application by either party, to order pre-arbitration
examination of the witnesses and documents that the other party intends to
introduce in its case-in-chief at the arbitration hearing. The arbitrators shall
render their decision in writing within 90 days of the conclusion of the
arbitration hearing. The arbitrators shall not be empowered to award to any
party any consequential damages, lost profits to the extent relating to any
business or asset owned by Buyer (including, but not limited to, Buyer's Mrs.
Butterworth's business) other than the Business, or relating to any effect on
Buyer's capitalization, or punitive damages in connection with any dispute
arising out of or relating in any
-52-
<PAGE>
way to this Agreement or the Ancillary Agreements or the transactions arising
hereunder or thereunder, and each party hereby irrevocably waives any right to
recover such damages. Notwithstanding anything to the contrary provided in this
Section 30(b) and without prejudice to the above procedures, either party may
apply to any court of competent jurisdiction for temporary injunctive or other
provisional judicial relief if such action is necessary to avoid irreparable
damage or to preserve the status quo until such time as the arbitration panel is
convened and available to hear such party's request for temporary relief. The
award rendered by the arbitrators shall be final and not subject to judicial
review and judgment thereon may be entered in any court of competent
jurisdiction.
* * * * *
-53-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
KRAFT FOODS, INC.
By: /s/ William J. Eichar
----------------------------------
Title: Vice President
MBW FOODS INC.
By: /s/ James B. Ardrey
----------------------------------
Title: Executive Vice President
<PAGE>
EX-4.6
Indenture
================================================================
AURORA FOODS INC.
9 7/8% Series C Senior Subordinated Notes due 2007
==========
INDENTURE
Dated as of July 1, 1997
==========
WILMINGTON TRUST COMPANY
Trustee
================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- ---------
310(a)(1)...........................................................7.10
(a)(2)...........................................................7.10
(a)(3)...........................................................N.A.
- i -
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions and Incorporation by Reference............ 1
SECTION 1.1. Definitions........................................... 1
SECTION 1.2. Other Definitions..................................... 17
SECTION 1.3. Incorporation by Reference of Trust Indenture Act..... 18
SECTION 1.4. Rules of Construction................................. 18
ARTICLE II
The Securities............................. 19
SECTION 2.1. Form and Dating....................................... 19
SECTION 2.2. Execution and Authentication.......................... 20
SECTION 2.3. Registrar and Paying Agent............................ 21
SECTION 2.4. Paying Agent To Hold Money in Trust................... 21
SECTION 2.5. Securityholder Lists.................................. 21
SECTION 2.6. Transfer and Exchange................................. 22
SECTION 2.7. Replacement Securities................................ 27
SECTION 2.8. Outstanding Securities................................ 27
SECTION 2.9. Temporary Securities.................................. 27
SECTION 2.10. Cancellation.......................................... 28
SECTION 2.11. Defaulted Interest.................................... 28
SECTION 2.12. CUSIP Numbers......................................... 28
ARTICLE III
Redemption............................... 28
SECTION 3.1. Notices to Trustee.................................... 28
SECTION 3.2. Selection of Securities To Be Redeemed................ 29
SECTION 3.3. Notice of Redemption.................................. 29
SECTION 3.4. Effect of Notice of Redemption........................ 30
SECTION 3.5. Deposit of Redemption Price........................... 30
SECTION 3.6. Securities Redeemed in Part........................... 30
ARTICLE IV
Covenants............................... 30
SECTION 4.1. Payment of Securities................................. 30
SECTION 4.2. SEC Reports........................................... 31
SECTION 4.3. Limitation on Indebtedness............................ 31
SECTION 4.4. Limitation on Restricted Payments..................... 32
SECTION 4.5. Limitation on Restrictions on Distributions
from Subsidiaries.................................... 34
- ii -
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Page
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SECTION 4.6. Limitation on Sales of Assets......................... 35
SECTION 4.7. Limitation on Affiliate Transactions.................. 37
SECTION 4.8. Change of Control..................................... 38
SECTION 4.9. Limitation on Sale of Subsidiary Capital Stock........ 39
SECTION 4.10. Future Security Guarantors............................ 39
SECTION 4.11. Limitation on Lines of Business....................... 39
SECTION 4.12. Maintenance of Office or Agency for Registration of
Transfer, Exchange and Payment of Securities......... 39
SECTION 4.13. Appointment to Fill a Vacancy in the Office of Trustee 40
SECTION 4.14. Provision as to Paying Agent.......................... 40
SECTION 4.15. Maintenance of Corporate Existence.................... 41
SECTION 4.16. Compliance Certificate................................ 41
SECTION 4.17. Further Instruments and Acts.......................... 41
ARTICLE V
Successor Company........................... 41
SECTION 5.1. When Company May Merge or Transfer Assets............. 41
ARTICLE VI
Defaults and Remedies......................... 42
SECTION 6.1. Events of Default..................................... 42
SECTION 6.2. Acceleration.......................................... 45
SECTION 6.3. Other Remedies........................................ 45
SECTION 6.4. Waiver of Past Defaults............................... 45
SECTION 6.5. Control by Majority................................... 45
SECTION 6.6. Limitation on Suits................................... 46
SECTION 6.7. Rights of Holders to Receive Payment.................. 46
SECTION 6.8. Collection Suit by Trustee............................ 46
SECTION 6.9. Trustee May File Proofs of Claim...................... 46
SECTION 6.10. Priorities............................................ 47
SECTION 6.11. Undertaking for Costs................................. 47
ARTICLE VII
Trustee................................ 47
SECTION 7.1. Duties of Trustee..................................... 47
SECTION 7.2. Rights of Trustee..................................... 48
SECTION 7.3. Individual Rights of Trustee.......................... 50
SECTION 7.4. Trustee's Disclaimer.................................. 50
SECTION 7.5. Notice of Defaults.................................... 50
SECTION 7.6. Reports by Trustee to Holders......................... 50
SECTION 7.7. Compensation and Indemnity............................ 50
SECTION 7.8. Replacement of Trustee................................ 51
- iii -
<PAGE>
Page
----
SECTION 7.9. Successor Trustee by Merger........................... 52
SECTION 7.10. Eligibility; Disqualification......................... 52
SECTION 7.11. Preferential Collection of Claims Against Company..... 52
ARTICLE VIII
Discharge of Indenture; Defeasance................... 53
SECTION 8.1. Discharge of Liability on Securities; Defeasance...... 53
SECTION 8.2. Conditions to Defeasance.............................. 54
SECTION 8.3. Application of Trust Money............................ 55
SECTION 8.4. Repayment to Company.................................. 55
SECTION 8.5. Indemnity for U.S. Government Obligations............. 55
SECTION 8.6. Reinstatement......................................... 55
ARTICLE IX
Amendments............................... 56
SECTION 9.1. Without Consent of Holders............................ 56
SECTION 9.2. With Consent of Holders............................... 57
SECTION 9.3. Compliance with Trust Indenture Act................... 58
SECTION 9.4. Revocation and Effect of Consents and Waivers......... 58
SECTION 9.5. Notation on or Exchange of Securities................. 58
SECTION 9.6. Trustee To Sign Amendments............................ 58
ARTICLE X
Subordination............................. 59
SECTION 10.1. Agreement To Subordinate.............................. 59
SECTION 10.2. Liquidation, Dissolution, Bankruptcy.................. 59
SECTION 10.3. Default on Senior Indebtedness or Guarantor Senior
Indebtedness......................................... 60
SECTION 10.4. Acceleration of Payment of Securities................. 61
SECTION 10.5. When Distribution Must Be Paid Over................... 61
SECTION 10.6. Subrogation........................................... 61
SECTION 10.7. Relative Rights....................................... 62
SECTION 10.8. Subordination May Not Be Impaired by Company or the
Subsidiary Guarantors................................ 62
SECTION 10.9. Rights of Trustee and Paying Agent.................... 62
SECTION 10.10. Distribution or Notice to Representative.............. 63
SECTION 10.11. Article X Not To Prevent Events of Default or Limit
Right To Accelerate.................................. 63
SECTION 10.12. Trust Moneys Not Subordinated......................... 63
SECTION 10.13. Trustee Entitled To Rely.............................. 63
SECTION 10.14. Trustee To Effectuate Subordination................... 64
- iv -
<PAGE>
Page
----
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness or Guarantor Senior Indebtedness........ 64
SECTION 10.16. Changes in Senior Indebtedness........................ 64
SECTION 10.17. Reliance by Holders of Senior Indebtedness and
Guarantor Senior Indebtedness on Subordination
Provisions........................................... 64
SECTION 10.18. Legend................................................ 65
ARTICLE XI
Subsidiary Guarantee.......................... 65
SECTION 11.1. Subsidiary Guarantee.................................. 65
SECTION 11.2. Limitation on Liability............................... 67
SECTION 11.3. Successors and Assigns................................ 67
SECTION 11.4. No Waiver............................................. 67
SECTION 11.5. Right of Contribution................................. 67
SECTION 11.6. No Subrogation........................................ 68
SECTION 11.7. Modification.......................................... 68
ARTICLE XII
Miscellaneous............................. 68
SECTION 12.1. Trust Indenture Act Controls.......................... 68
SECTION 12.2. Notices............................................... 68
SECTION 12.3. Communication by Holders with other Holders........... 69
SECTION 12.4. Certificate and Opinion as to Conditions Precedent.... 70
SECTION 12.5. Statements Required in Certificate or Opinion......... 70
SECTION 12.6. When Securities Disregarded........................... 70
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar.......... 70
SECTION 12.8. Legal Holidays........................................ 70
SECTION 12.9. Governing Law......................................... 70
SECTION 12.10. No Recourse Against Others............................ 71
SECTION 12.11. Successors............................................ 71
SECTION 12.12. Multiple Originals.................................... 71
SECTION 12.13. Variable Provisions................................... 71
SECTION 12.14. Qualification of Indenture............................ 71
SECTION 12.15. Table of Contents; Headings........................... 71
EXHIBIT A Form of Initial Note
EXHIBIT B Form of Exchange Note
EXHIBIT C Form of Transferee Letter of Representation
- v -
<PAGE>
INDENTURE dated as of July 1, 1997, between AURORA FOODS INC.
(formerly MBW Foods Inc.), a Delaware corporation (the "Company") and WILMINGTON
TRUST COMPANY, a Delaware banking corporation, as trustee (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 9 7/8%
Series C Senior Subordinated Notes due 2007 (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 9 7/8% Series C Senior
Subordinated Notes due 2007 (the "Exchange Notes" and, together with the Initial
Notes, the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Acquisition Closing Date" means July 1, 1997.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Subsidiary in a
Related Business; (ii) the Capital Stock of a Person that becomes a Subsidiary
as a result of the acquisition of such Capital Stock by the Company or another
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Subsidiary of the Company; provided, however,
that, in the case of clauses (ii) and (iii) of this definition, such Subsidiary
is primarily engaged in a Related Business.
"Affiliate" of any specified Person means (i) any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person or (ii) any Person who is a director
or officer (A) of such Person, (B) of any Subsidiary of such Person or (C) of
any Person described in clause (i) above. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the covenants described in Sections 4.4, 4.6 and 4.7 only,
"Affiliate" shall also mean any beneficial owner of shares representing 5% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
the Company or of rights or warrants to purchase such Voting Stock (whether or
not currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"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) the
redemption price of such Security at February 15, 2002 (such redemption price
being described in the Security) plus (2) all required interest payments due on
such Security through February 15, 2002, computed using a discount rate
<PAGE>
2
equal to the Treasury Rate plus 50 basis points based on 360-day year of twelve
30-day months, over (B) the principal amount of such Security.
"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
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 Subsidiaries (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition by a
Subsidiary to the Company or a Wholly-Owned Subsidiary or by the Company or a
Subsidiary to a Wholly-Owned Subsidiary, (ii) a disposition of inventory or
Temporary Cash Investments in the ordinary course of business, (iii) a
disposition of obsolete equipment or equipment that is no longer useful in the
conduct of the business of the Company and its Subsidiaries and that is disposed
of in each case in the ordinary course of business, (iv) the sale of other
assets so long as the fair market value of the assets disposed of pursuant to
this clause (iv) does not exceed $1.0 million in the aggregate in any fiscal
year and $5.0 million in the aggregate prior to February 15, 2007, (v) for the
purposes of the covenant described in Section 4.6 only, a disposition subject to
the covenant described in Section 4.4 and (vi) the disposition of all or
substantially all of the assets of the Company in the manner permitted pursuant
to Section 5.1 or any disposition that constitutes a Change of Control pursuant
to this Indenture.
"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 or Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of the numbers of years from the date of determination
to the dates of each successive scheduled principal payment of such Indebtedness
or redemption or similar payment with respect to Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Senior Credit Documents and any Indebtedness that is incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) Indebtedness under such Senior Credit
Documents including Indebtedness that refinances such Indebtedness, as amended
from time to time, 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 (including, without limitation, cash collateralization of letters of
credit).
<PAGE>
3
"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 a day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Wilmington, Delaware are
authorized or required by law to close.
"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.
"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.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States Government, or any agency or
instrumentality thereof, having maturities of not more than one year from the
date of acquisition; (ii) marketable general obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition thereof, having a credit
rating of "A" or better from either Standard & Poor's Ratings Group or Moody's
Investors Service, Inc.; (iii) certificates of deposit, time deposits,
eurodollar time deposits, overnight bank deposits or bankers' acceptances having
maturities of not more than one year from the date of acquisition thereof issued
by any domestic commercial bank the long-term debt of which is rated at the time
of acquisition thereof at least "A" or the equivalent thereof by Standard &
Poor's Ratings Group, or "A" or the equivalent thereof by Moody's Investors
Service, Inc., and having capital and surplus in excess of $500.0 million; (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (i), (ii) and (iii) entered into
with any bank meeting the qualifications specified in clause (iii) above; (v)
commercial paper rated at the time of acquisition thereof at least "A-2" or the
equivalent thereof by Standard & Poor's Ratings Group or "P-2" or the equivalent
thereof 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 investments, and in either case maturing within 270
days after the date of acquisition thereof; and (vi) interests in any investment
company which invests solely in instruments of the type specified in clauses (i)
through (v) above.
"Change of Control" means the occurrence of any of the following
events: (i) prior to the first public offering of Voting Stock of the Company,
Holdings or MBW LLC, as the case may be, the Permitted Holders cease to be the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of majority voting power of the Voting Stock of the
Company, whether as a result of issuance of securities of
<PAGE>
4
the Company, Holdings or MBW LLC, as the case may be, any merger, consolidation,
liquidation or dissolution of the Company, Holdings or MBW LLC, as the case may
be, any direct or indirect transfer of securities by any Permitted Holder or
otherwise (for purposes of this clause (i) and clause (ii) below, the Permitted
Holders will be deemed to beneficially own any Voting Stock of a Person (the
"specified corporation") held by any other Person (the "parent corporation") so
long as the Permitted Holders beneficially own (as so defined), directly or
indirectly, a majority of the voting power of the Voting Stock of the parent
corporation);
(ii) following the first public offering of Voting Stock of the
Company, Holdings or MBW LLC, as the case may be, any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more
Permitted Holders, is or becomes the beneficial owner (as defined in clause (i)
above, except that a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the Voting Stock of
the Company, Holdings or MBW LLC, as the case may be; provided that the
Permitted Holders beneficially own (as defined in clause (i) above), directly or
indirectly, in the aggregate a lesser percentage of the total voting power of
the Voting Stock of the Company, Holdings or MBW LLC, as the case may be, than
such other person and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the board of
directors of the Company, Holdings or MBW LLC, as the case may be, (for purposes
of this clause (ii), such other person shall be deemed to beneficially own any
Voting Stock of a specified corporation held by a parent corporation, if such
other person "beneficially owns" (as defined in this clause (ii)), directly or
indirectly, more than 35% of the voting power of the Voting Stock of such parent
corporation and the Permitted Holders "beneficially own" (as defined in clause
(i) above), directly or indirectly, in the aggregate a lesser percentage of the
voting power of the Voting Stock of such parent corporation and do not have the
right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of such parent corporation);
or
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together with
any new directors whose election by such Board of Directors or whose nomination
for election by the shareholders of the Company was approved by a vote of a
majority of the directors of the Company then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Aurora Foods Inc., a Delaware corporation.
"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, in each case for
such period, (v) other non-cash charges
<PAGE>
5
reducing Consolidated Net Income (excluding any such non-cash charge to the
extent that it represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) and (vi) for the period ending on the first anniversary of the Issue
Date only, non-recurring relocation and start-up expenses not in excess of $3
million, in each case for such period, and minus, to the extent not already
deducted in calculating Consolidated Net Income, (i) the aggregate amount of
"earnout" payments paid in cash during such period in connection with
acquisitions previously made by the Company and (ii) non-cash items increasing
Consolidated Net Income for such period.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of Consolidated Cash Flow for the period
of the most recent four consecutive fiscal quarters ending prior to the date of
such determination to (ii) Consolidated Interest Expense for such four fiscal
quarters; provided, however, that (A) if the Company or any of its Subsidiaries
has Incurred any Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to such Indebtedness as
if such Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (B) if since the beginning of such
period the Company or any of its Subsidiaries shall have made any Asset
Disposition, Consolidated Cash Flow for such period shall be reduced by an
amount equal to the Consolidated Cash Flow (if positive) attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest Expense
attributable to any Indebtedness of the Company or any of its Subsidiaries
repaid, repurchased, defeased or otherwise discharged with respect to the
Company and its continuing Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Subsidiary of the
Company is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Subsidiary to the extent the Company
and its continuing Subsidiaries are no longer liable for such Indebtedness after
such sale), (C) if since the beginning of such period the Company or any of its
Subsidiaries (by merger or otherwise) shall have made an Investment in any
Subsidiary of the Company (or any Person which becomes a Subsidiary of the
Company) or an acquisition of assets, including any Investment in a 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 and
including the pro forma expenses and cost reductions calculated on a basis
consistent with Regulation S-X of the Securities Act) as if such Investment or
acquisition occurred on the first day of such period and (D) if since the
beginning of such period any Person (that subsequently became a Subsidiary of
the Company or was merged with or into the Company or any Subsidiary of the
Company since the beginning of such period) shall have made any Asset
Disposition or any Investment or acquisition of assets that would have required
an adjustment pursuant to
<PAGE>
6
clause (B) or (C) above if made by the Company or a 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 Subsidiaries, plus, to the extent not
included in such interest expense, (i) interest expense attributable to
Capitalized Lease Obligations and imputed interest with respect to Attributable
Indebtedness, (ii) amortization of debt discount and debt issuance cost (other
than those debt discounts and debt issuance costs incurred on the Acquisition
Closing Date and the Issue Date), (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 Subsidiary under any Guarantee
of Indebtedness or other obligation of any other Person, (vii) net costs
associated with Currency Agreements and Interest Rate Agreements (including
amortization of fees), (viii) the product of (A) all Preferred Stock dividends
in respect of all Preferred Stock of Subsidiaries of the Company and
Disqualified Stock of the Company held by Persons other than the Company or a
Wholly-Owned Subsidiary multiplied by (B) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined Federal,
state and local statutory tax rate of the Company, expressed as a decimal, in
each case, determined on a consolidated basis in accordance with GAAP and (ix)
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.
"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 if such Person is not a Subsidiary, except that (A) subject
to the limitations contained in clause (iv) below, the Company's equity in the
net income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually distributed
by such Person during such period to the Company or a Subsidiary as a dividend
or other distribution (subject, in the case of a dividend or other distribution
to a Subsidiary, to the limitations contained in clause (iii) below) and (B) the
Company's equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income; (ii) any net income (loss)
of any person acquired by the Company or a Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition; (iii) any
<PAGE>
7
net income (loss) of any Subsidiary if such Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Subsidiary, directly or indirectly, to the Company,
except that (A) subject to the limitations contained in (iv) below, the
Company's equity in the net income of any such Subsidiary for such period shall
be included in such Consolidated Net Income up to the aggregate amount of cash
that could have been distributed by such Subsidiary during such period to the
Company or another Subsidiary as a dividend (subject, in the case of a dividend
that could have been made to another Subsidiary, to the limitation contained in
this clause) and (B) the Company's equity in a net loss of any such Subsidiary
for such period shall be included in determining such Consolidated Net Income;
(iv) any gain (but not loss) realized upon the sale or other disposition of any
assets of the Company or its consolidated 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; (v) any extraordinary gain
or loss; and (vi) the cumulative effect of a change in accounting principles.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending prior to the taking of any action for the
purpose of which the determination is being made as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"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.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and
(ii) any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $5.0
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of 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 or (iii) is redeemable at the option of
<PAGE>
8
the holder thereof, in whole or in part, in each case on or prior to 123 days
after the Stated Maturity of the Securities.
"Equity Investors" means the equity owners of MBW LLC on the Issue
Date.
"Equity Offering" means any public or private sales of equity
securities (excluding Disqualified Stock) of the Company, Holdings or MBW LLC.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Indenture" means the Indenture dated as of February 10,
1997 between the Company and Wilmington Trust Company, as Trustee.
"Existing Notes" means the securities issued under the Original
Indenture.
"Existing Notes Issue Date" means February 10, 1997.
"GAAP" means generally accepted principles in the United States of
America as in effect from time to time, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as are approved by a significant segment of the accounting
profession. All ratios and computations based on GAAP contained in this
Indenture shall be computed in conformity with GAAP as in effect on the Issue
Date.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of any other Person (whether arising
by virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor 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
<PAGE>
9
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 Guarantee; provided, however, that Guarantor Senior
Indebtedness shall not include (i) any obligations of such Subsidiary Guarantor
to the Company or any other Subsidiary of the Company, (ii) any liability for
Federal, state, local or other taxes owed or owing by such Subsidiary Guarantor,
(iii) any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities), (iv) 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 or (v) any
Capital Stock.
"Guarantor Senior Subordinated Indebtedness" means, with respect to
a Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee 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 Guarantee 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 Guarantee pursuant to a written agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holdings" means Aurora Foods Holdings Inc., a Delaware corporation.
"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 Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a 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
<PAGE>
10
drawing is reimbursed no later than the third business day following receipt by
such Person of a demand for reimbursement following payment on the letter of
credit), (iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (other than contingent or "earn-out"
payment obligations and 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, provided, however,
that the amount of Indebtedness of such Person shall be the lesser of (A) the
fair market value of such asset at such date of determination and (B) the amount
of such Indebtedness of such other Persons, (vii) all Indebtedness of other
Persons to the extent Guaranteed by such Person, (viii) the amount of all
obligations of such Person with respect to the redemption, repayment or other
repurchase of any Disqualified Stock or, with respect to any Subsidiary of the
Company, any Preferred Stock (but excluding, in each case, any accrued
dividends) and (ix) to the extent not otherwise included in this definition,
obligations of such Person under Currency Agreements and Interest Rate
Agreements. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above as such amount would be reflected on a balance sheet in accordance with
GAAP and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"Indenture" means this 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 receivable on the balance sheet of such Person) or
other extension of credit (including by way of Guarantee or similar arrangement,
but excluding any debt or extension of credit represented by a bank deposit
other than a time deposit) or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person.
"Issue Date" means the date on which the Initial 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).
<PAGE>
11
"Management Services Agreement" means (i) the Management Services
Agreement dated as of December 31, 1996 between the Company and Dartford
Partnership L.L.C. (and its permitted successors and assigns thereunder), (ii)
the Advisory Services Agreement dated as of December 31, 1996 between the
Company and MDC Management Company III, L.P. (and its permitted successors and
assigns thereunder) and (iii) the Services Agreement dated as of December 31,
1996 between the Company and Fenway Partners Capital Fund, L.P. (and its
permitted successors and assigns thereunder), in each case without giving effect
to any amendment or other modification thereto.
"MBW Acquisition Closing Date" means December 31, 1996.
"MBW LLC" means MBW Investors LLC, a Delaware limited liability
company.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom, in each case net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such Asset Disposition,
(ii) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any Lien upon
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other payments
required to be made to any Person owning a beneficial interest in assets subject
to sale or minority interest holders in Subsidiaries or joint ventures as a
result of such Asset Disposition, (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 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 Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock or Indebtedness, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result of such issuance or sale.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
<PAGE>
12
"Officers' Certificate" means a certificate signed by two Officers
(in the case of the annual Officers' Certificate delivered pursuant to Section
4.16, at least one of such Officers shall be the principal executive officer,
principal financial officer or principal accounting officer of the Company) and
that complies with Sections 12.4 and 12.5 of this Indenture and is delivered to
the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee and that complies with Sections 12.4 and 12.5 of
this Indenture and delivered to the Trustee. The counsel may be an employee of
or counsel to the Company or the Trustee.
"Permitted Holders" means the Equity Investors and their respective
Affiliates.
"Permitted Investment" means (i) any Investment in a Subsidiary of
the Company or a Person which will, upon making such Investment, become a
Subsidiary; provided, however, that the primary business of such Subsidiary is a
Related Business; (ii) any Investment in another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Subsidiary of the Company; provided, however, that such Person's primary
business is a Related Business; (iii) any Investment in Temporary Cash
Investments; (iv) receivables owing to the Company or any of its Subsidiaries,
if created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (v) payroll, travel and
similar advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (vi) loans or advances to employees made in
the ordinary course of business of the Company or such 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 Subsidiaries
or in satisfaction of judgments or claims; (viii) Investments the payment for
which consists exclusively of equity securities (exclusive of Disqualified
Stock) of the Company; (ix) loans or advances to employees and directors to
purchase equity securities of the Company, Holdings or MBW LLC; provided that
the aggregate amount of such loans and advances shall not exceed $2.0 million at
any time outstanding; (x) any Investment in another Person to the extent such
Investment is received by the Company or any Subsidiary as consideration for
Asset Disposition effected in compliance with Section 4.6; (xi) prepayment and
other credits to suppliers made in the ordinary course of business consistent
with the past practices of the Company and its Subsidiaries; (xii) 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; and (xiii) any Investment in
another Person not to exceed in the aggregate $2.0 million at any one time
outstanding (measured as of the date made and without giving effect to
subsequent changes in value).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
<PAGE>
13
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security plus
the premium, if any, payable on the security which is due or overdue or is to
become due at the relevant time.
"QIB" means any "qualified institutional buyer" (as defined under
the Securities Act).
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (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 Subsidiary and Indebtedness
of any Subsidiary that refinances Indebtedness of another Subsidiary) including
Indebtedness that refinances Refinancing Indebtedness, provided, however, that
(i) the Refinancing Indebtedness has a Stated Maturity no earlier than the
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 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 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 (plus the
amount of any premium required to be paid in connection therewith and plus
reasonable fees and expenses in connection therewith); provided further that
Refinancing Indebtedness shall not include Indebtedness of a Subsidiary which
refinances Indebtedness of the Company.
"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 as of July 1, 1997, between the Company and Chase
Securities Inc.
"Related Business" means the food business and such other business
activities which are incidental or related thereto.
"Representative" means any trustee, agent or representative (if any)
of an issue of Senior Indebtedness.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
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14
"SEC" or "Commission" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured
by a Lien.
"Security Guarantee" means any guarantee pursuant to a supplemental
Indenture which may from time to time be executed and delivered by a Subsidiary
of the company pursuant to Section 4.10.
"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.
"Senior Credit Agreement" means the Credit Agreement dated as of
December 31, 1996, among the Company, Holdings, the lenders parties thereto, and
The Chase Manhattan Bank, as administrative agent and Chase Securities Inc., as
arranging agent.
"Senior Credit Documents" means the collective reference to the
Senior Credit Agreement, the notes issued pursuant thereto and the Holdings
Guaranty, the Subsidiary Guaranty, the Security Agreement, the Pledge Agreement,
the Collateral Account Agreement and the Patent and Trademark Security Agreement
(each as defined in the Senior Credit Agreement) and each of the mortgages and
other security agreements, guarantees and other instruments and documents
executed and delivered pursuant to any of the foregoing or the Senior Credit
Agreement, in each case as amended, modified, renewed, refunded, replaced or
refinanced from time to time, including any agreement extending the maturity of,
refinancing, replacing or otherwise restructuring (including increasing the
amounts of available borrowing thereunder provided that such increase in
borrowing is permitted by Section 4.3 or adding Subsidiaries of the Company as
additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement
whether by the same or any other agent, lender or group of lenders.
"Senior Indebtedness" means the principal of, premium (if any), and
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization of the Company regardless of whether
post-filing interest is allowed in such proceeding) on, and fees and other
amounts owing in respect of, the Bank Indebtedness and all other Indebtedness of
the Company, whether outstanding on the Issue Date or thereafter issued, 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 (i) any obligation of the
Company to any Subsidiary, (ii) any liability for Federal, state, foreign, local
or other taxes owed or owing by the Company, (iii) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities), (iv)
any Indebtedness, Guarantee or obligation of the Company that is expressly
subordinate or junior
<PAGE>
15
in right of payment to any other Indebtedness, Guarantee or obligation of the
Company, including any Senior Subordinated Indebtedness and any Subordinated
Obligations or (v) any Capital Stock.
"Senior Subordinated Indebtedness" means the Securities and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the Company which is not Senior Indebtedness.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
June 18, 1997.
"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,
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 any Subsidiary which is required to
guarantee the Securities pursuant to Section 4.10.
"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 $250.0 million (or the foreign currency
equivalent thereof) and whose long-term debt, or whose parent holding company's
long-term debt, is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act), (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with a bank
<PAGE>
16
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.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.6(d) hereof.
"Treasury Rate" means, at the time of computation, the yield to
maturity 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 February 15, 2002; provided, however, that if
the period from the redemption date to February 15, 2002 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.
"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.
"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 Person means all classes of Capital Stock of
such Person then outstanding and normally entitled to vote in the election of
directors.
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17
"Wholly-Owned Subsidiary" means a Subsidiary of the Company, all of
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or another Wholly-Owned Subsidiary.
SECTION 1.2. Other Definitions.
Defined in
Term Section
---- -------
"Affiliate Transaction".................................. 4.7
"Agent Member"........................................... 2.1(c)
"Authenticating Agent"................................... 2.2
"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
"legal defeasance option"................................ 8.1(b)
"Legal Holiday".......................................... 12.8
"Obligations"............................................ 11.1
"Offer" ................................................. 4.6(b)
"Offer Amount"........................................... 4.6(c)(ii)
"Offer Period"........................................... 4.6(c)(ii)
"pay the Securities"..................................... 10.3
"Paying Agent"........................................... 2.3
"Payment Blockage Period"................................ 10.3
"Purchase Agreement"..................................... 2.1(b)
"Purchase Date".......................................... 4.6(c)(i)
"Registrar".............................................. 2.3
"Restricted Payment"..................................... 4.4(a)
"Successor Company"...................................... 5.1
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.
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18
"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 by reference to another statute or defined by an SEC
rule have the meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular;
(vi) unsecured Indebtedness shall not be deemed to be subordinate
or junior to Secured Indebtedness merely by virtue of its nature as
unsecured Indebtedness;
(vii) 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
(viii) the principal amount of any Preferred Stock shall be (A) the
maximum liquidation value of such Preferred Stock or (B) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
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19
ARTICLE II
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 by reference 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 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 June 18, 1997, among the
Company, Chase Securities Inc. and Credit Suisse First Boston Corporation (the
"Purchase Agreement").
Initial Notes 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 corporate trust office, as custodian for the
Depository, and registered in the name of the Depository or a nominee of the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Global Securities
may from time to time be increased or decreased by endorsements made on such
Global Securities by the Trustee, the Securities Custodian or the Depository 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 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
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20
Depositary governing the exercise of the rights of an owner 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). Definitive Securities
will bear the Restricted Securities Legend set forth on Exhibit A unless removed
in accordance with Section 2.6(f) hereof.
SECTION 2.2. Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature.
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: (i) Initial Notes for
original issue in an aggregate principal amount of $100.0 million and (ii)
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 $100.0 million except as provided in
Section 2.7.
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
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21
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 Paying Agent or the Registrar may
resign as such upon 30 days' prior written notice to the Company and the
Trustee; upon resignation of any Paying Agent or Registrar, the Company shall
appoint a successor Paying Agent or Registrar, as the case may be, no later than
30 days thereafter and shall provide notice to the Trustee of such successor
Paying Agent or Registrar.
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 10:00
a.m. (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 Holders 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 2.4, 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.
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 Holders. 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 Holders.
SECTION 2.6. Transfer and Exchange.
(a) Restrictions on Transfer and Exchange of Global Securities. (i)
The transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depositary or the Trustee, as the custodian for
the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.
(ii) A Global Security shall be exchangeable pursuant to this
Section 2.6(a) for Definitive Securities registered in the names of Persons
owning beneficial interests in such Global Security only if (A) such exchange is
made in compliance with the provisions of
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22
this Section 2.6 and (B) any of the following events shall have occurred: (1)
the Depositary for such Global Security notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or such
Depositary ceases to be a clearing agency registered under the Exchange Act, at
a time when such Depositary is required to be so registered in order to act as
Depositary, and a successor depositary is not appointed by the Company within 90
days thereafter, (2) the Company executes and delivers to the Trustee an
Officers' Certificate stating that such Global Security shall be so exchangeable
or (3) there shall have occurred and be continuing an Event of Default with
respect to the Securities and any of the Company, the Depositary or the Trustee
so requests. Upon exchange of a Global Security for one or more Definitive
Securities, such Definitive Securities shall not thereafter be exchangeable for
beneficial interests in a Global Security.
(iii) Any Global Security that is exchangeable for Definitive
Securities registered in the name of the owners of beneficial interests therein
pursuant to this Section 2.6 shall be surrendered by the Depositary to the
Trustee to be so exchanged, without charge, and the Company shall sign and the
Trustee shall authenticate and deliver, upon such exchange of such Global
Security, an equal aggregate principal amount of Definitive Securities of
authorized denominations. Definitive Securities issued in exchange
for a beneficial interest in a Global Security pursuant to this Section 2.6
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. All Definitive
Securities representing the Initial Notes delivered in exchange for a Global
Security which bore the Restricted Securities Legend set forth in Exhibit A
shall, except as otherwise provided in Section 2.6(d), 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 any of the events specified
in Section 2.6(a)(ii), the Company will promptly make available to the Trustee a
reasonable supply of Definitive Securities.
(vi) Notwithstanding any other provision of this Indenture, a Global
Security may not be transferred except as a whole by the Depositary for such
Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary.
(b) 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.
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23
(c) Transfer and Exchange of Definitive Securities. When Definitive
Securities are presented by a Holder to the Registrar or a co-registrar with a
request (i) to register the transfer of such Definitive Securities; or (ii) 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
(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) an "accredited investor" (within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that is an
institutional investor and 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.
(d) Legend.
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24
(i) Except in the case of Exchange Notes or 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, AS AMENDED (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 TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER 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
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25
SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING
CLAUSE (E), 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."
(ii) Upon any sale, exchange or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) after the Resale Restriction Termination Date (as defined
in the legend set forth in paragraph (i) above) or 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(a) hereof.
(e) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the Company
shall 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 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.
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26
(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.
(f) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any owner of a beneficial interest in a Global
Security, a member of, or a participant in the Depositary or any 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
owners of beneficial interests 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.
(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 owners of beneficial interests in any Global Security);
provided that the Trustee shall have the right to require such certifications,
Opinions of Counsel or other documentation in respect of exchanges of beneficial
ownership interests in Global Securities for Definitive Securities as it may
reasonably request.
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 Company
provides the Trustee with an Officer's Certificate stating that 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
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27
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 2.8 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 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.
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28
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
pursuant to a written instruction of Holders of at least a majority in principal
amount of the Securities) 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 2.11.
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 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 3.1 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 and, if the Trustee so requests, an Opinion of Counsel 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.
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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.
The notice shall identify the Securities to be redeemed and shall
state:
(i) the redemption date;
(ii) the redemption price;
(iii) the name and address of the Paying Agent;
(iv) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(v) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(vi) 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;
(vii) the CUSIP number, if any, printed on the Securities being
redeemed; and
(viii) 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 3.3.
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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.
SECTION 3.5. Deposit of Redemption Price. By at least 10:00 a.m.
(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.
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.
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SECTION 4.2. SEC Reports. Notwithstanding that the Company may not
be required to be subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, the Company shall file with the Commission, and within 15
days after such reports are filed, provide the Trustee and the Holders (at their
addresses as set forth in the register of Securities) with the annual reports
and the information, documents and other reports which are otherwise required
pursuant to Section 13 and 15(d) of the Exchange Act. Such requirements may also
be satisfied, prior to April 11, 1997, with the filing with the Commission of a
registration statement under the Securities Act that contains the foregoing
information (including financial statements) and by providing copies thereof to
the Trustee and the Holders. In addition, following the registration of the
common stock of the Company pursuant to Section 12(b) or 12(g) of the Exchange
Act, the Company shall furnish to the Trustee and the Holders, promptly upon
their becoming available, copies of the Company's annual report to stockholders
and any other information provided by the Company to its public stockholders
generally.
SECTION 4.3. Limitation on Indebtedness. (a) The Company shall not,
and shall not permit any of its Subsidiaries to, Incur any Indebtedness;
provided, however, that the Company and any of its Subsidiaries may Incur
Indebtedness if on the date thereof the Consolidated Coverage Ratio would be
greater than 2.00:1.00.
(b) Notwithstanding Section 4.3(a), the Company and its Subsidiaries
may Incur the following Indebtedness: (i) Bank Indebtedness provided that the
aggregate principal amount of Indebtedness Incurred pursuant to this clause (i)
does not exceed an amount outstanding at any time equal to $60.0 million less
the aggregate amount of permanent reductions of commitments to extend credit
thereunder and repayments of principal thereof (without duplication of
repayments required as a result of such reductions of commitments); (ii)
Indebtedness (A) of the Company to any Wholly-Owned Subsidiary and (B) of any
Subsidiary to the Company or any Wholly-Owned Subsidiary; (iii) Indebtedness
represented by the Securities, any Indebtedness (other than the Indebtedness
described in clauses (i)-(ii) above) outstanding on the date hereof and any
Refinancing Indebtedness Incurred in respect of any Indebtedness described in
this clause (iii) or this paragraph (b); (iv) Indebtedness represented by the
Security Guarantees and Guarantees of Indebtedness Incurred pursuant to clause
(i) above; (v) Indebtedness under Currency Agreements and Interest Rate
Agreements which are entered into for bona fide hedging purposes of the Company
or its 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 Subsidiaries Incurred without violation of the Indenture or to
business transactions of the Company or its Subsidiaries on customary terms
entered into in the ordinary course of business; (vi) Indebtedness of the
Company attributable to Capitalized Lease Obligations, or Incurred to finance
the acquisition, construction or improvement of fixed or capital assets, or
constituting Attributable Indebtedness in respect of Sale/Leaseback
Transactions, in an aggregate principal amount at any one time outstanding not
in excess of $5.0 million; and (vii) Indebtedness of the Company or any of its
Subsidiaries (which may comprise Bank Indebtedness) in an aggregate principal
amount at any time outstanding not in excess of $10.0 million.
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(c) Notwithstanding any other provision of this Section 4.3, the
Company shall not Incur any Indebtedness (i) pursuant to Section 4.3(b) if the
proceeds thereof are used, directly or indirectly, to repay, prepay, redeem,
defease, retire, refund or refinance any Subordinated Obligations unless such
Indebtedness shall be subordinated to the Securities to at least the same extent
as such Subordinated Obligations or (ii) pursuant to Section 4.3(a) or 4.3(b) if
such Indebtedness is subordinate or junior in ranking in any respect to any
Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness
or is expressly subordinated in right of payment to Senior Subordinated
Indebtedness.
(d) The Company shall not Incur any Secured Indebtedness 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.
SECTION 4.4. Limitation on Restricted Payments. (a) The Company
shall not, and shall not permit any Subsidiary, 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) except (A) dividends or distributions
payable in its Capital Stock (other than Disqualified Stock) and (B) dividends
or distributions payable to the Company or another Subsidiary (and, if such
Subsidiary is not a Wholly-Owned Subsidiary, to its other stockholders on a pro
rata basis), (ii) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of the Company or any Subsidiary held by Persons other than the
Company or another Subsidiary, (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
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
as a "Restricted Payment"), if at the time the Company or such Subsidiary makes
such Restricted Payment: (1) a Default shall have occurred and be continuing (or
would result therefrom); or (2) the Company could not Incur at least 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 (the amount so expended, if other than in cash, to be determined in
good faith by the Board of Directors, whose determination shall be conclusive
and evidenced by a resolution of the Board of Directors) 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
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 Cash Proceeds received by the Company from the issue or
sale of its Capital Stock (other than Disqualified Stock) or other cash
contributions to its capital subsequent to the Issue Date (other than an
issuance or sale to a Subsidiary of the Company or an employee stock ownership
plan or other trust established by the Company or any of its Subsidiaries); (C)
aggregate Net Cash
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33
Proceeds from issue or sale of its Capital Stock to an employee stock ownership
plan or similar trust, provided, however, that if such plan or trust Incurs any
Indebtedness to or Guaranteed by the Company to finance the acquisition of such
Capital Stock, such aggregate amount shall be limited to 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; and (D) the amount by which Indebtedness of the
Company or its Subsidiaries is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Subsidiary) subsequent to the Issue Date
of any Indebtedness of the Company or its Subsidiaries convertible or
exchangeable for Capital Stock (other than Disqualified Stock) of the Company
(less the amount of any cash, or other property, distributed by the Company or
any Subsidiary upon such conversion or exchange).
(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 other trust established by the Company or any of its
Subsidiaries); 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 Section 4.4(a)(3)(B);
(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 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; or (v) payment of
dividends or other distributions by the Company for the purposes set forth in
clauses (A) through (C) below; provided, however, that any such dividend or
distribution described in clauses (A) and (B) will be excluded in the
calculation of the amount of Restricted Payments and any such dividend or
distribution described in clause (C) will be included in the calculation of the
amount of Restricted Payments: (A) in amounts equal to the amounts required for
Holdings and MBW LLC to pay franchise taxes and other fees required to maintain
its legal existence and provide for audit, accounting, legal and other operating
costs of up to $500,000 per fiscal year; (B) in amounts equal to amounts
required for Holdings and MBW LLC to pay Federal, state and local income taxes
to the extent such income taxes are attributable to the income of the Company
and its Subsidiaries; and (C) in amounts equal to amounts expended by the
Company, Holdings or MBW LLC to repurchase Capital Stock of the Company,
Holdings or MBW LLC owned by employees (including former employees) of the
Company or its Subsidiaries or their assigns, estates and heirs; provided that
the aggregate amount paid, loaned or advanced pursuant to this clause (C) shall
not, in the aggregate, exceed the sum of $3.0 million plus any amounts
contributed by MBW LLC or Holdings to the Company as a result of resales of such
repurchased shares of Capital Stock; or (vi) any repurchase of equity
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interest deemed to occur upon exercise of stock options if such equity interests
represent a portion of the exercise price of such options.
SECTION 4.5. Limitation on Restrictions on Distributions from
Subsidiaries. The Company shall not, and shall not permit any of its
Subsidiaries to, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any such 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 on the Issue Date, including those arising under the Senior Credit
Documents; (B) any encumbrance or restriction with respect to a Subsidiary
pursuant to an agreement relating to any Indebtedness Incurred by a Subsidiary
prior to the date on which such 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 Subsidiary was acquired by the
Company); (C) any encumbrance or restriction with respect to a Subsidiary
pursuant to an agreement effecting a refinancing of Indebtedness Incurred
pursuant to an agreement referred to in clauses (A) or (B) or this clause (C) or
contained in any amendment, supplement or modification (including an amendment
and restatement) to an agreement referred to in clauses (A) or (B) or this
clause (C); provided, however, that the encumbrances and restrictions contained
in any such refinancing agreement or amendment taken as a whole are no less
favorable to the holders of the Securities in any material respect than
encumbrances and restrictions contained in such agreements; (D) in the case of
clause (iii), any encumbrance or restriction (1) that restricts in a customary
manner the subletting, assignment or transfer of any property or asset that is
subject to a lease, license, or similar contract, (2) 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 Subsidiary not otherwise prohibited by
this Indenture, or (3) contained in security agreements securing Indebtedness of
a Subsidiary to the extent such encumbrance or restrictions restrict the
transfer of the property subject to such security agreements; (E) any such
restriction imposed by applicable law; (F) any restriction with respect to a
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
Subsidiary pending the closing of such sale or disposition; and (G) purchase
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired.
SECTION 4.6. Limitation on Sales of Assets. (a) The Company shall
not, and shall not permit any Subsidiary to, make any Asset Disposition unless
(i) the Company or such Subsidiary receives consideration (including by way of
relief from, or by any other Person assuming sole responsibility for, any
liabilities, contingent or otherwise) at the time of such Asset Disposition at
least equal to the fair market value of the shares and assets subject to such
Asset Disposition, (ii) at least 85% of the consideration thereof received by
the Company or such Subsidiary is in the form of cash and (iii) an amount equal
to 100% of the Net Available Cash from such Asset Disposition is applied by the
Company (or such Subsidiary, as the case may be) (A) first, to the extent the
Company elects (or is required by the terms of any Senior Indebtedness or
Indebtedness (other than Preferred Stock) of a Wholly-Owned Subsidiary), to
prepay, repay or purchase Senior Indebtedness or such Indebtedness (other than
Preferred Stock) of a
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Wholly-Owned Subsidiary (in each case other than Indebtedness owed to the
Company or an Affiliate of the Company) within one year after the later of the
date of such Asset Disposition or the receipt of such Net Available Cash; (B)
second, to the extent of the balance of Net Available Cash after application in
accordance with clause (A), to the extent the Company or such Subsidiary elects,
to reinvest in Additional Assets (including by means of an Investment in
Additional Assets by a Subsidiary with Net Available Cash received by the
Company or another Subsidiary) within one year after the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (C) third, 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 the Existing
Notes pursuant and subject to the conditions of this Indenture to the Holders at
a purchase price of 100% of the principal amount thereof plus accrued and unpaid
interest to the purchase date, and (D) fourth, to the extent of the balance of
such Net Available Cash after application in accordance with clauses (A), (B)
and (C), to make an offer to purchase the Notes pursuant and subject to the
conditions of the Indenture to the Noteholders at a purchase price of 100% of
the principal amount thereof plus accrued and unpaid interest to the purchase
date; and (E) fifth, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A), (B), (C) and (D), to (x)
acquire Additional Assets (other than Indebtedness and Capital Stock) or (y)
prepay, repay or purchase Indebtedness of the Company (other than Indebtedness
owed to an Affiliate of the Company and other than Disqualified Stock of the
Company) or Indebtedness of any Subsidiary (other than Indebtedness owed to the
Company or an Affiliate of the Company), in each case described in this clause
(E) within one year from the receipt of such Net Available Cash or, if the
Company has made an Offer pursuant to clause (C), six months from the date such
Offer is consummated; provided, however, that, in connection with any
prepayment, repayment or purchase of Indebtedness pursuant to clause (A), (C) or
(D) above, the Company or such 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 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 Section 4.6 at any time exceed
$1.0 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
$10.0 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 Section 4.6, the following will be deemed
to be cash: (x) the assumption of Indebtedness (other than Disqualified Stock)
of the Company or any Subsidiary and the release of the Company or such
Subsidiary from all liability on such Indebtedness in connection with such Asset
Disposition and (y) securities received by the Company or any Subsidiary of the
Company from the transferee that are promptly converted by the Company or such
Subsidiary into cash.
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(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 by the Company for the
Securities (the "Offer") at a purchase price of 100% of their principal amount
plus accrued interest to the purchase date in accordance with the procedures
(including prorating in the event of oversubscription) set forth in Section
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).
(c) (i) Promptly, and in any event within 10 days after the Company
is required to make an Offer, the Company shall deliver to the Trustee and send,
by first-class mail to each Holder, a written notice stating that the Holder may
elect to have his or her Securities purchased by the Company either in whole or
in part (subject to prorating as hereinafter described in the event the Offer is
oversubscribed) in integral multiples of $1,000 of principal amount, at the
applicable purchase price. The notice shall specify a purchase date not less
than 30 days nor more than 60 days after the date of such notice (the "Purchase
Date").
(ii) Not later than the date upon which such written notice of an
Offer is delivered to the Trustee and the Holders, the Company shall deliver to
the Trustee an Officers' Certificate setting forth (A) the amount of the Offer
(the "Offer Amount"), (B) the allocation of the Net Available Cash from the
Asset Dispositions as a result of which such Offer is being made and (C) the
compliance of such allocation with the provisions of Section 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 are to be accepted by
the Company. The Trustee shall, on the Purchase Date, mail or deliver payment to
each tendering Holder in the amount of the purchase price of the Securities
tendered by such Holder to the extent such funds are available to the Trustee.
(iii) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice prior to the expiration of
the Offer Period. Each Holder will be entitled to withdraw its election if the
Trustee or the Company receives, not later than one Business Day prior to the
expiration of the Offer Period, a telegram, telex, facsimile transmission or
letter from such Holder setting forth the name of such Holder, the principal
amount of the Security or Securities which were delivered for purchase by such
Holder and a statement that such Holder is withdrawing its election to have such
Security or Securities purchased. If at the expiration of the Offer Period the
aggregate principal amount of Securities surrendered by Holders exceeds the
Offer Amount, the Company shall select the Securities to be purchased on a pro
rata basis (with such adjustments as may be deemed appropriate by the Company so
that only Securities in denominations of $1,000, or integral multiples thereof,
shall be purchased). Holders whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered.
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(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 Subsidiary to, directly or indirectly, enter
into or conduct any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of the
Company (an "Affiliate Transaction") unless: (i) the terms of such Affiliate
Transaction are no less favorable to the Company or such 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 $1.0
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 $5.0 million, the Company has received
a written opinion from an independent investment banking firm of nationally
recognized standing that such Affiliate Transaction is fair to the Company or
such Subsidiary, as the case may be, from a financial point of view.
(b) The provisions of Section 4.7(a) will not prohibit (i) any
Restricted Payment permitted to be made pursuant to Section 4.4 (and in the case
of Permitted Investments, only those described in clauses (v), (vi) and (ix) of
the definition of Permitted Investments), (ii) the performance of the Company's
or Subsidiary's obligations under any employment contract, collective bargaining
agreement, employee benefit plan, related trust agreement or any other similar
arrangement heretofore or hereafter entered into in the ordinary course of
business, (iii) payment of compensation to, and indemnity provided on behalf of,
employees, officers, directors or consultants (excluding the Management Services
Agreement) in the ordinary course of business, (iv) maintenance in the ordinary
course of business of benefit programs or arrangements for employees, officers
or directors, including vacation plans, health and life insurance plans,
deferred compensation plans, and retirement or savings plans and similar plans,
(v) any transaction between the Company and a Wholly-Owned Subsidiary or between
Wholly-Owned Subsidiaries or (vi) the payment of certain fees under the
Management Services Agreement as in effect on the Issue Date.
SECTION 4.8. Change of Control. (a) Upon the occurrence of a Change
of Control, each Holder shall have the right to require the Company to
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 due on the relevant
interest payment date), such repurchase to be made in accordance with Section
4.8(b).
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(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 of record with a copy to the Trustee stating: (i) that a
Change of Control has occurred and that such Holder has the right to require the
Company to purchase such Holder's Securities 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); (ii) the
circumstances and relevant facts and financial information concerning such
Change of Control; (iii) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and (iv) the
procedures determined by the Company, consistent with this Indenture, 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 4.8 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 Sale of Subsidiary Capital Stock. The
Company (i) will not, and will not permit any Subsidiary to, transfer, convey,
sell, lease or otherwise dispose of any Capital Stock of any Subsidiary to any
Person (other than to the Company or a Wholly-Owned Subsidiary) and (ii) will
not permit any Subsidiary to issue any of its Capital Stock (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly-Owned Subsidiary;
provided, however, that this Section 4.9 shall not prohibit such conveyance,
sale, lease or other disposition of all the Capital Stock of a Subsidiary if the
net cash proceeds from such transfer, conveyance, sale, lease, other disposition
or issuance are applied in accordance with Section 4.6.
SECTION 4.10. Future Security Guarantors. The Company will cause
each Subsidiary which Incurs Indebtedness or which is a guarantor of
Indebtedness Incurred
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39
pursuant to Section 4.3(b)(i) to execute and deliver to the Trustee a Security
Guarantee pursuant to which such Subsidiary will Guarantee, jointly and
severally, to the Holders and the Trustee, subject to subordination provisions
in Article X, the full and prompt payment of the Securities in the Indenture.
Each Security Guarantee will be limited in amount to an amount not to exceed the
maximum amount that can be Guaranteed by that Subsidiary without rendering the
Security Guarantee, as it relates to such Subsidiary, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
SECTION 4.11. Limitation on Lines of Business. The Company will not,
and will not permit any Subsidiary to, engage in any business, other than the
food business and such other business activities which are incidental or related
thereto.
SECTION 4.12. Maintenance of Office or Agency for Registration of
Transfer, Exchange and Payment of Securities. So long as any of the Securities
shall remain outstanding, the Company will maintain an office or agency in the
Borough of Manhattan, the City of New York, State of New York, where the
Securities may be surrendered for exchange or registration of transfer as in
this Indenture provided, and where notices and demands to or upon the Company in
respect to the Securities may be served, and where the Securities may be
presented or surrendered for payment. The Company may also from time to time
designate one or more other offices or agencies where Securities may be
presented or surrendered for any and all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, the City of New York, State of
New York for such purposes. The Company will give to the Trustee prompt written
notice of the location of any such office or agency and of any change of
location thereof. The Company initially appoints the Trustee c/o Harris Trust
Company of New York, 77 Water Street, New York, New York 10005 for each of said
purposes. In case the Company shall fail to maintain any such office or agency
or shall fail to give such notice of the location or of any change in the
location thereof, such surrenders, presentations and demands may be made and
notices may be served at the principal office of the Trustee in the City of
Wilmington, State of Delaware, and the Company hereby appoints the Trustee its
agent to receive at the aforesaid office all such surrenders, presentations,
notices and demands. The Trustee will give the Company prompt notice of any
change in location of the Trustee's principal office.
SECTION 4.13. Appointment to Fill a Vacancy in the Office of
Trustee. The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 7.8, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 4.14. Provision as to Paying Agent. (a) If the Company shall
appoint a paying agent other than the Trustee, it will cause such Paying Agent
to execute and deliver to the Trustee an instrument in which such agent shall
undertake, subject to the provisions of this Section 4.14,
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40
(i) that it will hold all sums held by it as such agent for the
payment of the principal of, premium, if any, or interest on the
Securities whether such sums have been paid to it by the Company (or by
any other obligor on the Securities) in trust for the benefit of the
holders of the Securities and will notify the Trustee of the receipt of
sums to be so held,
(ii) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Securities) to make any payment of
the principal of, premium, if any, or interest on the Securities when the
same shall be due and payable,
(iii) that it will at any time during the continuance of any Event
of Default specified in Section 6.1(i) or 6.1(ii), upon the written
request of the Trustee, deliver to the Trustee all sums so held in trust
by it, and
(iv) acknowledge, accept and agree to comply in all aspects with
the provisions of this Indenture relating to the duties, rights and
liabilities of such Paying Agent, including, without limitation, the
provision of Article X hereof.
(b) If the Company shall not act as its own Paying Agent, it will,
by 10:00 a.m. on the Business Day prior to each due date of the principal of or
premium, if any, or interest on any Securities, deposit with such Paying Agent a
sum in same day funds sufficient to pay the principal of, premium, if any, or
interest so becoming due, such sum to be held in trust for the benefit of the
holders of Securities entitled to such principal of or premium, if any, or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its failure so to act.
(c) If the Company shall act as its own Paying Agent, it will, on or
before each due date of the principal of or premium, if any, or interest on the
Securities, set aside, segregate and hold in trust for the benefit of the
persons entitled thereto, a sum sufficient to pay such principal or premium or
interest so becoming due and will notify the Trustee of any failure to take such
action.
(d) Anything in this Section 4.14 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by it, or any Paying Agent hereunder, as
required by this Section 4.14, such sums to be held by the Trustee upon the
trusts herein contained.
(e) Anything in this Section 4.14 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section 4.14 is subject
to the provisions of Sections 8.4 and 8.6.
SECTION 4.15. Maintenance of Corporate Existence. So long as any of
the Securities shall remain outstanding, the Company will at all times (except
as otherwise provided or permitted in this Section 4.15 or elsewhere in this
Indenture) do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence
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41
and franchises and the corporate existence and franchises of each Subsidiary;
provided that nothing herein shall require the Company to continue the corporate
existence or franchises of any Subsidiary if in the judgment of the Company it
shall be necessary, advisable or in the interest of the Company to discontinue
the same.
SECTION 4.16. 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
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 ss. 314(a)(4).
SECTION 4.17. Further Instruments and Acts. 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 or as may be reasonably requested by the Trustee.
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") is a corporation 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) expressly assumes 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 of the Successor Company as a result of such
transaction as having been Incurred by the Successor Company or such
Subsidiary at the time of such transaction), no 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 Section 4.3(a);
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42
(iv) immediately after giving effect to such transaction, the
Successor Company will have Consolidated Net Worth in an amount which is
not less than the Consolidated Net Worth of the Company immediately prior
to such transaction; and
(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but the
predecessor, the Company, in the case of a lease of all or substantially all its
assets shall not be released from the obligation to pay the principal of and
interest on the Securities.
Notwithstanding Section 5.1(ii) and 5.1(iii), (i) any Subsidiary of
the Company may consolidate with, merge into or transfer all or part of its
properties and assets to the Company or another wholly-owned Subsidiary of the
Company; and (ii) 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:
(i) 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;
(ii) 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;
(iii) the Company fails to comply with Section 5.1;
(iv) the Company fails to comply with Section 4.2, 4.3, 4.4, 4.5,
4.6, 4.7, 4.8, 4.9, 4.10 or 4.11 (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(ii)) and
such failure continues for 30 days after the notice specified below;
(v) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in (i),
(ii), (iii) or (iv) above) and such failure continues for 60 days after
the notice specified below;
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43
(vi) Indebtedness of the Company or any 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 $5.0 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;
(vii) 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;
(viii) 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;
or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days;
(ix) any judgment or decree for the payment of money in excess of
$5.0 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 which is final and non-appealable and is not
discharged and either (A) an enforcement proceeding has been commenced by
any creditor upon such judgment or decree and is not promptly stayed or
(B) there is a period of 60 days following the entry of such judgment or
decree during which such judgment or decree is not discharged or the
execution thereof stayed; or
(x) the failure of any Security Guarantee to be in full force
and effect (except as contemplated by the terms thereof) or the denial or
disaffirmation by any
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44
Security Guarantor of its obligations hereunder or any Security Guarantee
if 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 Section 6.1(iv) or
Section 6.1(v) 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 (iv) or (v) 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: (i) within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (vi) and any event which with the giving of
notice or the lapse of time would become an Event of Default under clause (iv),
(v) or (ix), its status and what action the Company is taking or proposes to
take with respect thereto; and (ii) within 120 days after the end of each fiscal
year, written notice in the form of an Officer's Certificate indicating whether
the Officers signing such Officer's Certificate knew or were aware of any
Default that occurred during such previous fiscal year.
SECTION 6.2. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.1(vii) or (viii) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in outstanding principal amount of the Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
and unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.1(vii) or (viii) with respect to
the Company occurs and is continuing, the principal of and accrued and unpaid
interest on all the Securities shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holders. The Holders of a majority in principal amount of the Securities by
notice to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of principal or
interest that has become due solely because of acceleration. No such rescission
shall affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 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
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45
of or interest on the Securities or to enforce the performance of any provision
of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in
outstanding 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 Holder affected.
When a Default or Event of Default is waived, it is deemed cured, but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any consequent right.
SECTION 6.5. Control by Majority. The Holders of a majority in
outstanding principal amount of the Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.1, that the Trustee determines is unduly prejudicial to the
rights of other Holders (it being understood that, subject to Section 7.1, the
Trustee shall have no duty to ascertain whether or not such actions or
forebearances are unduly prejudicial to such Holders) 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.
SECTION 6.6. Limitation on Suits. Except to enforce the right to
receive payment of principal, premium, (if any) or interests when due, a Holder
may not pursue any remedy with respect to this Indenture or the Securities
unless:
(i) the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;
(ii) the Holders of at least 25% in outstanding principal amount
of the Securities make a written request to the Trustee to pursue the
remedy;
(iii) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
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46
(v) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction that, in the opinion of the
Trustee are inconsistent with the request during such 60-day period.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 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(i) or (ii) 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 Holders allowed in
any judicial proceedings relative to the Company, its Subsidiaries or their
respective creditors or properties and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the 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: Costs and expenses of collection, including all sums paid or
advanced by the Trustee hereunder and the compensation, expenses and
disbursements of the Trustee, its agents, and counsel and all other
amounts due to the Trustee under Section 7.7;
SECOND: to holders of Senior Indebtedness to the extent required by
Article X;
THIRD: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
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47
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment
to Holders pursuant to this Section 6.10. At least 15 days before such record
date, the Company shall mail to each Holder and the Trustee a notice that states
the record date, the payment date and 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 6.11 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.
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: (i) 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 (ii) 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: (i) this paragraph does not limit the effect of Section 7.1(b);
(ii) 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 (iii) 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 Sections 7.1(a), 7.1(b) and 7.1(c).
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48
(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 7.1 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 its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed in
good faith.
(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.
(f) Prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, Officer's Certificate, or other certificated statement, instrument,
opinion, report, notice, request, consent, order, approval, appraisal, bond,
debenture, note, coupon, security, or other paper or document unless requested
in writing so to do by the Holders of not less than a majority in aggregate
principal amount of the Securities then outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the
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49
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expenses or liabilities as
a condition to proceeding; the reasonable expenses of every such examination
shall be paid by the Company or, if advanced by the Trustee, shall be repaid by
the Company upon demand.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its power and duties hereunder.
(h) The Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions, or agreements on the
part of the Company, except as otherwise set forth herein, but the Trustee may
require of the Company full information and advice as to the performance of the
covenants, conditions and agreements contained herein and shall be entitled in
connection herewith to examine the books, records and premises of the Company.
(i) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty and the Trustee shall not be
answerable for other than its negligence or willful default.
(j) Except for (i) a default under Sections 6.1(i) or (ii) hereof,
or (ii) any other event of which the Trustee has "actual knowledge" and which
event, with the giving of notice or the passage of time or both, would
constitute an Event of Default under this Indenture, the Trustee shall not be
deemed to have notice of any default or event unless specifically notified in
writing of such event by the Company or the Holders of not less than 25% in
aggregate principal amount of the Securities Outstanding; as used herein, the
term "actual knowledge" means the actual fact or statement of knowing, without
any duty to make any investigation with regard thereto.
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 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, it shall not be responsible for the use
or application of any money received by any Paying Agent (other than itself as
Paying Agent), 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 Holder notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of
Default in payment of principal of, or interest on, any Security (including
payments pursuant to the optional redemption or required repurchase
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50
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 Holder a brief report dated as of such May 15 that complies
with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b). The
Trustee shall also transmit by mail all reports required by TIA ss. 313(c).
A copy of each report at the time of its mailing to Holders shall be
filed by the Company with the SEC 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, and the Trustee shall be entitled to,
compensation for its services as set forth in a separate fee agreement between
the Trustee and the Company. 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 Holders and reasonable costs of counsel retained by the
Trustee in connection with the delivery of an Opinion of Counsel or 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
and hold harmless 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
Holder, 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 or
negligence.
To secure the Company's payment obligations in this Section 7.7, 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.
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51
The Company's payment obligations pursuant to this Section 7.7 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.1(vii) or (viii) 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 outstanding
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: (i) the Trustee fails to comply with Section 7.10; (ii) the Trustee
is adjudged bankrupt or insolvent; (iii) a receiver or other public officer
takes charge of the Trustee or its property; or (iv) the Trustee otherwise
becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the
Holders of a majority in outstanding 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 the Holders. 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 outstanding 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 Holder 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 7.8, 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 or banking
association without any further act shall be the successor Trustee.
If 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
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52
may adopt the certificate of authentication of any predecessor trustee, and
deliver such Securities so authenticated; and if 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 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 ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $400 million as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 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 ss.
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 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 obligations under
Sections 4.2 through 4.15, 5.1(iii) and 5.1(iv) and the operation of Sections
6.1(iv), 6.1(v), 6.1(vi), 6.1(vii) (but only with respect to a Subsidiary),
6.1(viii) (but only with respect to a Subsidiary) and 6.1(ix) ("covenant
defeasance option"); provided, however, no deposit under this Article VIII shall
be effective to terminate the obligations of the Company under the Securities or
this Indenture prior to
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53
123 days following any such deposit. The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Sections 6.1(iv),
6.1(vi), 6.1(vii) (but only with respect to a Subsidiary), 6.1(viii) (but only
with respect to a Subsidiary), 6.1(ix) and 6.1(x) 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:
(i) 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;
(ii) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment of the deposited U.S. Government Obligations plus any
deposited money without reinvestment 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;
(iii) (A) no Event of Default (excluding a Default or Event of
Default arising from breach of Section 4.3 as a result of the borrowing of
funds to be applied to such deposit) shall have occurred or be continuing
on the date of such deposit and (B) 123 days pass after the deposit is
made and during the 123-day period no Default specified in Section
6.1(vii) or 6.1(viii) with respect to the Company occurs which is
continuing at the end of such period;
(iv) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(v) 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;
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54
(vi) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (B) since the date hereof there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be subject to Federal
income tax 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;
(vii) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders will not recognize income, gain or loss for Federal
income tax purposes as a result of such covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such covenant defeasance
had not occurred;
(viii) The Holders shall have a perfected security interest under
applicable law in the cash or U.S. Government Obligations deposited
pursuant to Section 8.2(i) above;
(ix) The Company shall have delivered to the Trustee an Opinion of
Counsel, in form and substance reasonably satisfactory to the Trustee, to
the effect that, after the passage of 123 days following the deposit, the
trust funds will not be subject to any applicable bankruptcy, insolvency,
reorganization or similar law affecting creditors' rights generally;
(x) such defeasance shall not cause the Trustee to have a
conflicting interest with respect to any securities of the Company; and
(xi) 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 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.
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55
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal of or interest on the Securities that remains
unclaimed for two years, and, thereafter, Holders entitled to the money must
look to the Company for payment as general creditors.
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
Holder:
(i) to cure any ambiguity, omission, defect or inconsistency;
(ii) to comply with Article V;
(iii) 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;
(iv) to make any change in Article X that would limit or
terminate the benefits available to any holder of Senior Indebtedness (or
Representatives therefor) under Article X;
(v) to add Guarantees with respect to the Securities or to
secure the Securities;
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56
(vi) 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;
(vii) to comply with any requirement of the SEC in connection with
qualifying this Indenture under the TIA;
(viii) to make any change that does not adversely affect the rights
of any Holder; or
(ix) 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 9.1 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 9.1 becomes effective, the
Company shall mail to each Holder a notice briefly describing such amendment.
The failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 9.1.
SECTION 9.2. With Consent of Holders. The Company and the Trustee
may amend this Indenture or the Securities without notice to any Holder but with
the written consent of the Holders of at least a majority in principal amount of
the Securities. However, without the consent of each Holder affected, an
amendment may not:
(i) reduce the amount of Securities whose Holders must consent
to an amendment;
(ii) reduce the rate of or extend the time for payment of
interest on any Security;
(iii) reduce the principal of or extend the Stated Maturity of any
Security;
(iv) 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;
(v) make any Security payable in money other than that stated
in the Security;
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57
(vi) 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
(vii) make any change in Section 6.4 or 6.7 or the second
sentence of this Section 9.2.
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 9.2 may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section 9.2 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 9.2.
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 Holder.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall become valid or effective more than 120
days after such record date.
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
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58
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.
ARTICLE X
Subordination
SECTION 10.1. Agreement To Subordinate. The Company and each
Subsidiary Guarantor agrees, and each Holder 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 in full in cash or Cash Equivalents when due 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. For purposes of
these subordination provisions, the Indebtedness evidenced by the Securities is
deemed to include the liquidated damages payable pursuant to the provisions set
forth in the Securities. 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:
(i) 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 or Cash
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59
Equivalents of all Senior Indebtedness in the case of the Company or all
such Guarantor Senior Indebtedness in the case of such Subsidiary
Guarantor before the Holders 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
(ii) 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 or Cash Equivalents, any 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 in writing 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 or Cash Equivalents;
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 Designated 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 the immediately
preceding sentence has occurred and is continuing. During the continuance of any
default (other than a default described in clause (i) or (ii) of the preceding
sentence) with respect to any Designated Senior Indebtedness pursuant to which
the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, neither the Company (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 Company
and the Trustee (with a copy to such Subsidiary Guarantor) of written notice (a
"Blockage Notice") of such
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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) because the default giving rise to such Blockage Notice is no longer
continuing or (iii) by repayment in full in cash or Cash Equivalents of such
Designated Senior Indebtedness). Notwithstanding the provisions of the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this Section 10.3), 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; provided, however, that if any Blockage Notice
within such 360-day period is given by or on behalf of any holders of Designated
Senior Indebtedness (other than the Bank Indebtedness), the Representative of
the Bank Indebtedness may give another Blockage Notice within such period;
provided further, however, that in no event may the total number of days during
which any Payment Blockage Period or Periods is in effect exceed 179 days in the
aggregate during any 360 consecutive day period (unless the Designated Senior
Indebtedness in respect of which such default exists has been declared due and
payable in its entirety, in which case no payment may be made on the Securities
until such acceleration has been rescinded or annulled.
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 and 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 Representative of such Designated
Senior Indebtedness receives notice of such acceleration and, thereafter, the
Company (in the case of any Designated Senior Indebtedness of the Company) or
such 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, only if this Article X otherwise permits payments
at that time.
SECTION 10.5. When Distribution Must Be Paid Over. If a distribution
is made to the Trustee or the Securityholders that because of this Article X
should not have been made to them or which the Trustee or the Securityholders
are otherwise not entitled to retain under the provisions of this Article X, the
Trustee or 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 or Cash Equivalents and
all commitments in
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respect of the Senior Indebtedness have expired or terminated and until the
Securities are paid in full, Securityholders shall be subrogated (without any
duty on the part of the holders of Senior Indebtedness to warrant, create,
effectuate, preserve or protect such subrogation) 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.
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:
(i) 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
(ii) prevent the Trustee or any Securityholder from exercising
its available remedies upon a 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 failure of any of them to comply with this Indenture or by any act or
failure to act on the part of any such holder or any other holder of Senior
Indebtedness, regardless of any knowledge thereof which any such holder or any
other holder of Senior Indebtedness may have or otherwise be charged with.
SECTION 10.9. Rights of Trustee and Paying Agent. The Company shall
give prompt written notice to the Trustee of any fact known to the Company that
would prohibit the making of any payment to or by the Trustee in respect of the
Securities, but failure to give such notice shall not affect the subordination
of the Securities to the Senior Indebtedness provided in this Article X and
shall not result in any default or event of default under this Indenture or the
Securities. Notwithstanding Section 10.3, the Trustee or Paying Agent may
continue to pay 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 any such payment, a Trust
Officer of the Trustee receives written 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
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Representative, only the Representative may give the notice. Nothing in this
Section 10.9 is intended to or shall relieve any Securityholder from the
obligations imposed under this Article X with respect to monies or other
distributions received in violation of the provisions hereof. The Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Senior Indebtedness (or a
Representative of such holder) to establish that such notice has been given by a
holder of such Senior Indebtedness or Representative thereof.
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.
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, subject, however, to the rights under this Article X
of the holders of Senior Indebtedness to receive payments or other distributions
otherwise payable to or received by the Securityholders or the Trustee upon the
exercise of any remedy in connection with such acceleration.
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
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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 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 or 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. Changes in Senior Indebtedness. Any holder of Senior
Indebtedness may at any time and from time to time without the consent of or
notice to any Securityholder or the Trustee: (i) extend, renew, modify, waive or
amend the terms of the Senior Indebtedness; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any guarantor or any other person (except the
Company) liable in any manner for the Senior Indebtedness or amend or waive the
terms of any guaranty of the Senior Indebtedness; (iv) exercise or refrain from
exercising any rights against the Company or any other person; (v) apply any
sums by whomever paid or however realized to Senior Indebtedness; and (vi) take
any other action which otherwise might be deemed to impair the rights of the
holders of the Senior Indebtedness. Any and all of such actions may be taken by
the holders of Senior Indebtedness without incurring responsibility to any
Securityholder or the Agent and, subject
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to the provisions of the definition of Senior Indebtedness, without impairing or
releasing the obligations of any Securityholder or the Trustee under this
Article X.
SECTION 10.17. 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.
SECTION 10.18. Legend. The Notes shall be conspicuously legended
indicating that their payment is subordinated to Senior Indebtedness in
accordance with this Article X.
ARTICLE XI
Subsidiary Guarantee
SECTION 11.1. Subsidiary Guarantee. Subject to the subordination
provisions contained in Article X, each Subsidiary Guarantor which becomes a
party hereto by executing and delivering a supplement to this Indenture pursuant
to Section 4.10 hereby, jointly and severally, unconditionally and irrevocably,
Guarantees to each Holder and to the Trustee and its successors and assigns (i)
the full and punctual payment of principal of, premium (if any) and interest on
the Securities when due, whether at maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations owing of the Company under this
Indenture (including obligations owing to the Trustee) and the Securities and
(ii) 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.
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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 (i) 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; (ii) any extension or renewal of any
Obligation; (iii) 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; (iv) the release of any security
held by any Holder or the Trustee for the Obligations or any of them; (v) the
failure of any Holder or the Trustee to exercise any right or remedy against any
other guarantor of the Obligations; or (vi) 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 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
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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 11.1.
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 11.1.
SECTION 11.2. Limitation on Liability. Any term or provision of this
Indenture to the contrary notwithstanding, the maximum, aggregate liability of
each Subsidiary Guarantor hereunder shall not exceed the maximum amount that can
be guaranteed by such Subsidiary Guarantor under applicable federal and state
laws relating to insolvency of debtors.
SECTION 11.3. Successors and Assigns. (a) 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, without any further action required on the part of the
Trustee or any Holder, upon (i) the unconditional release of such Subsidiary
from its liability in respect of the Indebtedness in connection with which it
became a Subsidiary Guarantor hereunder pursuant to Section 4.10; or (ii) any
sale or other disposition (by merger or otherwise) to any Person which is not a
Subsidiary of the Company, of all of the Capital Stock in, or all or
substantially all of the assets of, such Subsidiary Guarantor; provided that (i)
such sale or disposition of such Capital Stock or assets is otherwise in
compliance with this Indenture and (ii) such Subsidiary Guarantor has been
unconditionally released from its liability in respect of the Indebtedness in
connection with which it became a Subsidiary Guarantor hereunder pursuant to
Section 4.10.
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SECTION 11.4. No Waiver. Neither a failure nor a delay on the part
of either the Trustee or the Holders in exercising any right, power or privilege
under this Article XI shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article XI at law,
in equity, by statute or otherwise.
SECTION 11.5. 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 11.5 shall in no respect limit the obligations and liabilities of any
Subsidiary Guarantor to the Trustee and the Holders and each Subsidiary
Guarantor shall remain liable to the Trustee and the Holders 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 Holder against the Company or any other Subsidiary Guarantor or any
collateral security or guarantee or right of offset held by the Trustee or any
Holder 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 Holders 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
Holders, 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. 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.
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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:
Aurora Foods Inc.
Community Corporate Center
445 Hutchinson Avenue
Columbus, OH 43235
Attention: Thomas J. Ferraro
if to the Subsidiary Guarantors:
c/o Aurora Foods Inc.
Community Corporate Center
445 Hutchinson Avenue
Columbus, OH 43235
Attention: Thomas J. Ferraro
if to the Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attention: Corporate Trust Administration.
The Company, any of the Subsidiary Guarantors, or the Trustee by
notice to the others may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to
the Holder at the Holder's address as it appears on the registration books of
the Registrar and shall be sufficiently given if so mailed within the time
prescribed.
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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 12.3. Communication by Holders with other Holders. Holders
may communicate pursuant to TIA ss. 312(b) with other Holders 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 ss. 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, if requested,
furnish to the Trustee: (i) 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 (ii) 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: (i) a statement that the
individual making such certificate or opinion has read such covenant or
condition; (ii) 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; (iii) 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 (iv) 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 Holders. 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 or in the State of Delaware. If a payment date is a Legal
Holiday, payment shall be made on
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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 Holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.
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>
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
AURORA FOODS INC.
By: /s/ James B. Ardrey
----------------------------------
Title: Executive Vice President
WILMINGTON TRUST COMPANY, as Trustee
By: /s/ Donald G. MacKelcan
----------------------------------
Title: Assistant Vice President
<PAGE>
EXHIBIT A to
Indenture
[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 TWO YEARS AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR
ANY AFFILIATE OF THE ISSUER 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
<PAGE>
2
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 THE CASE OF THE FOREGOING CLAUSE (E), 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.
THIS SECURITY IS SUBORDINATED TO SENIOR INDEBTEDNESS, AS DEFINED IN THE
INDENTURE (AS DEFINED HEREIN), AND THE OBLIGATIONS OF EACH SUBSIDIARY
GUARANTOR UNDER THE SUBSIDIARY GUARANTEE CONTAINED IN THE INDENTURE ARE
SUBORDINATED TO GUARANTOR SENIOR INDEBTEDNESS, AS DEFINED IN THE
INDENTURE, OF SUCH SUBSIDIARY GUARANTOR.
<PAGE>
No. 1 Principal Amount $100,000,000
CUSIP NO. _______________
9 7/8% Series C Senior Subordinated Note due 2007
Aurora Foods Inc., a Delaware corporation, promises to pay to CEDE &
CO., or registered assigns, the principal sum of One Hundred Million Dollars on
February 15, 2007.
Interest Payment Dates: February 15 and August 15 commencing August
15, 1997.
Record Dates: February 1 and August 15.
Additional provisions of this Security are set forth on the other
side of this Security.
Dated: AURORA FOODS INC.
by ________________________________________
__________________________________________
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
WILMINGTON TRUST COMPANY
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL NOTE]
9 7/8% Series C Senior Subordinated Note due 2007
1. Interest
Aurora 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 February 15 and August
15 of each year commencing August 15, 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 July 1, 1997. 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 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Company shall
transfer by wire to the accounts specified by 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 February 1 or
August 1 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
Initially, Wilmington Trust Company, a Delaware banking corporation
("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
July 1, 1997 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), between the Company 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. ss.ss. 77aaa-77bbbb) as in effect on the
<PAGE>
2
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 $100 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 Subsidiaries, the payment of dividends and other
distributions on the Capital Stock of the Company and its Subsidiaries, the
purchase or redemption of Capital Stock of the Company and Capital Stock of such
Subsidiaries, certain purchases or redemptions of Subordinated Obligations, the
sale or transfer of assets and Capital Stock of Subsidiaries, the issuance or
sale of Capital Stock of Subsidiaries, the business activities and investments
of the Company and its Subsidiaries and transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its Subsidiaries
to restrict distributions and dividends from Subsidiaries.
In addition, the Indenture requires Subsidiaries of the Company (in
the circumstances specified in Section 4.10 of the Indenture and on the terms
and conditions specified in Article XI of the Indenture), to enter into a
supplement to the Indenture providing for a guarantee by such Subsidiaries (on a
senior subordinated basis) of the due and punctual payment of the principal of,
premium (if any) and interest on the Securities and all other amounts payable by
the Company under the Indenture and the Securities when and as the same shall be
due and payable, whether at maturity, by acceleration or otherwise, according to
the terms of the Securities and the Indenture.
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 February 15, 2002. 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 February 15 of the years
set forth below:
Year Redemption Price
<PAGE>
3
2002................................... 104.9375%
2003................................... 103.2917%
2004................................... 101.6458%
2005 and thereafter.................... 100.0000%
Notwithstanding the foregoing, at any time or from time to time
prior to February 15, 2000 the Company may redeem up to $35 million of the
aggregate original principal amount of the Securities with the cash proceeds of
one or more Equity Offerings received by or invested in, the Company at a
redemption price (expressed as a percentage of principal amount) of 109.875%
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 after giving
effect to such redemption, at least $65 million of the aggregate principal
amount of the Securities remain outstanding after each such redemption.
At any time on or prior to February 15, 2002, 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
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 (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 such
Holder's registered address. Securities in denominations of principal amount
larger than $1,000 may be redeemed in part but only in integral 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, unless the Company shall have exercised
its right to redeem the Securities pursuant to paragraph 5 of the Securities in
connection with such 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.
<PAGE>
4
8. Subordination
The Securities are subordinated to Senior Indebtedness, as defined
in the Indenture, and the obligations of each Subsidiary Guarantor under the
Subsidiary Guarantee contained in Article XI of the Indenture are subordinated
to Guarantor Senior Indebtedness, as defined in the Indenture, of such
Subsidiary Guarantor. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid, and Guarantor
Senior Indebtedness of a Subsidiary Guarantor must be paid before such
Subsidiary Guarantor may make payments under the Subsidiary Guarantee. 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
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 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
<PAGE>
5
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal 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 outstanding principal amount of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in outstanding principal amount of
the 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 for the
benefit of the Holders 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 when the same becomes due and
payable; (ii) default in payment of principal on the Securities when the same
becomes due and payable 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 Subsidiaries if the amount
accelerated (or so unpaid) exceeds $5 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 $5 million; and (vii) the failure of any
Subsidiary Guarantee to be in full force and effect or the denial or
disaffirmation by any Subsidiary Guarantor of its obligations under the
Indenture or the Securities in certain cases. 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
<PAGE>
6
trust or power. The Trustee may withhold from Securityholders notice of any
continuing Default or Event of Default (except a 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).
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.
<PAGE>
7
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: Aurora Foods Inc., 445 Hutchinson Avenue,
Columbus, Ohio 43235, Attention: President.
<PAGE>
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 two 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; 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
5 |_| transferred pursuant to and in compliance with Regulation S
under the Securities Act of 1933; or
6 |_| transferred to an "accredited investor" (within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
1933) that is an institutional investor and that has furnished
to the Trustee a signed
<PAGE>
2
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.
This certificate and the statements contained herein are made for the benefit of
the Company, the Guarantors, Wilmington Trust Company, as Trustee, and Chase
Securities Inc., the Initial Purchaser of such Notes being transferred and each
of you are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding with respect to the materials covered hereby.
______________________________
Signature
Signature Guarantee:
_________________________ ______________________________
Signature
(Signature must be guaranteed)
____________________________________________________________
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
<TABLE>
<CAPTION>
Date of Amount of decrease in Amount of increase in Principal Amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Security following officer of Trustee or
Global Security Global Security such decrease or increase Securities Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
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>
EXHIBIT B to
Indenture
[FORM OF FACE OF EXCHANGE 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.
THIS SECURITY IS SUBORDINATED TO SENIOR INDEBTEDNESS, AS DEFINED IN
THE INDENTURE (AS DEFINED HEREIN), AND THE OBLIGATIONS OF EACH SUBSIDIARY
GUARANTOR UNDER THE SUBSIDIARY GUARANTEE CONTAINED IN THE INDENTURE ARE
SUBORDINATED TO GUARANTOR SENIOR INDEBTEDNESS, AS DEFINED IN THE INDENTURE, OF
SUCH SUBSIDIARY GUARANTOR.
<PAGE>
2
No. _____ Principal Amount $100,000,000
CUSIP NO.
9 7/8% Senior Subordinated Note due 2007
Aurora Foods Inc., a Delaware corporation, promises to pay to CEDE &
CO., or registered assigns, the principal sum of One Hundred Million Dollars on
February 15, 2007.
Interest Payment Dates: February 15 and August 15 commencing August
15, 1997.
Record Dates: February 15 and August 1.
Additional provisions of this Security are set forth on the other
side of this Security.
Dated: AURORA FOODS INC.
by ______________________________________
by ______________________________________
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
WILMINGTON TRUST COMPANY
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF EXCHANGE NOTE]
9 7/8% Senior Subordinated Note due 2007
1. Interest
Aurora 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 February 15 and August
15 of each year. 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 July 1, 1997. 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 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Company shall
transfer by wire to the accounts specified by 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 February 1 or
August 1 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
Initially, Wilmington Trust Company, a Delaware banking corporation
("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
July 1, 1997 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), between the Company 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. ss.ss. 77aaa-77bbbb) as in effect on the
<PAGE>
2
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 $100 million aggregate principal amount (subject to
Section 2.7 of the Indenture). This Security is one of the Exchange Notes
referred to in the Indenture. The Securities include the Initial Notes and any
Exchange Notes issued in exchange for the Initial Notes pursuant to the
Indenture and the Registration Rights Agreement. The Initial Notes and the
Exchange Notes are treated as a single class of securities under the Indenture.
The Indenture imposes certain limitations on the Incurrence of Indebtedness by
the Company and its Subsidiaries, the payment of dividends and other
distributions on the Capital Stock of the Company and its Subsidiaries, the
purchase or redemption of Capital Stock of the Company and Capital Stock of such
Subsidiaries, certain purchases or redemptions of Subordinated Obligations, the
sale or transfer of assets and Capital Stock of Subsidiaries, the issuance or
sale of Capital Stock of Subsidiaries, the business activities and investments
of the Company and its Subsidiaries and transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its Subsidiaries
to restrict distributions and dividends from Subsidiaries.
In addition, the Indenture requires Subsidiaries of the Company (in
the circumstances specified in Section 4.10 of the Indenture and on the terms
and conditions specified in Article XI of the Indenture), to enter into a
supplement to the Indenture providing for a guarantee by such Subsidiaries (on a
senior subordinated basis) of the due and punctual payment of the principal of,
premium (if any) and interest on the Securities and all other amounts payable by
the Company under the Indenture and the Securities when and as the same shall be
due and payable, whether at maturity, by acceleration or otherwise, according to
the terms of the Securities and the Indenture.
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 February 15, 2002. 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 February 15 of the years
set forth below:
<PAGE>
3
Year Redemption Price
---- ----------------
2002................................... 104.9375 %
2003................................... 103.2917 %
2004................................... 101.6458 %
2005 and thereafter.................... 100.0000 %
Notwithstanding the foregoing, at any time or from time to time
prior to February 15, 2000, the Company may redeem up to $35 million of the
aggregate original principal amount of the Securities with the cash proceeds of
one or more Equity Offerings received by or invested in, the Company at a
redemption price (expressed as a percentage of principal amount) of 109.875%
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 $65 million of the aggregate principal amount of
Securities remain outstanding after such redemption.
At any time on or prior to February 15, 2002, 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
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 (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 such Holder's registered address. Securities in denominations of
principal amount larger than $1,000 may be redeemed in part but only in integral
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, unless the Company shall have exercised
its right to redeem the Notes pursuant to paragraph 5 of the Securities in
connection with such 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.
<PAGE>
4
8. Subordination
The Securities are subordinated to Senior Indebtedness, as defined
in the Indenture, and the obligations of each Subsidiary Guarantor under the
Subsidiary Guarantee contained in Article XI of the Indenture are subordinated
to Guarantor Senior Indebtedness, as defined in the Indenture, of such
Subsidiary Guarantor. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid, and Guarantor
Senior Indebtedness of a Subsidiary Guarantor must be paid before such
Subsidiary Guarantor may make payments under the Subsidiary Guarantee. 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
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 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 and interest on the
Securities to redemption or maturity, as the case may be.
13. Amendment, Waiver
<PAGE>
5
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 outstanding principal amount of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in outstanding principal amount of
the 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 for the
benefit of the Holders 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 when the same becomes due and
payable; (ii) default in payment of principal on the Securities when the same
becomes due and payable 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 Subsidiaries if the amount
accelerated (or so unpaid) exceeds $5.0 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 $5.0 million; and (vii) the failure of any
Subsidiary Guarantee to be in full force and effect or the denial or
disaffirmation by any Subsidiary Guarantor of its obligations under the
Indenture or the Securities in certain cases. 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 Default or Event of Default in payment of principal
or interest) if it determines that withholding notice is in their interest.
<PAGE>
6
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).
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.
<PAGE>
7
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: Aurora Foods Inc., 445 Hutchinson Avenue,
Columbus, Ohio 43235, Attention:
President.
- --------------------------------------------------------------------------------
<PAGE>
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.
<PAGE>
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: _______________
Signature: _________________________
(Sign exactly as your name appears on the other side of the Security)
Signature
Guarantee: _______________________________________
(Signature must be guaranteed)
<PAGE>
EXHIBIT C to
Indenture
[FORM OF TRANSFEREE LETTER OF REPRESENTATION]
Aurora Foods Inc.
445 Hutchinson Avenue
Columbus, Ohio 43235
Attn: President
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Administration
Dear Sirs:
This certificate is delivered to request a transfer of $______
principal amount of the 9 7/8% Series C Senior Subordinated Notes due 2007 (the
"Notes") of Aurora Foods Inc.
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 "accredited investor" (within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the "Securities
Act")) that is an institutional accredited investor ("Institutional Accredited
Investor") 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>
2
2. We understand that the Notes have not been registered under the
Securities Act or any other applicable securities law, 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 two 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) that 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.
3. We agree on our own behalf and on behalf of any investor account
for which we are purchasing the Notes that (i) if it is an insurance company,
the funds to be used to purchase the Notes by it constitute (A) assets of an
insurance company general account maintained by it and the acquisition and
holding of each such Note by such account is exempt under United States
Department of Labor Prohibited Transaction Class Exemption ("PTCE") 95-60 or (B)
assets of an insurance company pooled separate account and the acquisition and
holding of each such Note by such account is exempt under PTCE 90-1, and (ii) if
it is not an insurance company, no part of the funds to be used to purchase the
Notes to be purchased by it constitute assets of any plan or employee benefit
plan such that the use of such assets constitutes a non-exempt prohibited
transaction under ERISA or the Code. The representation is made in reliance upon
the list furnished to the purchaser by the Company, if requested by the
purchaser, of the plans and employee benefit plans with respect to which the
Company is a party in interest or a disqualified person and is based upon the
purchaser's determination that a statutory or administrative exemption is
applicable
<PAGE>
3
or that the Company and its Affiliates are not parties in interest or
disqualified persons with respect to the purchaser or holder plan or employee
benefit plan. As used in this paragraph, the terms "employee benefit plan" and
"party in interest" shall have the meanings assigned to such terms in Section 3
of ERISA, the term "Affiliate" shall have the meaning assigned to such term in
Section 407(d)(7) of ERISA and the terms "disqualified person" and "plan" shall
have the meanings assigned to such terms in Section 4975 of the Code.
TRANSFEREE:
---------------------------
BY
-----------------------------------
<PAGE>
EX-4.9
Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
July 1, 1997
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
c/o Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Dear Sirs:
Aurora Foods Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to you (the "Initial Purchasers"), upon the terms set forth in
a purchase agreement dated June 18, 1997 (the "Purchase Agreement"),
$100,000,000 principal amount of its 9 7/8% Series C Senior Subordinated
Securities due 2007 (the "Securities") which Securities shall be unsecured and
will be subordinated to all existing and future Senior Indebtedness of the
Company and will be effectively subordinated to all obligations of each
subsidiary of the Company as may exist from time to time. Capitalized terms used
but not specifically defined herein have the respective meanings ascribed
thereto in the Purchase Agreement. As an inducement to the Initial Purchasers to
enter into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you, for the benefit of the
holders of the Securities (including the Initial Purchasers) (the "Holders"), as
follows:
1. Registered Exchange Offer. The Company shall prepare and, not
later than 60 days following the Issue Date (as hereinafter defined), shall file
with the Commission a registration statement (the "Exchange Offer Registration
Statement") on an appropriate form under the Securities Act with respect to a
proposed offer (the "Registered Exchange Offer") to the Holders to issue and
deliver to such Holders, in exchange for the Securities, a like aggregate
principal amount of debt securities of the Company (the "Exchange Securities")
identical in all material respects to the Securities, except for the transfer
restrictions relating to the Securities, shall use its reasonable best efforts
to cause the Exchange Offer Registration Statement to become effective under the
Securities Act no later than 150 days after the Issue Date and to be consummated
no later than 180 days after the Issue Date, and shall keep the Exchange Offer
Registration Statement effective for not less than 30 days (or longer, if
required by applicable law) after the date notice of the Exchange Offer is
mailed to the Holders (such period being called the "Exchange Offer Registration
Period"). The Exchange Securities will be issued under the Indenture or an
indenture (the "Exchange Securities Indenture") between the Company and the
Trustee or such other bank or trust company reasonably satisfactory to you, as
trustee (the "Exchange Securities
<PAGE>
2
Trustee"), such indenture to be identical in all material respects to the
Indenture except for the transfer restrictions relating to the Securities (as
described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Securities (assuming that such Holder (a) is
not (i) an affiliate of the Company within the meaning of the Securities Act or
(ii) an Exchanging Dealer (as defined below) not complying with the requirements
of the next sentence, (b) acquires the Exchange Securities in the ordinary
course of such Holder's business and (c) has no arrangements or understandings
with any person to participate in the distribution of the Exchange Securities)
and to trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States. The Company, the Initial Purchasers and each Exchanging Dealer (as
defined below) acknowledge that, pursuant to current interpretations by the
Commission's staff of Section 5 of the Securities Act, (i) each Holder which is
a broker-dealer electing to exchange Securities, acquired for its own account as
a result of market making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required to deliver a prospectus
containing the information set forth in Annex A hereto on the cover, in Annex B
hereto in the "Exchange Offer Procedures" section and the "Purpose of the
Exchange Offer" section, and in Annex C hereto in the "Plan of Distribution"
section of such prospectus in connection with a sale of any such Exchange
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer and (ii) if the Initial Purchasers elect to sell Exchange
Securities acquired in exchange for Securities constituting any portion of an
unsold allotment it is required to deliver a prospectus containing the
information required by Items 507 or 508 of Regulation S-K under the Securities
Act, as applicable, in connection with such a sale.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Securities acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, the Company shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Securities in the Registered
Exchange Offer, issue and deliver to any such Holder, in exchange for the
Securities held by such Holder (the "Private Exchange"), a like aggregate
principal amount of debt securities of the Company (the "Private Exchange
Securities") that are identical in all material respects to the Exchange
Securities, except for the transfer restrictions relating to such Private
Exchange Securities. The Private Exchange Securities will be issued under the
same indenture as the Exchange Securities, and the Company shall use its
reasonable best efforts to cause the Private Exchange Securities to bear the
same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
<PAGE>
3
(b) keep the Registered Exchange offer open for not less than 30
days after the date notice of the Exchange Offer is mailed to the Holders
(or longer if required by applicable law);
(c) utilize the services of a Depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last business day on which
the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws applicable to the
Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, the Company shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder of
Securities, Exchange Securities or Private Exchange Securities, as the
case may be, equal in principal amount to the Securities of such Holder so
accepted for exchange.
The Company shall make available for a period of 90 days after the
consummation of the Registered Exchange Offer, a copy of the prospectus forming
part of the Exchange Offer Registration Statement to any broker-dealer for use
in connection with any resale of any Exchange Securities.
Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Securities surrendered in exchange therefor or, if no interest has been paid
on the Securities, from the date of original issue of the Securities.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an affiliate of the Company
within the meaning of the Securities Act, or if it is an affiliate, it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
<PAGE>
4
Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include, as of the consummation of the Registered
Exchange Offer, an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
2. Shelf Registration. If (i) applicable interpretations of the
staff of the Commission do not permit the Company to effect the Registered
Exchange Offer as contemplated by Section 1 hereof, or (ii) for any other reason
the Registered Exchange Offer is not consummated within 165 days after the Issue
Date or (iii) any Holder either (A) is not eligible to participate in the
Registered Exchange Offer or (B) participates in the Registered Exchange Offer
and does not receive freely transferrable Exchange Securities in exchange for
tendered Securities the following provisions shall apply:
(a) The Company shall use all reasonable efforts to as promptly as
practicable file with the Commission and thereafter shall use its reasonable
best efforts to cause to be declared effective a shelf registration statement on
an appropriate form under the Securities Act relating to the offer and sale of
the Transfer Restricted Securities (as defined below) by the Holders from time
to time in accordance with the methods of distribution set forth in such
registration statement (hereafter, a "Shelf Registration Statement" and,
together with any Exchange Offer Registration Statement, a "Registration
Statement"); provided, however, that no Holder of Securities or Exchange
Securities (other than the Initial Purchasers) shall be entitled to have
Securities or Exchange Securities held by it covered by such Shelf Registration
Statement unless such Holder agrees in writing to be bound by all the provisions
of this Agreement applicable to such Holder.
(b) The Company shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by Holders for a period of three
years from the Issue Date or such shorter period that will terminate when all
the Securities and Exchange Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement (in any
such case, such period being called the "Shelf Registration Period"). The
Company shall be deemed not to have used its reasonable best efforts to keep the
Shelf Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Securities or
Exchange Securities covered thereby not being able to offer and sell such
Securities or Exchange Securities during that period, unless such action is
required by applicable law; provided, however, that the foregoing shall not
apply to actions taken by the Company in good faith and for valid business
reasons (not including avoidance of its obligations hereunder), including,
without limitation, the acquisition or divestiture of assets, so long as the
Company within 120 days thereafter complies with the requirements of Section
4(i) hereof. Any such period during which the Company fails to keep the
registration statement effective and usable for offers and sales of Securities
and Exchange Securities is referred to as a "Suspension Period." A Suspension
Period shall commence on
<PAGE>
5
and include the date that the Company gives notice that the Shelf Registration
Statement is no longer effective or the prospectus included therein is no longer
usable for offers and sales of Securities and Exchange Securities and shall end
on the date when each Holder of Securities and Exchange Securities covered by
such registration statement either receives the copies of the supplemented or
amended prospectus contemplated by Section 4(i) hereof or is advised in writing
by the Company that use of the prospectus may be resumed. If one or more
Suspension Periods occur, the three-year time period referenced above shall be
extended by the number of days included in each such Suspension Period.
(c) Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Shelf Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in
either case, other than with respect to information included therein in reliance
upon or in conformity with written information furnished to the Company by or on
behalf of any Holder specifically for use therein (the "Holders' Information"))
does not, when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (iii) any prospectus forming
part of any Shelf Registration Statement, and any supplement to such prospectus
(in either case, other than with respect to Holders' Information), does not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the Holders
of Securities will suffer damages if the Company fails to fulfill its
obligations under Section 1 or Section 2, as applicable, and that it would not
be feasible to ascertain the extent of such damages. Accordingly, if (i) the
applicable Registration Statement is not filed with the commission on or prior
to 60 days after the Issue Date, (ii) the Exchange Offer Registration Statement
or the Shelf Registration Statement, as the case may be, is not declared
effective within 150 days after the Issue Date (or in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
the applicable interpretations of Commission's Staff, if later, within 45 days
after publication of the change in law or interpretation), (iii) the Registered
Exchange Offer is not consummated on or prior to 180 days after the Issue Date,
or (iv) the Shelf Registration Statement is filed and declared effective within
150 days after the Issue Date (or in the case of a Shelf Registration Statement
required to be filed in response to a change in law or the applicable
interpretations of Commission's Staff, if later, within 45 days after
publication of the change in law or interpretation) but shall thereafter cease
to be effective (at any time that the Company is obligated to maintain the
effectiveness thereof) without being succeeded within 60 days by an additional
Registration Statement filed and declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company will
generally be obligated to pay liquidated damages to each holder of Transfer
Restricted Securities (as defined below), during the period of such Registration
Default, in an amount equal to $0.192 per week per $1,000 principal amount of
the Securities constituting Transfer Restricted Securities held by such holder
until the applicable Registration Statement is filed or declared effective, the
Registered Exchange Offer is consummated or the Shelf Registration Statement
again becomes effective, as the case may be; provided, however, no liquidated
damages shall be payable for a Registration Default under clause (iii) above if
a Shelf Registration Statement covering the securities for which the
<PAGE>
6
Exchange Offer was intended shall have been declared effective. Following the
cure of all Registration Defaults, the accrual of liquidated damages will cease.
"Transfer Restricted Securities" means each Security or Exchange Security until
(i) the date on which such Security or Exchange Security has been exchanged for
a freely transferrable Exchange Security in the Registered Exchange Offer, (ii)
the date on which such Security, Exchange Security or Private Exchange Security
has been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iii) the date on which such
Security, Exchange Security or Private Exchange Security is distributed to the
public pursuant to Rule 144 under the Securities Act or is salable pursuant to
Rule 144(k) under the Securities Act. Notwithstanding anything to the contrary
in this Section 3(a), the Company shall not be required to pay liquidated
damages to the holder of Transfer Restricted Securities if such holder: (a)
failed to comply with its obligations to make the representations in the second
to last paragraph of Section 1; or (b) failed to provide the information
required to be provided by it, if any, pursuant to Section 4(m).
(b) The Company shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Company shall pay the liquidated damages due on the Transfer
Restricted Securities by depositing with the Paying Agent (which may not be the
Company for these purposes), in trust, for the benefit of the Holders thereof,
prior to 10:00 a.m., New York City time on the next interest payment date
specified by the Indenture and the Securities, sums sufficient to pay the
liquidated damages then due. The liquidated damages due shall be payable on each
interest payment date specified by the Indenture to the record holder entitled
to receive the interest payment to be made on such date. Each obligation to pay
liquidated damages shall be deemed to accrue from and including the applicable
Registration Default.
(c) The parties hereto agree that the liquidated damages provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by holders of Transfer
Restricted Securities by reason of the failure of the Shelf Registration
Statement or the Exchange Offer Registration Statement, as the case may be, to
be filed, to be declared effective or to remain effective, or the Exchange Offer
to be consummated, as the case may be, to the extent required by this Agreement.
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to you, prior to the filing
thereof with the Commission, a copy of the Registration Statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that the Initial Purchasers (with respect to any
portion of an unsold allotment from the original offering) are participating in
the Registered Exchange Offer or the Shelf Registration, shall use reasonable
efforts to reflect in each such document, when so filed with the Commission,
such comments as you reasonably may propose; (ii) if applicable, include the
information set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a part of the Exchange Offer Registration Statement, and
include the information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; and (iii) if requested by
the Initial Purchasers, include the information required by Items 507 or 508 of
Regulation S-K
<PAGE>
7
under the Securities Act, as applicable, in the prospectus forming a part of the
Exchange Offer Registration Statement.
(b) The Company shall advise you and, if requested by the Holders,
but only as to events set forth in clauses (i) and (ii) below, the Holders and,
if requested by you, confirm such advice in writing (which advice pursuant to
clauses (ii)-(iv) hereof shall be accompanied by an instruction to suspend the
use of the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to any Registration Statement or the prospectus included therein or for
additional information;
(iii) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Securities, the Exchange
Securities or the Private Exchange Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose; and
(iv) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus so that, as of
such date, the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) The Company will furnish to each Holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits (including those
incorporated by reference).
(d) The Company will, during the Shelf Registration Period, promptly
deliver to each Holder of Transfer Restricted Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents to the use of the prospectus or
any amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Securities in connection with the offering and sale of the Transfer
Restricted Securities covered by the prospectus or any amendment or supplement
thereto.
(e) The Company will furnish to each Exchanging Dealer or any
Initial Purchaser, as applicable, which so requests, without charge, at least
one copy of the Exchange Offer Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if the
Exchanging Dealer or any Initial Purchaser, as applicable, so requests in
writing, all exhibits (including those incorporated by reference).
<PAGE>
8
(f) The Company will, during the Exchange Offer Registration Period,
promptly deliver to each Exchanging Dealer or any Initial Purchaser, as
applicable, without charge, as many copies of the prospectus included within the
coverage of Exchange Offer Registration Statement and any amendment or
supplement thereto as such Exchanging Dealer or any Initial Purchaser, as
applicable, may reasonably request for delivery by (i) such Exchanging Dealer in
connection with a sale of Exchange Securities received by it pursuant to the
Registered Exchange Offer or (ii) the Initial Purchasers in connection with a
sale of Exchange Securities received by it in exchange for Securities
constituting any portion of an unsold allotment; and the Company consents to the
use of the prospectus or any amendment or supplement thereto by any such
Exchanging Dealer or the Initial Purchasers, as applicable, as aforesaid.
(g) Prior to any public offering of Securities or Exchange
Securities pursuant to any Registration Statement, the Company will use its
reasonable best efforts to register or qualify or cooperate with the Holders of
Securities included therein and its counsel in connection with the registration
or qualification of such securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Securities, the Exchange
Securities or the Private Exchange Securities covered by such Registration
Statement; provided, however, that the Company will not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
(h) The Company will cooperate with the Holders of Securities,
Exchange Securities or Private Exchange Securities to facilitate the timely
preparation and delivery of certificates representing Securities, Exchange
Securities or Private Exchange Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as Holders may request in writing prior to sales of
Securities, Exchange Securities or Private Exchange Securities pursuant to such
Registration Statement.
(i) If (i) any event contemplated by paragraphs (b)(ii) through (iv)
above occurs during the period in which the Company is required to maintain an
effective Registration Statement or (ii) any Suspension Period remains in effect
more than 120 days after the occurrence thereof, the Company will promptly
prepare a post-effective amendment to the Registration Statement or a supplement
to the related prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Securities, the Exchange Securities or
the Private Exchange Securities from a Holder, the prospectus will not include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(j) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities, the
Exchange Securities and the Private Exchange Securities, as the case may be, and
provide the applicable trustee with printed certificates for the Securities, the
Exchange Securities and the Private Exchange Securities, as the case may be, in
a form eligible for deposit with The Depository Trust Company.
<PAGE>
9
(k) The Company will use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission and will make generally
available to its security holders as soon as practicable after the effective
date of the applicable Registration Statement an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act; provided that in no event
shall such earnings statement be delivered later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing after the effective
date of the applicable Registration Statement, which statements shall cover such
12-month period.
(l) The Company will cause the Indenture or the Exchange Securities
Indenture, as the case may be, to be qualified under the Trust Indenture Act as
required by applicable law in a timely manner.
(m) The Company may require each Holder of Transfer Restricted
Securities to be sold pursuant to any Shelf Registration Statement to furnish to
the Company such information regarding the Holder and the distribution of such
Transfer Restricted Securities as the Company may from time to time reasonably
require for inclusion in such Registration Statement, and the Company may
exclude from such registration the Transfer Restricted Securities of any Holder
that unreasonably fails to furnish such information within a reasonable time
after receiving such request.
(n) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 4(b)(ii) through (iv) hereof, such
Holder will discontinue disposition of such Transfer Restricted Securities until
such Holder's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(i) hereof, or until advised in writing (the "Advice")
by the Company that the use of the applicable prospectus may be resumed. If the
Company shall give any notice under Section 4(b)(ii) through (iv) during the
period that the Company is required to maintain an effective Registration
Statement (the "Effectiveness Period"), such Effectiveness Period shall be
extended by the number of days during such period from and including the date of
the giving of such notice to and including the date when each seller of Transfer
Restricted Securities covered by such Registration Statement shall have received
(x) the copies of the supplemental or amended prospectus contemplated by Section
4(i) (if an amended or supplemental prospectus is required) or (y) the Advice
(if no amended or supplemental prospectus is required).
5. Registration Expenses. The Company will bear all expenses
incurred in connection with the performance of its obligations under Sections 1,
2, 3 and 4 hereof and the Company will reimburse the Initial Purchasers and the
Holders for the reasonable fees and disbursements of one firm of attorneys
chosen by the Holders of a majority in aggregate principal amount of the
Securities, the Exchange Securities and the Private Exchange Securities to be
sold pursuant to each Registration Statement (the "Special Counsel") acting for
the Initial Purchasers or Holders in connection therewith.
6. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Exchanging Dealer or the Initial Purchasers,
as applicable, the Company shall indemnify and hold harmless each Holder, its
directors, officers, agents and employees
<PAGE>
10
and each person, if any, who controls such Holder within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act and the directors,
officers, agents and employees of such controlling persons against any and all
loss, liability, claim and damage, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any such
Registration Statement or any prospectus forming part thereof or in any
amendment or supplements thereto or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and shall
reimburse each Holder promptly upon demand for any and all expense (including,
subject to Section 6(c) hereof, the fees and disbursements of counsel chosen by
the indemnified party), reasonably incurred as such expenses are incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental or regulatory agency or body,
commenced or threatened, or any claim based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided, however,
that (i) this indemnity shall not apply to any loss, liability, claim, damage or
expense to the extent arising out of any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
Holders' Information and (ii) this indemnity with respect to any untrue
statement or alleged untrue statement or omission or alleged omission in any
related preliminary prospectus shall not enure to the benefit of any indemnified
party from whom the person asserting any such loss, claim, damage or liability
received Securities, Exchange Securities or Private Exchange Securities if such
persons did not receive a copy of the final prospectus at or prior to the
confirmation of the sale of such Securities, Exchange Securities or Private
Exchange Securities to such person in any case where such delivery is required
by the Securities Act and the untrue statement or omission of material fact
contained in the related preliminary prospectus was corrected in the final
prospectus unless such failure to deliver the final prospectus was a result of
noncompliance by the Company with Sections 4(c), 4(d), 4(e) or 4(f).
(b) In the event of a Shelf Registration Statement, each Holder
agrees to indemnify and hold harmless the Company, its directors, officers,
agents and employees and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act and the directors, officers, agents and employees of such controlling
persons against any and all loss, liability, claim, damage and expense described
in the indemnity contained in Section 6(a) hereof, as incurred, arising out of
or based upon any untrue statements or omissions, or alleged untrue statements
or omissions, made in the Registration Statement (or any amendment or supplement
thereto) in reliance on and in conformity with Holders' Information furnished to
the Company by such Holder; provided, however, that no such Holder shall be
liable for any indemnity claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Securities or Exchange
Securities pursuant to the Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any claim or action
commenced against it in respect of which indemnity may be sought hereunder;
provided, however, that failure to so notify an indemnifying party shall not
relieve such indemnifying party from any obligation that it may have pursuant to
this Section except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure;
provided further, however, that the failure to notify an indemnifying party
shall not relieve it from any liability that it may have to an indemnified party
otherwise than on account of this indemnity
<PAGE>
11
agreement. If any such claim or action shall be brought against an indemnified
party, the indemnified party shall notify the indemnifying party thereof, and
the indemnifying party shall be entitled to participate therein and, to the
extent that it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 6 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof; provided, however,
that an indemnified party will have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel will be at
the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party,
(2) the indemnified party has reasonably concluded (based on the written advice
of counsel) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available to
the indemnifying party, (3) a conflict or potential conflict exists (based on
the written advice of counsel to the indemnified party) between the indemnified
party and indemnifying party (in which case the indemnifying party will not have
the right to direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed counsel to assume
the defense of such action within a reasonable time after receiving notice of
the commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel for the indemnified party will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent, but if settled with its written
consent or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
(d) If a claim by an indemnified party for indemnification under
this Section 6 is unenforceable even though the express provisions hereof
provide for indemnification in such case, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions,
statements or omissions that resulted in such losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a
<PAGE>
12
material fact, has been taken or made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any losses shall be deemed to include, subject to the limitations set forth
in Section 6(c) herein, any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section, an indemnifying party that is a
holder of Transfer Restricted Securities, Exchange Securities or Private
Exchange Securities shall not be required to contribute any amount in excess of
the amount by which the total price at which the Transfer Restricted Securities,
Exchange Securities or Private Exchange Securities sold by such indemnifying
party and distributed to the public were offered to the public exceeds the
amount of any damages that such indemnifying party would have otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 10(f) of the Securities Act) shall be entitled to any
contribution from any person who was not guilty of such fraudulent
misrepresentation.
7. Miscellaneous. (a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the Company
has obtained the written consent of Holders of a majority in aggregate principal
amount of the Securities, the Exchange Securities and the Private Exchange
Securities, taken as a single class. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of the Holders of Securities, Exchange
Securities or Private Exchange Securities whose Securities, Exchange Securities
or Private Exchange Securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of a majority in aggregate principal amount of
the Securities, Exchange Securities or Private Exchange Securities being sold by
such Holders pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 7(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy
in like manner to Chase Securities Inc.;
(2) if to you, initially at your address set forth in the Purchase
Agreement; and
(3) if to the Company, initially at the address of the Company set
forth in the Purchase Agreement.
<PAGE>
13
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if telecopied.
(c) Successors And Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopies) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law; Submission to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED 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.
(g) No Inconsistent Agreements. The Company has not and shall not,
on or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the holders of Transfer Restricted
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The Company has not previously entered into any agreement which remains in
effect granting any registration rights with respect to any of its debt
securities to any person. Without limiting the generality of the foregoing,
without the written consent of the holders of a majority in aggregate principal
amount of the then outstanding Transfer Restricted Securities, the Company shall
not grant to any person the right to request the Company to register any debt
securities of the Company under the Securities Act unless the rights so granted
are not in conflict or inconsistent with the provisions of the Agreement.
(h) No Piggyback on Registrations. Neither the Company, nor any of
its security holders (other than the holders of Transfer Restricted Securities
in such capacity) shall have the right to include any securities of the Company
in any Shelf Registration or Registered Exchange Offer other than Transfer
Restricted Securities.
(i) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the
<PAGE>
14
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(j) Remedies. In the event of a breach by the Company, or by any
holder of Transfer Restricted Securities, of any of their obligations under this
Agreement, each holder of Transfer Restricted Securities or the Company, as the
case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages (other than the recovery of damages for a
breach by the Company of its obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of its rights under this Agreement. The Company
and each holder of Transfer Restricted Securities agree that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agree that,
in the event of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be adequate.
<PAGE>
15
Please confirm that the foregoing correctly sets forth the agreement
among the Company and you.
Very truly yours,
AURORA FOODS INC.
By: /s/ James B. Ardrey
-------------------------------------
Title: Executive Vice President
Accepted in New York, New York
CHASE SECURITIES INC.
By: /s/ Joseph C. Purcell
------------------------
Title: Vice President
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Robert A. Hansen
------------------------
Title: Director
<PAGE>
16
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
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 Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company 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 "Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company 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 Exchange Securities may be
required to deliver a prospectus.(1)
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities 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 Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities 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 and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
- --------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
<PAGE>
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
Exhibit 10.4
CONFORMED COPY
================================================================================
CREDIT AGREEMENT
DATED AS OF DECEMBER 31, 1996
AMONG
MBW FOODS INC.,
AS BORROWER,
MBW HOLDINGS INC.,
AS GUARANTOR,
THE LENDERS LISTED HEREIN,
AS LENDERS,
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT,
AND
CHASE SECURITIES INC.,
AS ARRANGING AGENT
================================================================================
<PAGE>
MBW FOODS INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS.............................. 2
1.1 Certain Defined Terms................................................ 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement...................................................... 35
1.3 Other Definitional Provisions........................................ 35
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS........................... 35
2.1 Commitments; Loans................................................... 35
2.2 Interest on the Loans................................................ 43
2.3 Fees................................................................. 47
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commit-
ments; General Provisions Regarding Payments; Application of Proceeds
of Collateral and Payments under Guaranties.......................... 48
2.5 Use of Proceeds...................................................... 57
2.6 Special Provisions Governing Eurodollar Rate Loans................... 58
2.7 Increased Costs; Taxes; Capital Adequacy............................. 60
2.8 Obligation of Lenders and Issuing Lenders to Mitigate................ 65
SECTION 3.
LETTERS OF CREDIT........................... 65
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein.............................................................. 65
3.2 Letter of Credit Fees................................................ 68
3.3 Drawings and Payments and Reimbursement of Amounts Paid Under
Letters of Credit.................................................... 69
3.4 Obligations Absolute................................................. 71
3.5 Indemnification; Nature of Issuing Lender's Duties................... 72
3.6 Increased Costs and Taxes Relating to Letters of Credit.............. 74
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT........................... 75
4.1 Conditions to Term Loans and Acquisition Revolving Loans............. 75
4.2 Conditions to All Loans.............................................. 81
4.3 Conditions to Letters of Credit...................................... 82
(i)
<PAGE>
Page
SECTION 5.
REPRESENTATIONS AND WARRANTIES................... 83
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries................................................... 83
5.2 Authorization of Borrowing, etc...................................... 84
5.3 Financial Condition; Projections..................................... 86
5.4 No Material Adverse Change; No Restricted Junior Payments............ 86
5.5 Title to Properties; Liens; Intellectual Property.................... 87
5.6 Litigation; Adverse Facts............................................ 87
5.7 Payment of Taxes..................................................... 88
5.8 Performance of Agreements; Materially Adverse Agreements; Material
Contracts............................................................ 88
5.9 Governmental Regulation.............................................. 88
5.10 Securities Activities................................................ 89
5.11 Employee Benefit Plans............................................... 89
5.12 Certain Fees......................................................... 89
5.13 Environmental Protection............................................. 89
5.14 Employee Matters..................................................... 91
5.15 Solvency............................................................. 91
5.16 Matters Relating to Collateral....................................... 91
5.17 Related Agreements................................................... 92
5.18 Disclosure........................................................... 92
5.19 Subordination of Seller Notes........................................ 93
SECTION 6.
AFFIRMATIVE COVENANTS........................ 93
6.1 Financial Statements and Other Reports............................... 93
6.2 Corporate Existence, etc............................................. 99
6.3 Payment of Taxes and Claims; Tax Consolidation....................... 99
6.4 Maintenance of Properties; Insurance................................. 99
6.5 Inspection; Lender Meeting........................................... 100
6.6 Compliance with Laws, etc............................................ 100
6.7 Environmental Disclosure and Inspection.............................. 100
6.8 Company's Remedial Action Regarding Hazardous Materials.............. 102
6.9 Execution of Subsidiary Guaranty and Subsidiary Security Agreements
by Subsidiaries and Future Subsidiaries.............................. 102
6.10 Conforming Leasehold Interests; Matters Relating to Additional Real
Property Collateral.................................................. 103
6.11 Further Assurances................................................... 105
SECTION 7.
NEGATIVE COVENANTS.......................... 106
7.1 Indebtedness......................................................... 106
(ii)
<PAGE>
Page
7.2 Liens and Related Matters............................................ 107
7.3 Investments; Joint Ventures.......................................... 109
7.4 Contingent Obligations............................................... 110
7.5 Restricted Junior Payments........................................... 111
7.6 Financial Covenants.................................................. 112
7.7 Restriction on Fundamental Changes; Asset Sales...................... 115
7.8 Sales and Lease-Backs................................................ 117
7.9 Transactions with Shareholders and Affiliates........................ 117
7.10 Disposal of Subsidiary Stock......................................... 118
7.11 Conduct of Business.................................................. 118
7.12 Amendments or Waivers of Certain Related Agreements; Amendments of
Documents Relating to Subordinated Indebtedness; Designation of
"Designated Senior Indebtedness"; Preferred Stock.................... 118
7.13 Fiscal Year.......................................................... 119
SECTION 8.
EVENTS OF DEFAULT.......................... 119
8.1 Failure to Make Payments When Due.................................... 120
8.2 Default in Other Agreements.......................................... 120
8.3 Breach of Certain Covenants.......................................... 120
8.4 Breach of Warranty................................................... 120
8.5 Other Defaults Under Loan Documents.................................. 121
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc................. 121
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc................... 121
8.8 Judgments and Attachments............................................ 122
8.9 Dissolution.......................................................... 122
8.10 Employee Benefit Plans............................................... 122
8.11 Change in Control.................................................... 122
8.12 Invalidity of Guaranties............................................. 123
8.13 Failure of Security.................................................. 123
8.14 Failure to Consummate Acquisition.................................... 123
8.15 Termination or Breach of Certain Transition Agreements............... 124
8.16 Conduct of Business By Holdings and MBW LLC.......................... 124
8.17 Default Under Subordination Provisions............................... 124
SECTION 9.
AGENTS................................ 125
9.1 Appointment.......................................................... 125
9.2 Powers; General Immunity............................................. 127
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness..................................................... 128
9.4 Right to Indemnity................................................... 128
9.5 Successor Agents and Swing Line Lender............................... 129
(iii)
<PAGE>
Page
9.6 Collateral Documents................................................. 129
SECTION 10.
MISCELLANEOUS............................ 130
10.1 Assignments and Participations in Loans, Letters of Credit........... 130
10.2 Expenses............................................................. 133
10.3 Indemnity............................................................ 134
10.4 Set-Off; Security Interest in Deposit Accounts....................... 134
10.5 Ratable Sharing...................................................... 135
10.6 Amendments and Waivers............................................... 136
10.7 Independence of Covenants............................................ 137
10.8 Notices.............................................................. 138
10.9 Survival of Representations, Warranties and Agreements............... 138
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative................ 138
10.11 Marshalling; Payments Set Aside...................................... 138
10.12 Severability......................................................... 139
10.13 Obligations Several; Independent Nature of Lenders' Rights........... 139
10.14 Headings............................................................. 139
10.15 Applicable Law....................................................... 139
10.16 Successors and Assigns............................................... 140
10.17 Consent to Jurisdiction and Service of Process....................... 140
10.18 Waiver of Jury Trial................................................. 141
10.19 Confidentiality...................................................... 141
10.20 Counterparts; Effectiveness.......................................... 142
Signature pages...................................................... S-1
(iv)
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF TERM NOTE
V FORM OF REVOLVING NOTE
VI FORM OF SWING LINE NOTE
VII FORM OF SUBSIDIARY GUARANTY
VIII FORM OF HOLDINGS GUARANTY
IX FORM OF PLEDGE AGREEMENT
X FORM OF SECURITY AGREEMENT
XI FORM OF PATENT AND TRADEMARK SECURITY AGREEMENT
XII FORM OF COMPLIANCE CERTIFICATE
XIII FORM OF OPINIONS OF COUNSEL TO LOAN PARTIES
XIV FORM OF OPINION OF O'MELVENY & MYERS LLP
XV FORM OF ASSIGNMENT AGREEMENT
XVI FORM OF PERMITTED SELLER NOTE
XVII FORM OF CERTIFICATE RE NON-BANK STATUS
XVIII FORM OF COLLATERAL ACCOUNT AGREEMENT
XIX FORM OF COLLATERAL ACCESS AGREEMENT
(v)
<PAGE>
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES; LENDING
OFFICES
4.1C CORPORATE AND CAPITAL STRUCTURE; MANAGEMENT
5.1 SUBSIDIARIES OF HOLDINGS
5.5B OTHER NECESSARY INTELLECTUAL PROPERTY RIGHTS
5.8 MATERIAL CONTRACTS
7.6E STIPULATED CONSOLIDATED EBITDA AND CONSOLIDATED CAPITAL
EXPENDITURES
(vi)
<PAGE>
MBW FOODS INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of December 31, 1996 and entered into by
and among MBW FOODS INC. a Delaware corporation ("Company"), MBW HOLDINGS INC.,
a Delaware corporation ("Holdings"), THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each individually referred to herein as a "Lender" and
collectively as "Lenders"), THE CHASE MANHATTAN BANK, as administrative agent
for Lenders (in such capacity, "Administrative Agent"), and CHASE SECURITIES
INC., as arranging agent (in such capacity, "Arranging Agent").
R E C I T A L S
WHEREAS, Holdings and Company, its direct Wholly Owned Subsidiary
(capitalized terms used in these Recitals without definition shall have the
respective meanings assigned in subsection 1.1 hereof), have been formed by the
MDC Entities and Dartford for the purpose of acquiring certain assets of Seller
relating exclusively to the manufacture and sale of pancake syrup and pancake
and waffle mix marketed under the Mrs. Butterworth's and Country Crock brand
names, and assuming certain liabilities in connection therewith (such assets and
liabilities being collectively the "Business"), on the terms set forth in that
certain Asset Purchase Agreement dated as of December 18, 1996, by and between
Company and Seller;
WHEREAS, on or before the Closing Date, (i) the MDC Entities, Dartford,
Fenway and the Management Investors will purchase all of the membership
interests of MBW Investors LLC, a Delaware limited liability company ("MBW
LLC"), for aggregate cash consideration of not less than $33,800,000, (ii) MBW
LLC will contribute to Holdings, as common equity, the consideration received by
MBW LLC from such sale of the membership interests of MBW LLC, and (iii)
Holdings will contribute to Company, as common equity, the consideration
received by Holdings from such equity contribution by MBW LLC;
WHEREAS, on or before the Closing Date, Company will borrow not less than
$50,000,000 in aggregate principal amount of Subordinated Bridge Loans;
WHEREAS, Company desires that Lenders extend certain credit facilities to
Company in an aggregate principal amount of $60,000,000 which, together with the
proceeds of the Subordinated Bridge Loans and the contribution by Holdings of
not less than $33,800,000 in equity to Company, will be used (i) to finance the
purchase price for the Business payable in connection with the Acquisition, (ii)
to pay Transaction Costs and (iii) to provide financing for
<PAGE>
working capital and other general corporate purposes (including acquisitions) of
Company and its Subsidiaries;
WHEREAS, Holdings desires to guaranty, and Company desires that all of its
future Subsidiaries guaranty, all of the obligations of Company with respect to
the credit facilities provided by Lenders;
WHEREAS, Company desires to secure all of the Obligations and desires that
all of its future Subsidiaries secure their respective obligations under the
Subsidiary Guaranty, and Holdings desires to secure its obligations under its
Guaranty, by granting to Administrative Agent, for the benefit of Agents and
Lenders, (i) a first priority Lien on substantially all of their respective real
and personal property and (ii) a first priority pledge of all of the capital
stock of their respective direct Subsidiaries;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Holdings, Lenders and Agents
agree as follows:
SECTION 1.
DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the following
meanings:
"Acquisition" means the transactions contemplated by the Acquisition
Agreement.
"Acquisition Agreement" means that certain Asset Purchase Agreement
dated as of December 18, 1996, by and between Company and Seller, as in
effect on the Closing Date and as such agreement may thereafter be
amended, restated, supplemented or otherwise modified from time to time to
the extent permitted under subsection 7.12A.
"Acquisition Revolving Loans" has the meaning assigned to that term
in subsection 2.5A.
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date, the rate per annum obtained by dividing (i) the London
Interbank offered rate for deposits in U.S. Dollars for maturities
comparable to the Interest Period for which such Adjusted Eurodollar Rate
will apply as of approximately 11:00 A.M. (London time) on such Interest
Rate Determination Date as set forth on Telerate Page 3750 by (ii) a
percentage equal to 100% minus the stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the
<PAGE>
Federal Reserve System in respect of "Eurocurrency liabilities" as defined
in Regulation D (or any successor category of liabilities under Regulation
D).
"Administrative Agent" means Chase, in its capacity as
Administrative Agent, and any successor to Chase in such capacity
appointed pursuant to subsection 9.5A.
"Affected Lender" has the meaning assigned to that term in
subsection 2.6C.
"Affected Loans" has the meaning assigned to that term in subsection
2.6C.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or by contract
or otherwise.
"Agent" means, individually, each of Administrative Agent and
Arranging Agent, and "Agents" means Administrative Agent and Arranging
Agent, collectively.
"Aggregate Amounts Due" has the meaning assigned to that term in
subsection 10.5.
"Agreement" means this Credit Agreement dated as of December 31,
1996, as it may be amended, restated, supplemented or otherwise modified
from time to time.
"Anniversary" means each of the dates that are anniversaries of the
Closing Date.
"Applicable Base Rate Margin" means (i) with respect to the Term
Loans, 1.75% per annum, and (ii) with respect to the Revolving Loans,
1.25% per annum.
"Applicable Eurodollar Rate Margin" means (i) with respect to the
Term Loans, 3.00% per annum, and (ii) with respect to the Revolving Loans,
2.50% per annum.
"Applied Amount" has the meaning assigned to that term in subsection
2.4C(ii).
"Arranging Agent" has the meaning assigned to that term in the
introduction to this Agreement.
"Asset Sale" means the sale (including in any sale-leaseback
transaction) by Company or any of its Subsidiaries to any Person (other
than Company or any of its
<PAGE>
Wholly Owned Subsidiaries) of (i) any of the stock of any of Company's
Subsidiaries, (ii) all or substantially all of the assets of any division
or line of business of Company or any of its Subsidiaries, or (iii) any
other assets other than sales of assets (including without limitation
inventory) in the ordinary course of business and sales of obsolete
equipment, excluding any such other assets to the extent that the
aggregate value of such assets sold in any single transaction or
transactions is equal to $2,000,000 or less in any one Fiscal Year.
"Assignment Agreement" means an assignment agreement in
substantially the form of Exhibit XV annexed hereto or in such other form
as may be approved by Administrative Agent.
"Assumption Agreement" means that certain Assignment and Assumption
Agreement dated as of December 31, 1996, by and between Seller and
Company, as in effect on the Closing Date and as such agreement may
thereafter be amended, restated, supplemented or otherwise modified from
time to time to the extent permitted under subsection 7.12A.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Rate" means, at any time, the higher of (x) the Prime Rate or
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
"Base Rate Loans" means Loans bearing interest at rates determined
by reference to the Base Rate as provided in subsection 2.2A.
"Business" has the meaning assigned to that term in the Recitals to
this Agreement.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or
required by law or other governmental action to close, and (ii) with
respect to all notices, determinations, fundings, issuances and payments
in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate
Loans, any day that is a Business Day described in clause (i) above and
that is also (a) a day for trading by and between banks in Dollar deposits
in the London interbank market and (b) a day on which banking institutions
are open for business in London.
"Capital Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of that Person.
<PAGE>
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" means (i) marketable securities issued or
directly and 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 thereof; (ii) marketable direct obligations issued by any
state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of acquisition,
having the highest rating obtainable from either Standard & Poor's Rating
Service ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii)
commercial paper maturing no more than one year from the date of creation
thereof and, at the time of acquisition, having a rating of at least A-1
from S&P or at least P-1 from Moody's; (iv) certificates of deposit or
bankers' acceptances maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having a rating of at least A-1
from S&P or at least P-1 from Moody's, issued by any Lender or any
commercial bank organized under the laws of the United States of America
or any state thereof or the District of Columbia having unimpaired capital
and surplus of not less than $250,000,000 (each Lender and each such
commercial bank being herein called a "Cash Equivalent Bank"); and (v)
Eurodollar time deposits having a maturity of less than one year purchased
directly from any Cash Equivalent Bank (provided such deposit is with such
Cash Equivalent Bank or any other Cash Equivalent Bank).
"Cash Proceeds" means, with respect to any Asset Sale, Cash payments
(including any Cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise, but only as and when so
received) received by Company or any of its Subsidiaries from such Asset
Sale.
"Certificate re Non-Bank Status" means a certificate substantially
in the form of Exhibit XVII annexed hereto delivered by a Lender to
Administrative Agent pursuant to subsection 2.7B(iii).
"Chase" means The Chase Manhattan Bank and its successors,
including, without limitation, its successors by merger.
"Closing Date" means the date on or before December 31, 1996 on
which the initial Loans are made.
"Collateral" means all of the properties and assets (including
capital stock) in which Liens are purported to be granted by the
Collateral Documents.
"Collateral Access Agreement" means any landlord waiver, mortgagee
waiver, bailee letter or any similar acknowledgement or agreement of any
landlord or mortgagee in respect of any Real Property Asset where any
Collateral is located or any warehouse-
<PAGE>
man or processor in possession of any Inventory of any Loan Party,
substantially in the form of Exhibit XIX annexed hereto with such changes
thereto as may be agreed to by Administrative Agent in the reasonable
exercise of its discretion.
"Collateral Account" has the meaning assigned to that term in the
Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral Account
Agreement executed and delivered by Company and Administrative Agent on
the Closing Date, substantially in the form of Exhibit XVIII annexed
hereto, pursuant to which Company may pledge cash to Administrative Agent
to secure the obligations of Company to reimburse Issuing Lenders for
payments made under one or more Letters of Credit as such Collateral
Account Agreement may hereafter be amended, restated, supplemented or
otherwise modified from time to time.
"Collateral Documents" means the Pledge Agreement, the Security
Agreement, the Patent and Trademark Security Agreement, the Collateral
Account Agreement, the Mortgages and any other documents, instruments or
agreements delivered by any Loan Party pursuant to this Agreement or any
of the other Loan Documents in order to grant or perfect liens on any
assets of such Loan Party as security for the Obligations.
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment
mechanism in connection with the purchase of any materials, goods or
services by Company or any of its Subsidiaries in the ordinary course of
business of Company or such Subsidiary.
"Commitments" means the commitments of Lenders to make Loans as set
forth in subsection 2.1A.
"Company" has the meaning assigned to that term in the introduction
to this Agreement.
"Company Common Stock" means the common stock of Company, par value
$0.01 per share.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit XII annexed hereto delivered to Administrative Agent by
Company pursuant to subsection 6.1(iv).
"Condemnation Proceeds" has the meaning assigned to that term in
subsection 2.4B(iii)(d).
"Conforming Leasehold Interest" means any Recorded Leasehold
Interest as to which the lessor has agreed in writing for the benefit of
Administrative Agent (which
<PAGE>
writing has been delivered to Administrative Agent), whether under the
terms of the applicable lease, under the terms of a Landlord Consent and
Estoppel, or otherwise, to the matters described in the definition of
"Landlord Consent and Estoppel," which interest, if a subleasehold or
sub-subleasehold interest, is not subject to any contrary restrictions
contained in a superior lease or sublease.
"Consolidated Capital Expenditures" means, for any period, the
aggregate amount paid or accrued by Holdings and its Subsidiaries for the
rental, lease, purchase (including by way of the acquisition of Securities
of a Person), construction or use of any property during such period, the
value or cost of which, in conformity with GAAP, would appear on the
consolidated balance sheet of Holdings and its Subsidiaries in the
category of "purchases of property, plant or equipment" at the end of such
period, excluding any such expenditure made to restore, replace or rebuild
property to the condition of such property immediately prior to any
damage, loss, destruction or condemnation of such property, to the extent
such expenditure is made with insurance proceeds or condemnation awards
relating to any such damage, loss, destruction or condemnation; provided,
however, that Consolidated Capital Expenditures shall not include
expenditures up to an aggregate amount equal to the portion of the
purchase price for any Permitted Acquisition made pursuant to subsection
7.7(vii) that would otherwise be treated as a Consolidated Capital
Expenditure.
"Consolidated Cash Interest Coverage Ratio" means, for any period,
the ratio of (i) Consolidated EBITDA for such period to (ii) Consolidated
Cash Interest Expense for such period.
"Consolidated Cash Interest Expense" means, for any period,
Consolidated Interest Expense payable in cash during such period.
"Consolidated Current Assets" means, as at any date of
determination, the total assets of Holdings and its Subsidiaries on a
consolidated basis which may properly be classified as current assets in
conformity with GAAP, excluding Cash and Cash Equivalents.
"Consolidated Current Liabilities" means, as at any date of
determination, the total liabilities of Holdings and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities
in conformity with GAAP.
"Consolidated EBITDA" means, for any period, (i) the sum of the
amounts for such period of (a) Consolidated Net Income, plus (b) to the
extent deducted in determining such Consolidated Net Income, (1)
Consolidated Interest Expense, (2) depreciation, (3) depletion, (4)
amortization, (5) all Federal, state, local and foreign income taxes, (6)
transaction fees paid to the MDC Entities and/or Dartford and/or Fenway in
connection with acquisitions made after the Closing Date, so long as such
transaction fees are paid in accordance with the terms of the MDC Advisory
Services
<PAGE>
Agreement, the Dartford Management Agreement and the Fenway Agreement, (7)
non-recurring charges incurred prior to June 30, 1998 with respect to (A)
relocation of Company's assets, (B) the purchase of computers and
computer-related equipment and (C) transition related expenses in
connection with the foregoing, but only to the extent that such
non-recurring charges, together with all expenditures excluded from
Consolidated Capital Expenditures under clause (iii) of the definition of
Consolidated Fixed Charges, do not exceed $3,000,000 in the aggregate, (8)
all other non-cash items reducing Consolidated Net Income and (9) any
extraordinary and unusual losses, minus (ii) the sum of the amounts for
such period of (a) all other non-cash items increasing Consolidated Net
Income, plus (b) any extraordinary and unusual gains, all of the foregoing
as determined on a consolidated basis for Holdings and its Subsidiaries in
conformity with GAAP.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for
such period of (a) Consolidated EBITDA, (b) to the extent deducted from
Consolidated EBITDA by virtue of clause (ii)(b) of the definition thereof,
extraordinary and unusual cash gains, and (c) the Consolidated Working
Capital Adjustment minus (ii) the sum, without duplication, of the amounts
for such period of (a) voluntary and scheduled cash repayments of
Consolidated Total Debt (excluding repayments of Revolving Loans except to
the extent the Revolving Loan Commitments are permanently reduced in
connection with such repayments), (b) Consolidated Capital Expenditures
(net of any proceeds of any related financings with respect to such
expenditures), (c) expenditures made in connection with any Permitted
Acquisition pursuant to subsection 7.7(vii) (net of any proceeds of any
related financings with respect to such acquisitions), including without
limitation transaction fees paid in cash to the MDC Entities and/or
Dartford and/or Fenway in connection with such acquisitions, so long as
such transaction fees are paid in accordance with the terms of the MDC
Advisory Services Agreement, the Dartford Management Agreement and the
Fenway Agreement, (d) Consolidated Interest Expense, (e) to the extent
added back to Consolidated EBITDA by virtue of clause (i)(b)(9) of the
definition thereof, extraordinary and unusual cash losses, (f) to the
extent added back to Consolidated EBITDA by virtue of clause (i)(b)(7) of
the definition thereof, non-recurring charges paid in cash incurred prior
to June 30, 1998, and (g) the provision for current taxes based on income
of Holdings and its Subsidiaries and payable in cash with respect to such
period.
"Consolidated Fixed Charges" means, for any period, an amount equal
to the sum of the amounts for such period of (i) scheduled amortization of
Indebtedness of Holdings and its Subsidiaries (as reduced by prepayments
previously made), and discount or premium relating to any such
Indebtedness for such period, whether expensed or capitalized, (ii)
Consolidated Cash Interest Expense, (iii) Consolidated Capital
Expenditures (excluding expenditures which would otherwise be included in
Consolidated Capital Expenditures incurred prior to June 30, 1998 with
respect to (a) relocation of Company's assets, (b) the purchase of
computers and computer-related equipment and (c) transition
<PAGE>
related expenses in connection with the foregoing, but only to the extent
that such expenditures, together with all non-recurring charges added back
to Consolidated EBITDA by virtue of clause (i)(b)(7) of the definition
thereof, do not exceed $3,000,000 in the aggregate), and (iv) taxes
actually paid in cash by Holdings or any of its Subsidiaries.
"Consolidated Interest Expense" means, for any period, the net
interest expense of Holdings and its Subsidiaries for such period (net of
any interest income of Holdings and its Subsidiaries during such period)
as determined on a consolidated basis in conformity with GAAP.
"Consolidated Net Income" means, for any period, the net income (or
loss) of Holdings and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded (i) the income (or loss) of
any Person in which any other Person (other than Holdings or any of the
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid in cash to Holdings or any
of its Subsidiaries by such Person during such period and (ii) the income
(or loss) of any Person accrued prior to the date it becomes a Subsidiary
of Company or is merged into or consolidated with Company or any of its
Subsidiaries or the date such Person's assets are acquired by Company any
of its Subsidiaries.
"Consolidated Total Debt" means, as at any date of determination,
all outstanding Indebtedness of Holdings and its Subsidiaries as
determined on a consolidated basis in conformity with GAAP.
"Consolidated Working Capital" means, as at any date of
determination, the excess of Consolidated Current Assets over Consolidated
Current Liabilities.
"Consolidated Working Capital Adjustment" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds
(or is less than) Consolidated Working Capital as of the end of such
period.
"Contingent Obligation" means, as applied to any Person, any direct
or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of
another if the primary purpose or intent thereof by the Person incurring
the Contingent Obligation is to provide assurance to the obligee of such
obligation of another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be complied with,
or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof, (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings, or (iii) under Interest
Rate Agreements. Contingent Obligations shall include, without limitation,
(a) the direct or
<PAGE>
indirect guaranty, endorsement (otherwise than for collection or deposit
in the ordinary course of business), co-making, discounting with recourse
or sale with recourse by such Person of the obligation of another, (b) the
obligation to make take-or-pay or similar payments if required regardless
of non-performance by any other party or parties to an agreement, and (c)
any liability of such Person for the obligation of another through any
agreement (contingent or otherwise) (x) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form
of loans, advances, stock purchases, capital contributions or otherwise)
or (y) to maintain the solvency or any balance sheet item, level of income
or financial condition of another if, in the case of any agreement
described under subclauses (x) or (y) of this sentence, the primary
purpose or intent thereof is as described in the preceding sentence. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if less, the amount to
which such Contingent Obligation is specifically limited.
"Continuing Director" shall mean, as of any date of determination,
any member of the Board of Directors of Company who (i) was a member of
such Board of Directors on the Closing Date or (ii) was nominated for
election or elected to such Board of Directors with the affirmative vote
of the MDC Entities and/or Dartford and/or Fenway.
"Contractual Obligation" means, as applied to any Person, any
provision of any Security issued by that Person or of any material
indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is
subject.
"Co-Pack Agreement" means that certain Co-Pack Agreement dated as of
December 31, 1996, by and between Seller and Company, as in effect on the
Closing Date and as such agreement may thereafter be amended, restated,
supplemented or otherwise modified from time to time to the extent
permitted under subsection 7.12A.
"CSI" means Chase Securities Inc. and its successors and assigns,
including, without limitation, its successors by merger.
"Dartford Management Agreement" means that certain Management
Services Agreement dated as of December 31, 1996, by and between Company
and Dartford, as in effect on the Closing Date and as such agreement may
thereafter be amended, restated, supplemented or otherwise modified from
time to time to the extent permitted under subsection 7.12A.
"Dartford" means Dartford Partnership L.L.C., a limited liability
company organized under the laws of the State of Delaware.
<PAGE>
"Defaulting Lender" means any Lender with respect to which a Lender
Default is in effect.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate
of deposit.
"Dollars" and the sign "$" mean the lawful money of the United
States of America.
"Eligible Assignee" means (i) (a) a commercial bank organized under
the laws of the United States or any state thereof; (b) a commercial bank
organized under the laws of any other country or a political subdivision
thereof; provided that (x) such bank is acting through a branch or agency
located in the United States or (y) such bank is organized under the laws
of a country that is a member of the Organization for Economic Cooperation
and Development or a political subdivision of such country; (c) any other
entity which is an "accredited investor" (as defined in Regulation D under
the Securities Act) which extends credit or buys loans as one of its
businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies; and (d) any other financial
institution or fund (whether a corporation, partnership, trust or other
entity) that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and has combined
capital and surplus or net assets of at least $100,000,000, in each case
(under clauses (a) through (d) above) that is reasonably acceptable to
Administrative Agent; and (ii) any Lender and any Affiliate of any Lender;
provided that no Affiliate of Company shall be an Eligible Assignee.
"Employee Benefit Plan" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is subject to ERISA and which is maintained
or contributed to by Company or any of its ERISA Affiliates.
"Employment Agreements" means, collectively, (i) that certain
Employment Agreement dated as of December 31, 1996, by and between Company
and Thomas Ferraro, and (ii) that certain Employment Agreement dated as of
December 31, 1996, by and between Company and Gary Willett.
"Environmental Claim" means any written accusation, allegation,
notice of violation, claim, demand, abatement order or other order or
direction (conditional or otherwise) by any governmental authority or any
Person for any damage, including, without limitation, personal injury
(including sickness, disease or death), tangible or intangible property
damage, contribution, indemnity, indirect or consequential damages, damage
to the environment, nuisance, pollution, contamination or other adverse
effects on the environment, or for fines, penalties or restrictions, in
each case relating to, resulting from or in connection with Hazardous
Materials and relating to Company, any
<PAGE>
of its Subsidiaries, any of their respective Affiliates that are directly
or indirectly controlled by Company, or any Facility.
"Environmental Laws" means all laws, statutes, ordinances, orders,
rules, regulations, plans, policies or decrees and the like relating to
(i) environmental matters, including, without limitation, those relating
to fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the Release or threatened
Release of Hazardous Materials, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational
safety and health, public health and safety, industrial hygiene or
protection of wetlands, in any manner applicable to Company or any of its
Subsidiaries or any of their respective properties, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. ss. 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water Pollution
Control Act ( 33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C.
ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et
seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
ss.136 et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651
et seq.) and the Emergency Planning and Community Right-to-Know Act (42
U.S.C. ss. 11001 et seq.), each as amended or supplemented, and any
analogous future or present local, state and federal statutes and
regulations promulgated pursuant thereto, each as in effect as of the date
of determination.
"Equity Proceeds" means the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith)
from the issuance of any equity Securities of Holdings or Company after
the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA Affiliate" means, as applied to any Person, (i) any
corporation which is a member of a controlled group of corporations within
the meaning of Section 414(b) of the Internal Revenue Code of which that
Person is a member; (ii) any trade or business (whether or not
incorporated) which is a member of a group of trades or businesses under
common control within the meaning of Section 414(c) of the Internal
Revenue Code of which that Person is a member; and (iii) solely for
purposes of obligations under Section 412 of the Internal Revenue Code or
under the applicable sections set forth in Section 414(t)(2) of the
Internal Revenue Code, any member of an affiliated service group within
the meaning of Section 414(m) or (o) of the Internal Revenue Code of which
that Person, any corporation described in clause (i) above or any trade or
business described in clause (ii) above is a member.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043(c) of ERISA and the regulations issued thereunder with
respect to any Pension Plan
<PAGE>
(excluding those for which the provision for 30-day notice to the PBGC has
been waived by regulation or with respect to which no penalty will be
assessed by the PBGC for failure to satisfy such notice requirements);
(ii) the failure to meet the minimum funding standard of Section 412 of
the Internal Revenue Code with respect to any Pension Plan (whether or not
waived in accordance with Section 412(d) of the Internal Revenue Code) or
the failure to make by its due date a required installment under Section
412(m) of the Internal Revenue Code with respect to any Pension Plan or
the failure to make any required contribution to a Multiemployer Plan;
(iii) the provision by the administrator of any Pension Plan pursuant to
Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan
in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company or any of its ERISA Affiliates from any Pension Plan
with two or more contributing sponsors or the termination of any such
Pension Plan resulting, in either case, in liability pursuant to Section
4063 or 4064 of ERISA, respectively; (v) the institution by the PBGC of
proceedings to terminate any Pension Plan pursuant to Section 4042 of
ERISA; (vi) the imposition of liability on Company or any of its ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal by
Company or any of its ERISA Affiliates in a complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any
Multiemployer Plan resulting in withdrawal liability pursuant to Section
4201 of ERISA, or the receipt by Company or any of its ERISA Affiliates of
written notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends
to terminate or has terminated under Section 4042 of ERISA or under
Section 4041A of ERISA if such termination would result in liability to
Company or any of its ERISA Affiliates; (viii) the imposition on Company
or any of its ERISA Affiliates of fines, penalties or taxes under Chapter
43 of the Internal Revenue Code or under Section 409 or 502(c), (i) or (l)
or 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the failure
of any Pension Plan (or any other Employee Benefit Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code) to qualify
under Section 401(a) of the Internal Revenue Code, or the failure of any
trust forming part of any Pension Plan to qualify for exemption from
taxation under Section 501(a) of the Internal Revenue Code; or (x) the
imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension
Plan.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Event of Default" means each of the events set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon)
now, hereafter or heretofore
<PAGE>
owned, leased, operated or used by Company or any of its Subsidiaries (but
only as to portions of buildings actually leased or used) or any of their
respective predecessors or any of their respective Affiliates that are
directly or indirectly controlled by Company.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by
Administrative Agent from three Federal funds brokers of recognized
standing selected by Administrative Agent.
"Fenway" means Fenway Partners Capital Fund, L.P., a Delaware
limited partnership.
"Fenway Agreement" means that certain Advisory Agreement dated as of
December 31, 1996, by and between Company and Fenway, as in effect on the
Closing Date and as such agreement may thereafter be amended, restated,
supplemented or otherwise modified from time to time to the extent
permitted under subsection 7.12A.
"FFDC Act" means the Federal Food, Drug and Cosmetic Act, as amended
from time to time, and any successor statute.
"First Priority" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that (i)
such Lien has priority over any other Lien on such Collateral and (ii)
such Lien is the only Lien (other than Permitted Encumbrances and Liens
permitted pursuant to subsection 7.2A) to which such Collateral is
subject.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of Holdings and its Subsidiaries
ending on the last Saturday in December of each calendar year.
"Fixed Charge Component" has the meaning assigned to that term in
subsection 7.6E(i).
"Flavor Supply Agreement" means that certain Flavor Supply Agreement
dated as of December 31, 1996, by and between Company and Quest, as in
effect on the Closing Date and as such agreement may thereafter be
amended, restated, supplemented or otherwise modified from time to time to
the extent permitted under subsection 7.12A.
<PAGE>
"Flood Hazard Property" means a Mortgaged Property located in an
area designated by the Federal Emergency Management Agency as having
special flood or mud slide hazards.
"Funding and Payment Office" means the office of Administrative
Agent and Swing Line Lender located at One Chase Manhattan Plaza, 8th
Floor, New York, New York 10081 or such offices of Administrative Agent or
any successor Administrative Agent specified by Administrative Agent or
such successor Administrative Agent in a written notice to Loan Parties
and Lenders).
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set
forth in 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 may be approved by a significant
segment of the accounting profession, in each case as the same are
applicable to the circumstances as of the date of determination and
specifically, terms used herein applicable to Company and its Subsidiaries
defined by reference to GAAP shall give effect to the subtraction of
minority interests.
"Governmental Acts" has the meaning assigned to that term in
subsection 3.5.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from
any federal, state or local governmental authority, agency or court.
"Guaranty" means, individually, each of the Holdings Guaranty, the
Subsidiary Guaranty and any other guaranty of the Obligations, and
"Guaranties" means the Holdings Guaranty, the Subsidiary Guaranty and each
other guaranty of the Obligations, collectively.
"Guarantors" means Holdings and the Subsidiary Guarantors.
"Hazardous Materials" means (i) any chemical, material or substance
defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic substances" or
any other formulations intended to define, list or classify substances by
reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under any applicable
Environmental Laws; (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters
and other wastes associated with the exploration, development
<PAGE>
or production of crude oil, natural gas or geothermal resources; (iv) any
flammable substances or explosives; (v) any radioactive materials; (vi)
asbestos in any form; (vii) urea formaldehyde foam insulation; (viii)
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million;
(ix) pesticides; and (x) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority.
"Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous
Materials, including the use, manufacture, possession, storage, holding,
presence, existence, location, Release, threatened Release, discharge,
placement, generation, transportation, processing, construction,
treatment, abatement, removal, remediation, disposal, disposition or
handling of any Hazardous Materials, and any corrective action or response
action with respect to any of the foregoing.
"Holdings" has the meaning assigned to that term in the introduction
to this Agreement.
"Holdings Common Stock" means the common stock of Holdings, par
value $0.01 per share.
"Holdings Guaranty" means the Holdings Guaranty executed and
delivered by Holdings on the Closing Date, substantially in the form of
Exhibit VIII annexed hereto, as such Holdings Guaranty may thereafter be
amended, restated, supplemented or otherwise modified from time to time.
"Immaterial Subsidiaries" means, with respect to any Person, any
Subsidiary or Subsidiaries of such Person the assets of which constitute,
individually or in the aggregate, less than 5% of the total assets of such
Person and its Subsidiaries.
"Indebtedness" means, as applied to any Person, (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to
Capital Leases that is properly classified as a liability on a balance
sheet in conformity with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations
for borrowed money (other than accounts payable incurred in the ordinary
course of business and accrued expenses incurred in the ordinary course of
business), (iv) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding any such obligations
incurred under ERISA), which purchase price is (a) due more than six
months from the date of incurrence of the obligation in respect thereof or
(b) evidenced by a note or similar written instrument, and (v) all
indebtedness secured by any Lien on any property or asset owned or held by
that Person regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is nonrecourse to the credit of that
Person. Obligations under Interest Rate Agreements constitute Contingent
Obligations and not Indebtedness.
<PAGE>
"Indemnified Liabilities" has the meaning assigned to that term in
subsection 10.3.
"Indemnitee" has the meaning assigned to that term in subsection
10.3.
"Initial Period" means the period commencing on and including the
Closing Date and ending on (but excluding) the earlier of (i) 60 days
after the Closing Date and (ii) the date on which Arranging Agent notifies
Company that it has concluded its primary syndication of the Loans and the
Commitments.
"Insurance Proceeds" has the meaning assigned to that term in
subsection 2.4B(iii)(d).
"Intellectual Property" has the meaning assigned to that term in
subsection 5.5B.
"Interest Payment Date" means (i) with respect to any Base Rate
Loan, each March 15, June 15, September 15 and December 15 of each year,
commencing on March 15, 1997 and (ii) with respect to any Eurodollar Rate
Loan, the last day of each Interest Period applicable to such Loan;
provided that in the case of each Interest Period of longer than three
months, "Interest Payment Date" shall also include the date that is three
months after the commencement of such Interest Period.
"Interest Period" has the meaning assigned to that term in
subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to hedge Company or any of its
Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" means each date for calculating
the Adjusted Eurodollar Rate, for purposes of determining the interest
rate in respect of an Interest Period. The Interest Rate Determination
Date in respect of calculating the Adjusted Eurodollar Rate shall be the
second Business Day prior to the first day of the related Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Inventory" means, with respect to any Person as of any date of
determination, all goods, merchandise and other personal property which
are then held by such Person for sale or lease, including raw materials
and work in process.
<PAGE>
"Investment" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, stock or other Securities of any other Person (other than a
Person that, prior to such purchase or acquisition, was a Wholly Owned
Subsidiary of Company), or (ii) any direct or indirect loan, advance
(other than advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course
of business) or capital contribution by Company or any of its Subsidiaries
to any other Person other than a Wholly Owned Subsidiary of Company,
including all indebtedness and accounts receivable acquired from that
other Person that are not current assets or did not arise from sales to
that other Person in the ordinary course of business; provided, however,
that the term "Investment" shall not include (a) current trade and
customer accounts receivable for goods furnished or services rendered in
the ordinary course of business and payable in accordance with customary
trade terms, (b) advances and prepayments to suppliers for goods and
services in the ordinary course of business, (c) stock or other securities
acquired in connection with the satisfaction or enforcement of
Indebtedness or claims due or owing to Company or any of its Subsidiaries
or as security for any such Indebtedness or claims, (d) Cash held in
Deposit Accounts with banks and trust companies (other than Lenders) not
exceeding $2,000,000 in aggregate amount, (e) Cash held in any Deposit
Account with a Lender and (f) shares in a mutual fund that invests solely
in Cash Equivalents. The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto, without
any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"IP Collateral" means the Collateral under the Patent and Trademark
Security Agreement.
"Issuing Lender" means, with respect to any Letter of Credit, the
Lender which agrees or is otherwise obligated to issue such Letter of
Credit, determined as provided in subsection 3.1B(ii).
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
"Landlord Consent and Estoppel" means, with respect to any Leasehold
Property, a letter, certificate or other instrument in writing from the
lessor under the related lease, satisfactory in form and substance to
Administrative Agent, pursuant to which such lessor agrees, for the
benefit of Administrative Agent, (i) that without any further consent of
such lessor or any further action on the part of the Loan Party holding
such Leasehold Property, such Leasehold Property may be encumbered
pursuant to a Mortgage and may be assigned to the purchaser at a
foreclosure sale or in a transfer in lieu of such a sale (and to a
subsequent third party assignee if Administrative Agent, any
<PAGE>
Lender, or an Affiliate of either so acquires such Leasehold Property),
(ii) that such lessor shall not terminate such lease as a result of a
default by such Loan Party thereunder without first giving Administrative
Agent notice of such default and at least 30 days (or, if such default
cannot reasonably be cured by Administrative Agent within such period,
such longer period as may reasonably be required) to cure such default,
(iii) to the matters contained in a Collateral Access Agreement, and (iv)
to such other matters relating to such Leasehold Property as
Administrative Agent may reasonably request.
"Leasehold Property" means any leasehold interest of any Loan Party
as lessee under any lease of real property, other than any such leasehold
interest designated from time to time by Administrative Agent in its sole
discretion as not being required to be included in the Collateral.
"Lender" and "Lenders" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their
successors and permitted assigns pursuant to subsection 10.1, and the term
"Lenders" shall include Swing Line Lender unless the context otherwise
requires, provided that the term "Lenders", when used in the context of a
particular Commitment, shall mean Lenders having that Commitment.
"Lender Default" shall mean (i) the refusal (which has not been
retracted) of a Lender to make available its portion of any Loans
(including any Revolving Loans made to pay Refunded Swing Line Loans or to
reimburse drawings under Letters of Credit) in accordance with subsection
2.1A(iii) or its portion of any unreimbursed drawing or payment under a
Letter of Credit in accordance with subsection 3.3C or (ii) a Lender
having notified Company and/or Administrative Agent in writing that it
does not intend to comply with its obligations under subsection 2.1 or
subsections 3.1C, 3.3B or 3.3C.
"Lending Office" means, as to any Lender, the office or offices of
such Lender specified as the "Lending Office" on Schedule 2.1, or such
other office or offices as such Lender may from time to time notify
Company and Administrative Agent.
"Letter of Credit" or "Letters of Credit" means Commercial Letters
of Credit and Standby Letters of Credit issued or to be issued by Issuing
Lenders for the account of Company pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter
may become available for drawing under all Letters of Credit then
outstanding (whether or not the conditions to drawing thereunder have been
met) plus (ii) the aggregate amount of all drawings under Letters of
Credit honored by Issuing Lenders and not theretofore reimbursed by
Company (including any such reimbursement out of the proceeds of Revolving
Loans pursuant to subsection 3.3B).
<PAGE>
"Leverage Ratio" means, as of any date of determination, the ratio
of Consolidated Total Debt, as of the date of determination, to
Consolidated EBITDA, for the twelve-month period ending on the date of
determination, in each case calculated for Company and its Subsidiaries on
a consolidated basis in accordance with GAAP.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, fixed or floating charge or encumbrance of any kind (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" or "Loans" means, as the context requires, one or more of the
Term Loans, Revolving Loans and Swing Line Loans or any combination
thereof.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit (and any applications for, or reimbursement agreements or other
documents or certificates executed by Company in favor of an Issuing
Lender relating to, the Letters of Credit), the Holdings Guaranty, the
Subsidiary Guaranty, the Collateral Documents and any Interest Rate
Agreement entered into by Company with a Lender or an Affiliate of any
Lender.
"Loan Party" means, individually, each of Holdings, Company and any
Subsidiary Guarantors, and "Loan Parties" means Holdings, Company and each
Subsidiary Guarantor, collectively.
"Management Fees" means the fees payable by Company pursuant to the
MDC Advisory Services Agreement, the Dartford Management Agreement and the
Fenway
Agreement.
"Management Investors" shall mean such Persons other than the MDC
Entities, Dartford and Fenway as shall hold membership interests in MBW
LLC on or prior to the Closing Date, which Persons shall be reasonably
acceptable to Administrative Agent and Lenders.
"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from
time to time.
"Material Contract" means any of the Employment Agreements or any
other contract or other arrangement to which Holdings or any of its
Subsidiaries is a party (other than the Loan Documents) for which breach,
nonperformance, cancellation or failure to renew could have a Material
Adverse Effect.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, operations, properties, assets, condition (financial or
otherwise) or prospects
<PAGE>
of Company and its Subsidiaries, taken as a whole, (ii) the material
impairment of the ability of any Loan Party to perform the Obligations and
(iii) a material adverse effect upon the legality, validity, binding
effect or enforceability against a Loan Party of a Loan Document to which
it is a party; provided that Company's consummation of the Acquisition in
accordance with the terms of the Acquisition Agreement shall not be deemed
to have a Material Adverse Effect for purposes of subsection 5.4.
"Maximum Consolidated Capital Expenditures Amount" has the meaning
assigned to that term in subsection 7.6D.
"MBW LLC" has the meaning assigned to that term in the Recitals to
this Agreement.
"MBW LLC Agreement" means that certain Amended and Restated Limited
Liability Company Agreement dated as of December 31, 1996, by and among
the MDC Entities, Dartford, Fenway and the Management Investors, as such
agreement may be amended, restated, supplemented or otherwise modified
from time to time.
"MDC Advisory Services Agreement" means that certain Advisory
Services Agreement dated as of December 31, 1996, by and between Company
and MDC Management Company III, L.P., as in effect on the Closing Date and
as such agreement may thereafter be amended, restated, supplemented or
otherwise modified from time to time to the extent permitted under
subsection 7.12A.
"MDC Entities" means McCown De Leeuw & Co. III, L.P., a California
limited partnership, McCown De Leeuw & Co. Offshore (Europe) III, L.P., a
Bermuda limited partnership, McCown De Leeuw & Co. III (Asia), L.P., a
Bermuda limited partnership and Gamma Fund LLC, a California limited
liability company.
"Mortgage" means any mortgage or legal charge (whether designated as
a deed of trust or a mortgage or by any similar title) granted by Company
or any of its Subsidiaries (or, at Administrative Agent's option, an
amendment to an existing Mortgage, in form satisfactory to Administrative
Agent, adding such Mortgaged Property to the Real Property Assets
encumbered by an existing Mortgage) in any Real Property Asset to secure
the Obligations, as such mortgage or legal charge may be amended,
restated, supplemented or otherwise modified from time to time, and
"Mortgages" means all such instruments collectively.
"Mortgaged Property" has the meaning assigned to that term in
subsection 6.10B.
"Mortgage Policy" has the meaning assigned to that term in
subsection 6.10B(iv).
<PAGE>
"Multiemployer Plan" means a "multiemployer plan", as defined in
Section 4001(a)(3) of ERISA which is subject to Title IV of ERISA, to
which Company or any of its ERISA Affiliates is contributing or to which
Company or any of its ERISA Affiliates has an obligation to contribute.
"Net Cash Proceeds" means, with respect to any Asset Sale, Cash
Proceeds of such Asset Sale net of bona fide direct costs of sale
including, without limitation, (i) income taxes reasonably estimated to be
actually payable as a result of such Asset Sale within one year of the
date of receipt of such Cash Proceeds, (ii) transfer, sales, use and other
taxes payable in connection with such Asset Sale, (iii) payment of the
outstanding principal amount of, premium or penalty, if any, and interest
on any Indebtedness (other than the Loans) that is secured by a Lien on
the stock or assets in question and that is required to be repaid under
the terms thereof as a result of such Asset Sale, and (iv) broker's
commissions and reasonable fees and expenses of counsel, accountants and
other professional advisors in connection with such Asset Sale.
"Non-Defaulting Lender" means and includes each Lender other than a
Defaulting Lender.
"Non-US Lender" has the meaning assigned to that term in subsection
2.7B(iii).
"Notes" means one or more of the Term Notes, Revolving Notes or
Swing Line Note or any combination thereof.
"Notice of Borrowing" means a notice in the form of Exhibit I
annexed hereto delivered by Company to Administrative Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Company to
Administrative Agent pursuant to subsection 2.2D with respect to a
proposed conversion or continuation of the applicable basis for
determining the interest rate with respect to the Loans specified therein.
"Notice of Issuance of Letter of Credit" means a notice in the form
of Exhibit III annexed hereto delivered by Company to Administrative Agent
pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"Obligations" means all obligations of every nature of each Loan
Party from time to time owed to Agents, Lenders or any of them under the
Loan Documents, whether for principal, interest, reimbursement of amounts
drawn under Letters of Credit or payments for early termination of
Interest Rate Agreements, fees, expenses, indemnification or otherwise.
<PAGE>
"Officer's Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the
board (if an officer), its president, its chief financial officer or a
vice president; provided that every Officer's Certificate with respect to
the compliance with a condition precedent to the making of any Loans
hereunder shall include (i) a statement that the officer making or giving
such Officer's Certificate has read such condition and any definitions or
other provisions contained in this Agreement relating thereto, (ii) a
statement that, in the opinion of the signer he or she has made or has
caused to be made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not such
condition has been complied with, and (iii) a statement as to whether, in
the opinion of the signer, such condition has been complied with.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the
lessee at any time) of any property (whether real, personal or mixed) that
is not a Capital Lease other than any such lease under which that Person
is the lessor.
"Patent and Trademark Security Agreement" means the Patent and
Trademark Security Agreement entered into by and among Company, the
Subsidiary Guarantors and Administrative Agent dated as of the date
hereof, substantially in the form of Exhibit XI annexed hereto, as such
Patent and Trademark Security Agreement may thereafter be amended,
restated, supplemented or otherwise modified from time to time.
"Patent License Agreement" means that certain Patent License
Agreement dated as of December 31, 1996, by and among Seller, Unilever PLC
and Company, as in effect on the Closing Date and as such agreement may
thereafter be amended, restated, supplemented or otherwise modified from
time to time to the extent permitted under subsection 7.12A.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA (or any successor thereto).
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Title IV of ERISA.
"Permitted Acquisition" means an acquisition of assets or a business
effected in accordance with the provisions of subsection 7.7(vii).
"Permitted Encumbrances" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not, at the time, required by subsection 6.3;
<PAGE>
(ii) statutory Liens of landlords, statutory Liens of carriers,
warehousemen, mechanics and materialmen and other Liens imposed by law
(other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n)
of the Internal Revenue Code or by ERISA) incurred in the ordinary course
of business for sums not yet delinquent or being contested in good faith,
if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to others not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor under any
Capital Lease permitted by subsection 7.1(iii) or any operating lease not
prohibited by this Agreement, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b);
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(x) deposits in the ordinary course of business to secure
liabilities to insurance carriers, lessors, utilities and other service
providers; and
(xi) bankers liens and rights of setoff with respect to customary
depository arrangements entered into in the ordinary course of business.
<PAGE>
"Permitted Seller Note" means a promissory note substantially in the
form of Exhibit XVI annexed hereto representing any Indebtedness of
Company incurred in connection with any Permitted Acquisition payable to
the seller in connection therewith, as such note may be amended, restated,
supplemented or otherwise modified from time to time to the extent
permitted under subsection 7.12B; provided that no Permitted Seller Note
shall (i) be guarantied by any Subsidiary of Company or secured by any
property of Company or any of its Subsidiaries or (ii) bear cash interest
at a rate in excess of 12% per annum; and provided further, that no
Permitted Seller Note shall provide for any prepayment or repayment of all
or any portion of the principal thereof prior to the date of the final
scheduled installment of principal of any of the Loans.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint
stock companies, Joint Ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
"Pledge Agreement" means that certain Pledge Agreement by and among
Company, Holdings, the Subsidiary Guarantors and Administrative Agent
dated as of the date hereof and substantially in the form of Exhibit IX
annexed hereto, as such Pledge Agreement may be amended, restated,
supplemented or otherwise modified from time to time.
"Pledged Collateral" means the "Pledged Collateral" as defined in
the Pledge Agreement.
"Potential Event of Default" means a condition or event that, after
notice or after any applicable grace period has lapsed, or both, would
constitute an Event of Default.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by Chase as its prime commercial lending rate in effect
at its principal office in New York City. The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually
charged to any customer. Chase or any other Lender may make commercial
loans or other loans at rates of interest at, above or below the Prime
Rate.
"Proceedings" has the meaning assigned to that term in subsection
6.1(x).
"Pro Forma Calculation Period" has the meaning assigned to that term
in subsection 7.6E(i).
"Projections" has the meaning assigned to that term in subsection
5.3B.
<PAGE>
"Pro Rata Share" means (i) with respect to all payments,
computations and other matters relating to the Term Loan Commitment or the
Term Loan of any Lender, the percentage obtained by dividing (x) the Term
Loan Exposure of that Lender by (y) the aggregate Term Loan Exposure of
all Lenders; (ii) with respect to all payments, computations and other
matters relating to the Revolving Loan Commitment or the Revolving Loans
of any Lender or any Letters of Credit issued by any Lender or any
participations purchased by any Lender therein or in any Swing Line Loans,
the percentage obtained by dividing (x) the Revolving Loan Exposure of
that Lender by (y) the aggregate Revolving Loan Exposure of all Lenders;
and (iii) for all other purposes with respect to each Lender, the
percentage obtained by dividing (x) the sum of the Term Loan Exposure of
that Lender plus the Revolving Loan Exposure of that Lender by (y) the sum
of the aggregate Term Loan Exposure of all Lenders plus the aggregate
Revolving Loan Exposure of all Lenders; in any such case as the applicable
percentage may be adjusted by assignments permitted pursuant to subsection
10.1. The initial Pro Rata Share of each Lender for purposes of each of
clauses (i), (ii) and (iii) of the preceding sentence is set forth
opposite the name of that Lender in Schedule 2.1 annexed hereto.
"PTO" means the United States Patent and Trademark Office or any
successor or substitute office in which filings are necessary or, in the
opinion of Administrative Agent, desirable in order to create or perfect
Liens on any IP Collateral.
"Pure Food and Drug Laws" means the FFDC Act and the pure food and
drug laws of each of the states of the United States into which products
of the Business are or have been shipped.
"Quest" means Quest International Flavors & Food Ingredients
Company.
"Quest Agreements" means, collectively, (i) that certain Flavor
Escrow Agreement dated as of December 31, 1996, by and among Quest, the
escrow agent named therein and Company, as in effect on the Closing Date
and as such agreement may thereafter be amended, restated, supplemented or
otherwise modified from time to time to the extent permitted under
subsection 7.12A, and (ii) the Flavor Supply Agreement.
"Real Property Asset" means, at any time of determination, any
interest then owned by any Loan Party in any real property.
"Recorded Leasehold Interest" means a Leasehold Property with
respect to which a Record Document (as hereinafter defined) has been
recorded in all places necessary or desirable, in Administrative Agent's
reasonable judgment, to give constructive notice of such Leasehold
Property to third-party purchasers and encumbrancers of the affected real
property. For purposes of this definition, the term "Record Document"
means, with respect to any Leasehold Property, (a) the lease
<PAGE>
evidencing such Leasehold Property or a memorandum thereof, executed and
acknowledged by the owner of the affected real property, as lessor, or (b)
if such Leasehold Property was acquired or subleased from the holder of a
Recorded Leasehold Interest, the applicable assignment or sublease
document, executed and acknowledged by such holder, in each case in form
sufficient to give such constructive notice upon recordation and otherwise
in form reasonably satisfactory to Administrative Agent.
"Refunded Swing Line Loans" has the meaning assigned to that term in
subsection 2.1A(iii).
"Register" has the meaning assigned to that term in subsection 2.1D.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulatory Shares" means, with respect to any Person, shares of
such Person required to be issued as qualifying shares to directors or
persons similarly situated or shares issued to Persons other than Company
or a Wholly Owned Subsidiary of Company in response to regulatory
requirements of foreign jurisdictions pursuant to a resolution of the
Board of Directors of such Person, so long as such shares do not exceed
one percent of the total outstanding shares of equity such Person and any
owners of such shares irrevocably covenant with Company to remit to
Company or waive any dividends or distributions paid or payable in respect
of such shares.
"Reimbursement Date" has the meaning assigned to that term in
subsection 3.3B.
"Related Agreements" means the Subordinated Bridge Loan Agreement,
the Subordinated Bridge Notes, the other Subordinated Bridge Loan
Documents, the Subordinated Exchange Note Indenture, the Subordinated
Exchange Notes, the other Subordinated Exchange Note Documents, the
Warrant Agreement, the Warrant Escrow Agreement, the Warrants, the
Acquisition Agreement, the Assumption Agreement, the MDC Advisory Services
Agreement, the Dartford Management Agreement, the Fenway Agreement and the
Transition Agreements.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or
outdoor environment (including, without limitation, the abandonment or
disposal of any barrels, containers or other closed receptacles containing
any Hazardous Materials), or into or out of any Facility, including the
movement of any Hazardous Material through the air, soil, surface water,
groundwater or property.
<PAGE>
"Requisite Lenders" means Non-Defaulting Lenders having or holding
not less than 51% of the sum of the aggregate Term Loan Exposure of all
Non-Defaulting Lenders plus the aggregate Revolving Loan Exposure of all
Non-Defaulting Lenders.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Company now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock to the holders of that class, (ii)
any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any
class of stock of Holdings or Company now or hereafter outstanding, (iii)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock
of Holdings or Company now or hereafter outstanding, and (iv) any payment
or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or
legal defeasance), sinking fund or similar payment with respect to, any
Subordinated Indebtedness.
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(ii) and "Revolving
Loan Commitments" means such commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means December 15,
2001.
"Revolving Loan Exposure" means, with respect to any Lender as of
any date of determination (i) prior to the termination of the Revolving
Loan Commitments, that Lender's Revolving Loan Commitment and (ii) after
the termination of the Revolving Loan Commitments, the sum of (a) the
aggregate outstanding principal amount of the Revolving Loans of that
Lender plus (b) in the event that Lender is an Issuing Lender, the
aggregate Letter of Credit Usage in respect of all Letters of Credit
issued by that Lender (net of any participations purchased by other
Lenders in such Letters of Credit) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of
Credit or any unreimbursed drawings under any Letters of Credit plus (d)
the aggregate amount of all participations purchased by that Lender in any
outstanding Swing Line Loans plus (e) in the case of Swing Line Lender,
the sum of the aggregate outstanding principal amount of all Swing Line
Loans (in each case net of any participations therein purchased by other
Lenders).
"Revolving Loans" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(ii).
"Revolving Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(i)(b) on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of
subsection 10.1B(i) in connection with assignments of the Revolving Loan
Commitment and Revolving Loans of any Lender,
<PAGE>
in each case substantially in the form of Exhibit V annexed hereto, as
they may be amended, restated, supplemented or otherwise modified from
time to time.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim certificates
for the purchase or acquisition of, or any right to subscribe to, purchase
or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Security Agreement" means the Security Agreement entered into by
and among Company, Holdings, the Subsidiary Guarantors and Administrative
Agent dated as of the date hereof and substantially in the form of Exhibit
X annexed hereto, as such Security Agreement may be amended, restated,
supplemented or otherwise modified from time to time.
"Seller" means Conopco, Inc., a New York corporation, doing business
as Van den Bergh Foods Company.
"Shared Technology License Agreement" means that certain Shared
Technology License Agreement dated as of December 31, 1996, by and between
Seller and Company, as in effect on the Closing Date and as such agreement
may thereafter be amended, restated, supplemented or otherwise modified
from time to time to the extent permitted under subsection 7.12A.
"Solvent" means, with respect to any Person, that as of the date of
determination both (i) (a) the then fair saleable value of the property of
such Person is (y) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (z) not less than the amount
that will be required to pay the probable liabilities on such Person's
then existing debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably available to
such Person; (b) such Person's capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction;
and (c) such Person does not intend to incur, or believe (nor should it
reasonably believe) that it will incur, debts beyond its ability to pay
such debts as they become due; and (ii) such Person is "solvent" within
the meaning given that term and similar terms under applicable laws
relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
<PAGE>
"Standby Letter of Credit" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) workers'
compensation liabilities of Company or any of its Subsidiaries, (ii) the
obligations of third party insurers of Company or any of its Subsidiaries
arising by virtue of the laws of any jurisdiction requiring third party
insurers, (iii) performance, payment, deposit or surety obligations of
Company or any of its Subsidiaries, in any case if required by law or
governmental rule or regulation or in accordance with custom and practice
in the industry, and (iv) such other obligations of Company and its
Subsidiaries as may be reasonably acceptable to Administrative Agent;
provided that Standby Letters of Credit may not be issued for the purpose
of supporting (a) trade payables or (b) Indebtedness constituting
"antecedent debt" (as that term is used in Section 547 of the Bankruptcy
Code).
"Subordinated Bridge Loan Agreement" means that certain Senior
Subordinated Credit Agreement dated as of December 31, 1996 by and between
Company, the financial institutions listed therein as lenders and Chase,
as agent for the lenders, pursuant to which the Subordinated Bridge Loans
are made, as in effect on the Closing Date and as such agreement may
thereafter be amended, restated, supplemented or otherwise modified from
time to time to the extent permitted under subsection 7.12B.
"Subordinated Bridge Loan Documents" means the Subordinated Bridge
Notes, the Subordinated Bridge Loan Agreement, the Subordinated Bridge
Loan Guaranties and each other document executed in connection with the
Subordinated Bridge Loans, as each such document may be amended, restated,
supplemented or otherwise modified from time
to time to the extent permitted by subsection 7.12B.
"Subordinated Bridge Loan Guaranties" means, collectively, each of
the guaranties of Company's obligations with respect to the Subordinated
Bridge Loans executed by certain Subsidiaries of Company from time to
time, in the form of Exhibit B to the Subordinated Bridge Loan Agreement,
in each case with such changes thereto when executed as are permitted
under subsection 7.12B and as each such guaranty may thereafter be
amended, restated, supplemented or otherwise modified from time to time to
the extent permitted under subsection 7.12B.
"Subordinated Bridge Loans" means the $50,000,000 in initial
aggregate principal amount of Indebtedness in respect of "Initial Loans"
(as such term is defined in the Subordinated Bridge Loan Agreement)
incurred by Company pursuant to the Subordinated Bridge Loan Agreement,
and shall include any "Term Loans" (as such term is defined in the
Subordinated Bridge Loan Agreement) into which such Initial Loans are
converted.
"Subordinated Bridge Notes" means the promissory notes of Company
issued pursuant to the Subordinated Bridge Loan Agreement and evidencing
the Subordinated Bridge Loans, as such notes may be amended, restated,
supplemented or otherwise modified from time to time to the extent
permitted under subsection 7.12B.
<PAGE>
"Subordinated Exchange Note Documents" means the Subordinated
Exchange Note Indenture, the Subordinated Exchange Notes and each other
document executed in connection with the Subordinated Exchange Notes, as
each such document may be amended, restated, supplemented or otherwise
modified from time to time to the extent permitted under subsection 7.12B.
"Subordinated Exchange Note Indenture" means the indenture pursuant
to which the Subordinated Exchange Notes are issued, in the form delivered
to Agents and Lenders on or prior to the Closing Date, with such changes
thereto when executed as are permitted under subsection 7.12B and as such
indenture may thereafter be amended, restated, supplemented or otherwise
modified from time to time to the extent permitted under subsection 7.12B.
"Subordinated Exchange Notes" means the Increasing Rate Subordinated
Notes due 2006 of Company issued pursuant to the Subordinated Exchange
Note Indenture in exchange for all or any portion of the Subordinated
Bridge Notes, in the form delivered to Agents and Lenders on or prior to
the Closing Date, with such changes thereto when executed as are permitted
under subsection 7.12B and as such notes may thereafter be amended,
restated, supplemented or otherwise modified from time to time to the
extent permitted under subsection 7.12B.
"Subordinated Indebtedness" means (i) the Indebtedness of Company
under the Subordinated Bridge Loan Documents and the Subordinated Exchange
Note Documents, (ii) any Indebtedness permitted under subsection 7.1(vi),
(iii) the Indebtedness of Company evidenced by any Permitted Seller Notes,
and (iv) any other Indebtedness of Company or any of its Subsidiaries
subordinated in right of payment to the Obligations pursuant to
documentation containing maturities, amortization schedules, covenants,
defaults, remedies, subordination provisions and other material terms in
form and substance satisfactory to Administrative Agent and Requisite
Lenders.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which
more than 50% of the total voting power of shares of stock or other
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the
management and policies thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"Subsidiary Guarantor" means any Subsidiary of Company that becomes
party to the Subsidiary Guaranty at any time after the Closing Date
pursuant to subsection 6.9.
"Subsidiary Guaranty" means the Subsidiary Guaranty, substantially
in the form of Exhibit VII annexed hereto, executed and delivered by each
Subsidiary Guarantor
<PAGE>
from time to time after the Closing Date pursuant to subsection 6.9, as
such Subsidiary Guaranty may be amended, restated, supplemented or
otherwise modified from time to time.
"Subsidiary Security Agreements" has the meaning assigned to that
term in subsection 6.9.
"Supplemental Collateral Agent" has the meaning assigned to that
term in subsection 9.1B.
"Swing Line Lender" means Chase, or any Person serving as a
successor Administrative Agent hereunder, in its capacity as Swing Line
Lender hereunder.
"Swing Line Loan Commitment" means the commitment of Swing Line
Lender to make Swing Line Loans to Company pursuant to subsection
2.1A(iii).
"Swing Line Loans" means the Loans made by Swing Line Lender
pursuant to subsection 2.1A(iii).
"Swing Line Note" means (i) the promissory note of Company issued
pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any
promissory note issued by Company to any successor Administrative Agent
and Swing Line Lender pursuant to the last sentence of subsection 9.5B, in
each case substantially in the form of Exhibit VI annexed hereto, as it
may be amended, restated, supplemented or otherwise modified from time to
time.
"Tax" or "Taxes" means any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed; provided that "Tax on the overall net
income" of a Person shall be construed as a reference to a tax imposed by
the jurisdiction in which that Person's principal office (and/or, in the
case of a Lender, its relevant Lending Office) is located or in which that
Person is deemed to be doing business on all or part of the net income,
profits or gains of that Person (whether worldwide, or only insofar as
such income, profits or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise).
"Term Loan Commitment" means the commitment of a Lender to make a
Term Loan to Company pursuant to subsection 2.1A(i), and "Term Loan
Commitments" means such commitments of all Lenders in the aggregate.
"Term Loan Conversion" means the occurrence of the events described
in subsection 2.1A(iv) on the Term Loan Conversion Date.
<PAGE>
"Term Loan Conversion Date" means the date on or prior to the first
Anniversary on which Company repays all Indebtedness with respect to the
Subordinated Bridge Loans with the proceeds of Indebtedness permitted
under subsection 7.1(vi). Notwithstanding anything herein to the contrary,
the Term Loan Conversion Date and the Term Loan Conversion may not occur
after the first Anniversary.
"Term Loan Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the funding of the Term Loans, that
Lender's Term Loan Commitment and (ii) after the funding of the Term
Loans, the outstanding principal amount of the Term Loan of that Lender.
"Term Loans" means the Loans made by Lenders to Company pursuant to
subsection 2.1A(i).
"Term Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(i)(a) on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of
subsection 10.1B(i) in connection with assignments of the Term Loan
Commitments or Term Loans of any Lenders, in each case substantially in
the form of Exhibit IV annexed hereto, as they may be amended, restated,
supplemented or otherwise modified from time to time.
"Title Company" means one or more title insurance companies
reasonably satisfactory to Administrative Agent.
"Total Utilization of Revolving Loan Commitments" means, as at any
date of determination, the sum of (i) the aggregate principal amount of
all outstanding Revolving Loans (other than Revolving Loans made for the
purpose of repaying any Refunded Swing Line Loans or reimbursing the
applicable Issuing Lender for any amount drawn under any Letter of Credit
but not yet so applied) plus (ii) the aggregate principal amount of all
outstanding Swing Line Loans plus (iii) the Letter of Credit Usage.
"Transaction Costs" means the fees, costs and expenses payable by
Company and its Subsidiaries on or before the Closing Date in connection
with the transactions contemplated hereby and by the Related Agreements.
"Transition Agreements" means, collectively, (i) that certain
License Agreement dated as of December 31, 1996, by and between Seller and
Company, as in effect on the Closing Date and as such agreement may
thereafter be amended, restated, supplemented or otherwise modified from
time to time to the extent permitted under subsection 7.12A; (ii) the
Shared Technology License Agreement; (iii) the Transition Services
Agreement; (iv) the Co-Pack Agreement; (v) the Patent License Agreement;
and (vi) the Quest Agreements.
<PAGE>
"Transition Services Agreement" means that certain Transition
Services Agreement dated as of December 31, 1996, by and between Seller
and Company, as in effect on the Closing Date and as such agreement may
thereafter be amended, restated, supplemented or otherwise modified from
time to time to the extent permitted under subsection 7.12A.
"Unfunded Current Liability" means, with respect to any Pension
Plan, the amount, if any, by which the actuarial present value of the
accumulated plan benefits under such Pension Plan as of the close of its
most recent plan year exceeds the fair market value of the assets
allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 35, based upon the actuarial
assumptions used by such Pension Plan's actuary in the most recent annual
valuation of such Pension Plan.
"Warrant Agreement" means that certain Warrant Agreement dated as of
December 31, 1996, by and between Holdings and ChaseMellon Shareholder
Services L.L.C., pursuant to which the Warrants are issued, as in effect
on the Closing Date and as such agreement may thereafter be amended,
restated, supplemented or otherwise modified from time to time to the
extent permitted under subsection 7.12A.
"Warrant Escrow Agreement" means that certain Warrant Escrow
Agreement dated as of December 31, 1996, by and between Holdings and
Chase, as escrow agent, as in effect on the Closing Date and as such
agreement may thereafter be amended, restated, supplemented or otherwise
modified from time to time to the extent permitted under subsection 7.12A.
"Warrants" means the warrants issued on the Closing Date by Holdings
pursuant to the Warrant Agreement to be sold to the purchasers of
securities representing Indebtedness permitted under subsection 7.1(vi),
as in effect on the Closing Date and as such warrants may be thereafter
amended, restated, supplemented or otherwise modified from time to time to
the extent permitted under subsection 7.12A.
"Wholly Owned Subsidiary" means, with respect to any Person, a
Subsidiary of such Person all of the outstanding capital stock or other
ownership interests of which (other than Regulatory Shares) shall at the
time be owned by such Person or by one or more Wholly Owned Subsidiaries
of such Person or by such Person and one or more Wholly Owned Subsidiaries
of such Person.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement.
Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Company to Lenders
<PAGE>
pursuant to clauses (i), (ii), (iii) and (xiii) of subsection 6.1 shall be
prepared in accordance with GAAP (except, with respect to interim financial
statements, normal year-end audit adjustments and the absence of explanatory
footnotes) as in effect at the time of such preparation (and delivered together
with the reconciliation statements provided for in subsection 6.1(v)).
Calculations in connection with the definitions, covenants and other provisions
of this Agreement shall utilize accounting principles and policies in conformity
with those used to prepare the financial statements referred to in subsection
5.3A.
1.3 Other Definitional Provisions.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. The words "includes", "including" and similar terms used in any Loan
Document shall be construed as if followed by the words "without limitation".
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Loans.
A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Loan Parties set forth
herein and in the other Loan Documents, each Lender hereby severally agrees to
make the Loans described in subsections 2.1A(i) and 2.1A(ii) and Swing Line
Lender hereby agrees to make the Swing Line Loans as described in subsection
2.1A(iii).
(i) Term Loans. Each Lender severally agrees to lend to Company on
the Closing Date an amount not exceeding its Pro Rata Share of the
aggregate amount of the Term Loan Commitments to be used for the purposes
identified in subsection 2.5A. The amount of each Lender's Term Loan
Commitment is set forth opposite its name on Schedule 2.1 annexed hereto
and the aggregate amount of the Term Loan Commitments is $15,000,000;
provided that the Term Loan Commitments of Lenders shall be adjusted to
give effect to any assignments of the Term Loan Commitments pursuant to
subsection 10.1B. Each Lender's Term Loan Commitment shall expire
immediately and without further action on March 31, 1997 if the Term Loans
and the Acquisition Revolving Loans are not made on or before that date.
Company may make only one borrowing under the Term Loan Commitments.
Amounts borrowed under this subsection 2.1A(i) and subsequently repaid or
prepaid may not be reborrowed; provided, however, that the foregoing shall
not prevent reborrowing under Revolving Loan Commitments created pursuant
to the Term Loan Conversion.
<PAGE>
(ii) Revolving Loans. Each Lender severally agrees, subject to the
limitations set forth below with respect to the maximum amount of
Revolving Loans permitted to be outstanding from time to time, to lend to
Company from time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date an aggregate
amount which shall not exceed its Pro Rata Share of the aggregate amount
of the Revolving Loan Commitments, to be used for the purposes identified
in subsection 2.5B. The original amount of each Lender's Revolving Loan
Commitment is set forth opposite its name on Schedule 2.1 annexed hereto
and the aggregate original amount of the Revolving Loan Commitments is
$45,000,000; provided that the Revolving Loan Commitments of Lenders shall
be adjusted to give effect to any assignments of the Revolving Loan
Commitments pursuant to subsection 10.1B; provided further, that the
amount of the Revolving Loan Commitments shall be reduced from time to
time by the amount of any reductions thereto made pursuant to subsections
2.4A(ii) and 2.4B; and provided further, that the amount of the Revolving
Loan Commitments shall be increased in the event of the Term Loan
Conversion. Each Lender's Revolving Loan Commitment shall expire on the
Revolving Loan Commitment Termination Date and all Revolving Loans and all
other amounts owed hereunder with respect to the Revolving Loans and the
Revolving Loan Commitments shall be paid in full no later than that date;
provided that each Lender's Revolving Loan Commitment shall expire
immediately and without further action on March 31, 1997 if the Term Loans
and the Acquisition Revolving Loans are not made on or before that date.
Amounts borrowed under this subsection 2.1A(ii) may be repaid and
reborrowed to but excluding the Revolving Loan Commitment Termination
Date.
Notwithstanding anything contained herein to the contrary, in no
event shall the Total Utilization of Revolving Loan Commitments at any
time exceed the Revolving Loan Commitments then in effect.
(iii) Swing Line Loans. Swing Line Lender hereby agrees, subject to
the limitations set forth below with respect to the maximum aggregate
amount of all Swing Line Loans outstanding from time to time, to make a
portion of the Revolving Loan Commitments available to Company from time
to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date by making Base Rate Loans as
Swing Line Loans to Company in an aggregate amount not to exceed the
amount of the Swing Line Loan Commitment, to be used for the purposes
identified in subsection 2.5B, notwithstanding the fact that such Swing
Line Loans, when aggregated with the sum of Swing Line Lender's
outstanding Revolving Loans and Swing Line Lender's Pro Rata Share of the
Letter of Credit Usage then in effect, may exceed Swing Line Lender's
Revolving Loan Commitment. The original amount of the Swing Line Loan
Commitment is $2,000,000; provided that the amounts of the Swing Line Loan
Commitment are subject to reduction as provided in clause (b) of the next
paragraph. The Swing Line Loan Commitment shall expire on the Revolving
Loan Commitment Termination Date and all Swing Line Loans and all other
amounts owed hereunder with respect to the Swing Line Loans shall be paid
in full no later than that
<PAGE>
date; provided that the Swing Line Loan Commitment shall expire
immediately and without further action on March 31, 1997 if the Term Loans
and the Acquisition Revolving Loans are not made on or before that date.
Amounts borrowed under this subsection 2.1A(iii) may be repaid and
reborrowed to but excluding the Revolving Loan Commitment Termination
Date.
Notwithstanding anything contained herein to the contrary, the Swing
Line Loans, and the Swing Line Loan Commitment shall be subject to the
following limitations in the amounts indicated:
(a) in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the Revolving Loan Commitments then
in effect;
(b) any reduction of the Revolving Loan Commitments made
pursuant to subsection 2.4B which reduces the aggregate Revolving
Loan Commitments to an amount less than the then current sum of the
Swing Line Loan Commitment shall result in an automatic
corresponding pro rata reduction of the Swing Line Loan Commitment
such that the sum thereof equals the amount of the Revolving Loan
Commitments, as so reduced, without any further action on the part
of Company, Administrative Agent or Swing Line Lender.
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Company pursuant to subsection 2.4B(i), Swing Line Lender may,
at any time in its sole and absolute discretion, deliver to Administrative
Agent (with a copy to Company), no later than 12:00 Noon (New York time)
at least one Business Day in advance of the proposed Funding Date, a
notice (which shall be deemed to be a Notice of Borrowing given by
Company) requesting Lenders to make Revolving Loans that are Base Rate
Loans to Company on such Funding Date in an amount equal to the amount of
such Swing Line Loans (the "Refunded Swing Line Loans") outstanding on the
date such notice is given which Swing Line Lender requests Lenders to
prepay. Anything contained in this Agreement to the contrary
notwithstanding, (i) the proceeds of such Revolving Loans made by Lenders
other than Swing Line Lender shall be immediately delivered by
Administrative Agent to Swing Line Lender (and not to Company) and applied
to repay a corresponding portion of the Refunded Swing Line Loans and (ii)
on the day such Revolving Loans are made, Swing Line Lender's Pro Rata
Share of the Refunded Swing Line Loans shall be deemed to be paid with the
proceeds of a Revolving Loan made by Swing Line Lender to Company, and
such portion of the Swing Line Loans deemed to be so paid, shall no longer
be outstanding as Swing Line Loans and shall no longer be due under the
Swing Line Note of Swing Line Lender but shall instead constitute part of
Swing Line Lender's outstanding Revolving Loans to Company and shall be
due under the Revolving Note issued by Company to Swing Line Lender.
Company hereby authorizes each of Administrative Agent and Swing Line
Lender to charge Company's accounts with Administrative Agent and Swing
Line Lender (up to the
<PAGE>
amount available in each such account) in order to immediately pay Swing
Line Lender the amount of the Refunded Swing Line Loans to the extent the
proceeds of such Revolving Loans made by Lenders, including the Revolving
Loan deemed to be made by Swing Line Lender, are not sufficient to repay
in full the Refunded Swing Line Loans. If any portion of any such amount
paid (or deemed to be paid) to Swing Line Lender should be recovered by or
on behalf of Company from Swing Line Lender in bankruptcy, by assignment
for the benefit of creditors or otherwise, the loss of the amount so
recovered shall be ratably shared among all Lenders in the manner
contemplated by subsection 10.5.
If for any reason Revolving Loans are not made pursuant to this
subsection 2.1A(iii) in an amount sufficient to repay any amounts owed to
Swing Line Lender in respect of any outstanding Swing Line Loans on or
before the third Business Day after demand for payment thereof by Swing
Line Lender, each Lender shall be deemed to, and hereby agrees to, have
purchased a participation in such outstanding Swing Line Loans, and in an
amount equal to its Pro Rata Share of the applicable unpaid amount
together with accrued interest thereon. Upon one Business Day's notice
from Swing Line Lender, each Lender shall deliver to Swing Line Lender an
amount in equal to its respective participation in the applicable unpaid
amount in same day funds at the Funding and Payment Office. In order to
evidence such participation each Lender agrees to enter into a
participation agreement at the request of Swing Line Lender in form and
substance satisfactory to Swing Line Lender. In the event any Lender fails
to make available to Swing Line Lender the amount of such Lender's
participation as provided in this paragraph, Swing Line Lender shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the rate customarily used by Swing Line Lender for the
correction of errors among banks for three Business Days and thereafter at
the Base Rate, as applicable.
Notwithstanding anything contained herein to the contrary, (i) each
Lender's obligation to make Revolving Loans for the purpose of repaying
any Refunded Swing Line Loans pursuant to the second preceding paragraph
and each Lender's obligation to purchase a participation in any unpaid
Swing Line Loans pursuant to the immediately preceding paragraph shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (a) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against Swing Line
Lender, Company or any other Person for any reason whatsoever; (b) the
occurrence or continuation of an Event of Default or a Potential Event of
Default; (c) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries; (d) any breach of this Agreement or any other Loan
Document by any party thereto; or (e) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing; provided
that no Lender shall have any such obligation unless (x) Swing Line Lender
believed in good faith that all conditions under Section 4 to the making
of the applicable Refunded Swing Line Loans or other unpaid Swing Line
Loans, were satisfied at the time such Refunded
<PAGE>
Swing Line Loans or unpaid Swing Line Loans were made, or (y) such Lender
had actual knowledge, by receipt of any notices required to be delivered
to Lenders pursuant to subsection 6.1(ix) or otherwise, that any such
condition under Section 4 had not been satisfied and such Lender failed to
notify Swing Line Lender and Administrative Agent in writing that it had
no obligation to make Revolving Loans until such condition was satisfied
(any such notice to be effective as of the date of receipt thereof by
Swing Line Lender and Administrative Agent), or (z) the satisfaction of
any such condition under Section 4 not satisfied had been waived by
Requisite Lenders prior to or at the time such Refunded Swing Line Loans
or other unpaid Swing Line Loans were made; and (ii) Swing Line Lender
shall not be obligated to make any Swing Line Loans if it has elected not
to do so after the occurrence and during the continuation of a Potential
Event of Default or Event of Default.
(iv) Term Loan Conversion. On the Term Loan Conversion Date, without
further action by Company, Administrative Agent or Lenders, (a) the
Revolving Loan Commitments then in effect shall be increased by
$15,000,000, (b) each Lender having an outstanding Term Loan immediately
prior to such date shall have a Revolving Loan Commitment and Revolving
Loan Exposure equal to the product of (1) such Lender's Pro Rata Share
with respect to Term Loans immediately prior to such date multiplied by
(2) $15,000,000, (c) all outstanding Term Loans shall become Revolving
Loans and all such Revolving Loans, together with all other Revolving
Loans, shall be reallocated based on the assumption that Company shall, as
of the opening of business on the Term Loan Conversion Date, have repaid
all such Loans then outstanding and immediately thereafter reborrowed
Revolving Loans in the same respective principal amounts from Lenders in
accordance with their respective Pro Rata Shares as in effect immediately
after giving effect to clauses (a) and (b) of this subsection, and (d) the
Term Notes shall be of no further force and effect. Based on such assumed
reallocation, Administrative Agent shall advise each Lender as to the net
amount of payments to be received by, or Loans to be advanced by, such
Lender on the Term Loan Conversion Date. In the event that the foregoing
reallocation of the Loans shall require prepayment of any portion of a
Eurodollar Rate Loan of a Lender on a date that is not the last day of an
Interest Period applicable to such Loan, Company shall pay compensation to
such Lender in accordance with subsection 2.6D.
(v) Issuance of Notes Upon Term Loan Conversion. On or as soon as
practicable after the Term Loan Conversion Date, (a) each Lender shall
deliver any Term Notes and Revolving Notes issued to it hereunder, marked
to show their cancellation, to Company, and (b) Company shall execute and
deliver to each Lender (or to Administrative Agent for such Lender) a
Revolving Note substantially in the form of Exhibit V annexed hereto to
evidence that Lender's Revolving Loans, in the principal amount of that
Lender's new Revolving Loan Commitment and with other appropriate
insertions.
B. Borrowing Mechanics. Term Loans or Revolving Loans (including any such
Loans made as Eurodollar Rate Loans with a particular Interest Period) made on
any Funding
<PAGE>
Date (other than Revolving Loans made pursuant to a request by Swing Line Lender
pursuant to subsection 2.1A(iii) for the purpose of repaying any Refunded Swing
Line Loans or Revolving Loans made pursuant to subsection 3.3B for the purpose
of reimbursing any Issuing Lender for the amount of a drawing or payment under a
Letter of Credit issued by it) shall be in an aggregate minimum amount of
$500,000 and integral multiples of $250,000 in excess of that amount. Swing Line
Loans made on any Funding Date shall be in an aggregate minimum amount of
$250,000 and integral multiples of $100,000 in excess of that amount. Whenever
Company desires that Lenders make Term Loans or Revolving Loans it shall deliver
to Administrative Agent on behalf of Company a Notice of Borrowing no later than
12:00 Noon (New York time), at least three Business Days in advance of the
proposed Funding Date in the case of a Eurodollar Rate Loan, or at least one
Business Day in advance of the proposed Funding Date in the case of a Base Rate
Loan. Whenever Company desires that Swing Line Lender make a Swing Line Loan, it
shall deliver to Administrative Agent a Notice of Borrowing no later than 12:00
Noon (New York time) on the proposed Funding Date. The Notice of Borrowing shall
specify (i) the proposed Funding Date (which shall be a Business Day), (ii) the
amount and type of Loans requested, (iii) in the case of Swing Line Loans, that
such Loans shall be Base Rate Loans, (iv) in the case of any Loans other than
Swing Line Loans, whether such Loans shall be Base Rate Loans or Eurodollar Rate
Loans, and (v) in the case of any Loans requested to be made as Eurodollar Rate
Loans, the initial Interest Period requested therefor. Term Loans and Revolving
Loans may be continued as or converted into Base Rate Loans and Eurodollar Rate
Loans in the manner provided in subsection 2.2D. In lieu of delivering the
above-described Notice of Borrowing, Company may give Administrative Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1B; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Borrowing to Administrative Agent on or
before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any
Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing are no longer true and correct as
of the applicable Funding Date, and the acceptance by Company of the proceeds of
any Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Company shall be bound to make a borrowing in accordance therewith.
<PAGE>
C. Disbursement of Funds. All Term Loans and all Revolving Loans under
this Agreement shall be made by Lenders simultaneously and proportionately to
their respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Administrative
Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice
in lieu thereof), Administrative Agent shall notify each Lender or Swing Line
Lender, as the case may be, of the proposed borrowing and of the amount of such
Lender's Pro Rata Share of the applicable Loans.
Each Lender shall make the amount of its Loan available to Administrative
Agent not later than 12:00 Noon (New York time) on the applicable Funding Date,
and Swing Line Lender shall make the amount of its Swing Line Loan available to
Administrative Agent not later than 12:00 Noon (New York time) on the applicable
Funding Date, in each case in same day funds, at the Funding and Payment Office.
Except as provided in subsection 2.1A(iii) or subsection 3.3B with respect to
Revolving Loans used to repay Refunded Swing Line Loans or to reimburse any
Issuing Lender for the amount of an honored drawing or payment under a Letter of
Credit issued by it, upon satisfaction or waiver of the conditions precedent
specified in subsections 4.1 (in the case of Loans made on the Closing Date) and
4.2 (in the case of all Loans), Administrative Agent shall make the proceeds of
such Loans available to Company on the applicable Funding Date by causing an
amount of same day funds equal to the proceeds of all such Loans received by
Administrative Agent from Lenders or Swing Line Lender, as the case may be, to
be credited to the account of Company at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender prior
to the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Company and Company shall immediately pay such corresponding amount to
Administrative Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
rate applicable to such Loan. Nothing in this subsection 2.1C shall be deemed to
relieve any Lender from its obligation to fulfill its Commitments hereunder or
to prejudice any rights that Company may have against any Lender as a result of
any default by such Lender hereunder.
<PAGE>
D. The Register.
(i) Administrative Agent shall maintain, at the address referred to
in subsection 10.8, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from
time to time (the "Register"). The Register shall be available for
inspection by Company or any Lender at any reasonable time and from time
to time upon reasonable prior notice.
(ii) Administrative Agent shall record in the Register the
Commitments and the outstanding Loans from time to time of each Lender and
each repayment or prepayment in respect of the principal amount of the
outstanding Loans of each Lender. Any such recordation shall be conclusive
and binding on Company and each Lender, absent manifest error; provided
that failure to make any such recordation, or any error in such
recordation, shall not affect Company's Obligations in respect of the
applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation, the Notes held by such Lender) the amount of each Loan
made by it and each payment in respect thereof. Any such recordation shall
be prima facie evidence of the amount of such Loans; provided that failure
to make any such recordation, or any error in such recordation, shall not
affect Company's Obligations in respect of the applicable Loans; and
provided, further that in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register shall
govern, absent manifest error.
(iv) Company, Agents and Lenders shall deem and treat the Persons
listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any Commitment or Loan shall be
effective, in each case unless an until an Assignment Agreement effecting
the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in
subsection 10.1B(ii). Prior to such recordation, all amounts owed with
respect to the applicable Commitment or Loan shall be owed to the Lender
listed in the Register as the owner thereof, and any request, authority or
consent of any Person who, at the time of making such request or giving
such authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, assignee or transferee of
the corresponding Commitments or Loans.
(v) Company hereby designates Chase, and any financial institution
serving as a successor Administrative Agent, to serve as Company's agent
solely for purposes of maintaining the Register as provided in this
subsection 2.1D, and Company hereby agrees that, to the extent Chase
serves in such capacity, Chase and its officers, directors, employees,
agents and affiliates shall constitute Indemnitees for all purposes under
subsection 10.3.
<PAGE>
E. Notes. Company shall execute and deliver on the Closing Date (i) to
each Lender (or to Administrative Agent for that Lender) (a) a Term Note
substantially in the form of Exhibit IV annexed hereto, to evidence that
Lender's Term Loans in the principal amount of that Lender's Term Loans and with
other appropriate insertions, and (b) a Revolving Note substantially in the form
of Exhibit V annexed hereto to evidence that Lender's Revolving Loans, in the
principal amount of that Lender's Revolving Loan Commitment and with other
appropriate insertions, and (ii) to Swing Line Lender, a Swing Line Note
substantially in the form of Exhibit VI annexed hereto to evidence Swing Line
Lender's Swing Line Loans, in the principal amount of the Swing Line Loan
Commitment and with other appropriate insertions. The Notes and the Obligations
evidenced thereby shall be governed by, subject to and benefit from all of the
terms and conditions of this Agreement and the other Loan Documents and shall be
guarantied and/or secured by the Collateral as provided in the Loan Documents.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7,
each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate, as the case may be. Subject to the provisions of
subsection 2.7, each Swing Line Loan shall bear interest on the unpaid principal
amount thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate. The applicable
basis for determining the rate of interest with respect to any Loan shall be
selected by Company initially at the time a Notice of Borrowing is given with
respect to such Loan pursuant to subsection 2.1B. The basis for determining the
interest rate with respect to any Term Loan or any Revolving Loan may be changed
from time to time pursuant to subsection 2.2D. If on any day any Term Loan or
Revolving Loan is outstanding with respect to which notice has not been
delivered to Administrative Agent in accordance with the terms of this Agreement
specifying the applicable basis for determining the rate of interest, then for
that day that Loan shall bear interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the Term Loans and
the Revolving Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus the
Applicable Base Rate Margin; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Eurodollar Rate Margin.
Subject to the provisions of subsections 2.2E and 2.7, the Swing Line
Loans shall bear interest through maturity at the sum of the Base Rate plus the
Applicable Base Rate Margin with respect to Revolving Loans.
<PAGE>
B. Interest Periods. In connection with each Eurodollar Rate Loan, Company
may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one-, two-, threeor six-month period;
provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a
Loan initially made as a Eurodollar Rate Loan, or on the date specified in
the applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period shall
commence on the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) 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, subject to clause (iii) of this subsection 2.2B, end on the
last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the Term Loans
shall extend beyond December 15, 2002 and no Interest Period with respect
to any portion of the Revolving Loans shall extend beyond the Revolving
Loan Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the Term
Loans shall extend beyond a date on which Company is required to make a
scheduled payment of principal of the Term Loans unless the sum of (a) the
aggregate principal amount of Term Loans that are Base Rate Loans plus (b)
the aggregate principal amount of Term Loans that are Eurodollar Rate
Loans with Interest Periods expiring on or before such date equals or
exceeds the principal amount required to be paid on the Term Loans on such
date;
(vii) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the date on which a permanent
reduction of the Revolving Loan Commitments is scheduled to occur unless
the sum of (a) the aggregate principal amount of Revolving Loans that are
Base Rate Loans plus (b) the aggregate principal amount of
<PAGE>
Revolving Loans that are Eurodollar Rate Loans with Interest Periods
expiring on or before such date plus (c) the excess of the Revolving Loan
Commitments then in effect over the aggregate principal amount of
Revolving Loans then outstanding equals or exceeds the permanent reduction
of the Revolving Loan Commitments that is scheduled to occur on such date;
(viii) Company may not select an Interest Period of longer than two
months prior to the end of the Initial Period;
(ix) there shall be no more than ten (10) Interest Periods
outstanding at any time; and
(x) in the event Company fails to specify an Interest Period for any
Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event that any Swing Line Loans, any Revolving
Loans or any Term Loans that are Base Rate Loans are prepaid pursuant to
subsection 2.4B(i), interest accrued on such Swing Line Loans, Revolving Loans
or Term Loans through the date of such prepayment shall be payable on the next
succeeding Interest Payment Date applicable to Base Rate Loans (or, if earlier,
at final maturity).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Term Loans or Revolving Loans equal to $500,000 and integral
multiples of $250,000 in excess of that amount from Loans bearing interest at a
rate determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of
any Interest Period applicable to a Eurodollar Rate Loan, to continue all or any
portion of such Loan equal to $500,000 and integral multiples of $250,000 in
excess of that amount as a Eurodollar Rate Loan; provided, however, that a
Eurodollar Rate Loan may only be converted into a Base Rate Loan on the
expiration date of an Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 12:00 Noon (New York time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan), and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar
<PAGE>
Rate Loan, the requested Interest Period, and (v) in the case of a conversion
to, or a continuation of, a Eurodollar Rate Loan, that no Potential Event of
Default or Event of Default has occurred and is continuing. In lieu of
delivering the above-described Notice of Conversion/Continuation, Company may
give Administrative Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Administrative Agent on or before the proposed
conversion/continuation date.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Conversion/Continuation for conversion to, or continuation of, a Eurodollar
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to effect a conversion or continuation in accordance therewith.
E. Post-Default Interest. Upon the occurrence and during the continuation
of any Event of Default, the outstanding principal amount of all Loans and, to
the extent permitted by applicable law, any interest payments thereon not paid
when due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code, or other applicable bankruptcy or insolvency laws)
payable upon demand at a rate that is 2% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the applicable Loans
(or, in the case of any such fees and other amounts, at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Revolving Loans bearing interest at a rate determined by reference to the Base
Rate); provided that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate equal to 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans that are Term Loans or Revolving Loans, as applicable. Payment
or acceptance of the increased rates of interest provided for in this subsection
2.2E is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of any Agent or Lender.
F. Computation of Interest. Interest on Loans shall be computed on the
basis of a 360-day year and for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an
<PAGE>
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded;
provided that if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan.
2.3 Fees.
A. Commitment Fees. Company agrees to pay to Administrative Agent, for
distribution to each Lender having a Revolving Loan Commitment, in proportion to
that Lender's Pro Rata Share of the Revolving Loan Commitments, commitment fees
for the period from and including the Closing Date to and excluding the
Revolving Loan Commitment Termination Date equal to the average of the daily
excess of the Revolving Loan Commitments over the sum of (i) the aggregate
principal amount of Revolving Loans outstanding (but not any Swing Line Loans
outstanding) plus the Letter of Credit Usage multiplied by (ii) 1/2 of 1% per
annum. All such commitment fees shall be calculated on the basis of a 360-day
year and the actual number of days elapsed and shall be payable quarterly in
arrears on March 15, June 15, September 15 and December 15 of each year,
commencing on March 15, 1997, and on the Revolving Loan Commitment Termination
Date.
B. Other Fees. Company agrees to pay to Agents such other fees in the
amounts and at the times separately agreed upon between Company and the
applicable Agents.
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments; Application of Proceeds of
Collateral and Payments under Guaranties.
A. Scheduled Payments of Term Loans and Scheduled Reductions of
Revolving Loan Commitments.
(i) Scheduled Payments of Term Loans. Company shall make principal
payments on the Term Loans in installments on the dates and in the amounts
set forth below:
===============================================================
SCHEDULED REPAYMENT
DATE OF TERM LOANS
===============================================================
March 15, 1997 $250,000
June 15, 1997 $250,000
September 15, 1997 $250,000
December 15, 1997 $250,000
<PAGE>
===============================================================
SCHEDULED REPAYMENT
DATE OF TERM LOANS
===============================================================
March 15, 1998 $250,000
June 15, 1998 $250,000
September 15, 1998 $250,000
December 15, 1998 $250,000
---------------------------------------------------------------
March 15, 1999 $250,000
June 15, 1999 $250,000
September 15, 1999 $250,000
December 15, 1999 $250,000
---------------------------------------------------------------
March 15, 2000 $250,000
June 15, 2000 $250,000
September 15, 2000 $250,000
December 15, 2000 $250,000
---------------------------------------------------------------
March 15, 2001 $250,000
June 15, 2001 $250,000
September 15, 2001 $250,000
December 15, 2001 $250,000
---------------------------------------------------------------
March 15, 2002 $2,500,000
June 15, 2002 $2,500,000
September 15, 2002 $2,500,000
December 15, 2002 $2,500,000
===============================================================
; provided that the scheduled installments of principal of the Term Loans
set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Term Loans in accordance with subsection
2.4C; and provided further, that the Term Loans and all other amounts owed
hereunder with respect to the Term Loans shall be paid in full no later
than December 15, 2002, and the final installment payable by Company in
respect of the Term Loans on such date shall be in an amount, if such
amount is different from that specified above, sufficient to repay all
amounts owing by Company under this Agreement with respect to the Term
Loans.
(ii) Scheduled Reductions of Revolving Loan Commitments. Except as
set forth in the following proviso, the Revolving Loan Commitments shall
be permanently reduced on the dates and in the amounts set forth below:
<PAGE>
===============================================================
SCHEDULED REDUCTION
DATE OF REVOLVING LOAN
COMMITMENTS
===============================================================
March 15, 1998 $1,250,000
June 15, 1998 $1,250,000
September 15, 1998 $1,250,000
December 15, 1998 $1,250,000
---------------------------------------------------------------
March 15, 1999 $1,875,000
June 15, 1999 $1,875,000
September 15, 1999 $1,875,000
December 15, 1999 $1,875,000
---------------------------------------------------------------
March 15, 2000 $1,875,000
June 15, 2000 $1,875,000
September 15, 2000 $1,875,000
December 15, 2000 $1,875,000
---------------------------------------------------------------
March 15, 2001 $2,500,000
June 15, 2001 $2,500,000
September 15, 2001 $2,500,000
December 15, 2001 $17,500,000
===============================================================
; provided, however, that if the Term Loan Conversion shall occur,
thereafter the Revolving Loan Commitments shall instead be permanently
reduced on the dates and in the amounts set forth below:
===============================================================
SCHEDULED REDUCTION
DATE OF REVOLVING LOAN
COMMITMENTS
===============================================================
March 15, 1999 $3,750,000
June 15, 1999 $3,750,000
September 15, 1999 $3,750,000
December 15, 1999 $3,750,000
---------------------------------------------------------------
March 15, 2000 $3,750,000
June 15, 2000 $3,750,000
September 15, 2000 $3,750,000
December 15, 2000 $3,750,000
---------------------------------------------------------------
March 15, 2001 $3,750,000
June 15, 2001 $3,750,000
September 15, 2001 $3,750,000
December 15, 2001 $18,750,000
===============================================================
<PAGE>
; and provided further, that the scheduled reductions of the Revolving
Loan Commitments set forth above shall be reduced in connection with any
voluntary or mandatory reductions of the Revolving Loan Commitments in
accordance with subsection 2.4C.
B. Prepayments and Unscheduled Reductions in Revolving Loan Commitments.
(i) Voluntary Prepayments. Company may, upon written or telephonic
notice to Administrative Agent on or prior to 12:00 Noon (New York time)
on the date of prepayment, which notice, if telephonic, shall be promptly
confirmed in writing, at any time and from time to time prepay, without
premium or penalty, any Swing Line Loan on any Business Day in whole or in
part in an aggregate minimum amount of $250,000 and integral multiples of
$100,000 in excess of that amount. In addition, so long as no Swing Line
Loans are then outstanding, Company may, upon not less than one Business
Day's prior written or telephonic notice, in the case of Base Rate Loans,
and three Business Days' prior written or telephonic notice, in the case
of Eurodollar Rate Loans, in each case confirmed in writing to
Administrative Agent (which notice Administrative Agent will promptly
transmit by telefacsimile or telephone to each Lender), at any time and
from time to time prepay, without premium or penalty, the Loans other than
Swing Line Loans on any Business Day in whole or in part in an aggregate
minimum amount of $500,000 and integral multiples of $250,000 in excess of
that amount; provided, however, that prepayment of a Eurodollar Rate Loan
on any day other than the expiration of the Interest Period applicable
thereto shall be subject to compliance with subsection 2.6D. Notice of
prepayment having been given as aforesaid, the Loans shall become due and
payable on the prepayment date specified in such notice and in the
aggregate principal amount specified therein. Any voluntary prepayments
pursuant to this subsection 2.4B(i) shall be applied as specified in
subsection 2.4C.
(ii) Voluntary Reductions of Revolving Loan Commitments . Company
may, upon not less than three Business Days' prior written or telephonic
notice confirmed in writing to Administrative Agent (which notice
Administrative Agent will promptly transmit by telefacsimile or telephone
to each Lender), at any time and from time to time terminate in whole or
permanently reduce in part, without premium or penalty, the Revolving Loan
Commitments in an amount up to the amount by which the Revolving Loan
Commitments exceed the Total Utilization of Revolving Loan Commitments at
the time of such proposed termination or reduction; provided that any such
partial reduction of the Revolving Loan Commitments shall be in an
aggregate minimum amount of $500,000 and integral multiples of $250,000 in
excess of that amount. Company's notice to Administrative Agent shall
designate the date (which shall be a Business Day) of such termination or
reduction and the amount of any partial reduction, and such termination or
reduction of the Revolving Loan Commitments shall be effective on the date
specified in such notice and shall reduce the Revolving Loan Commitment of
each Lender proportionately to its Pro Rata Share. Any such voluntary
reduction of the Revolving Loan Commitments shall be applied as specified
in subsection 2.4C.
<PAGE>
(iii) Mandatory Prepayments and Mandatory Reductions of Revolving
Loan Commitments.
The Loans shall be prepaid and the Revolving Loan Commitments shall
be reduced in the manner provided in subsection 2.4C upon the occurrence
of the following circumstances:
(a) Prepayments and Reductions from Asset Sales. No later than
the second Business Day following the date of receipt by Company or
any of its Subsidiaries of the Net Cash Proceeds of any Asset Sale
(other than any portion of such Net Cash Proceeds that is reinvested
(or scheduled for reinvestment) in assets of the general type used
in the business of Company and its Subsidiaries within 360 days from
the date of receipt of such Net Cash Proceeds), Company shall prepay
the Loans (and/or the Revolving Loan Commitments shall be reduced)
in an aggregate amount equal to such Net Cash Proceeds; provided,
however, that Company may not reinvest (or schedule for
reinvestment) Net Cash Proceeds (x) upon the occurrence and during
the continuation of an Event of Default and (y) until the earlier of
(1) the Term Loan Conversion Date and (2) the first Anniversary.
Company shall, no later than 360 days after receipt of any such Net
Cash Proceeds that have not theretofore been applied to the
Obligations, make an additional prepayment of the Loans (and/or the
Revolving Loan Commitments shall be reduced) in the full amount of
all such proceeds that have not therefore been so reinvested.
Concurrently with any prepayment of the Loans and/or reduction of
the Commitments pursuant to this subsection 2.4B(iii)(a), Company
shall deliver to Administrative Agent an Officer's Certificate
demonstrating the derivation of the Net Cash Proceeds of the
correlative Asset Sale from the gross sales price thereof. In the
event that Company shall, at any time after receipt of Cash Proceeds
of any Asset Sale requiring a prepayment or a reduction of the
Revolving Loan Commitments pursuant to this subsection 2.4B(iii)(a),
determine that the prepayments and/or reductions of the Revolving
Loan Commitments previously made in respect of such Asset Sale were
in an aggregate amount less than that required by the terms of this
subsection 2.4B(iii)(a), Company shall promptly cause to be made an
additional prepayment of the Loans (and/or reduction in the
Revolving Loan Commitments) in an amount equal to the amount of any
such deficit, and Company shall concurrently therewith deliver to
Administrative Agent an Officer's Certificate demonstrating the
derivation of the additional Net Cash Proceeds resulting in such
deficit.
(b) Prepayments and Reductions Due to Issuance of Debt. On or
prior to the first Business Day after receipt by Company or any of
its Subsidiaries of any proceeds of any Indebtedness (other than the
Loans and any other Indebtedness permitted under subsection 7.1(i),
(ii), (iii), (iv), (v), (vii) or (viii)), Company shall prepay the
Loans (and/or the Revolving Loan Commitments shall be reduced) in an
amount equal to the amount of such proceeds; provided,
<PAGE>
however, that such proceeds from Indebtedness permitted under
subsection 7.1(vi) shall not be applied to prepay Loans pursuant to
this subsection if and to the extent such proceeds are applied by
Company to repay the Indebtedness with respect to the Subordinated
Bridge Loans and/or the Subordinated Exchange Notes; and provided
further, that payment or acceptance of the amounts provided for in
this subsection 2.4B(iii)(b) shall not constitute a waiver of any
Event of Default resulting from the incurrence of such Indebtedness
or otherwise prejudice any rights or remedies of Agents or Lenders.
(c) Prepayments and Reductions Due to Issuance of Equity
Securities. On or prior to the first Business Day after receipt by
Holdings or Company or any of its Subsidiaries of any Equity
Proceeds, Company shall prepay the Loans (and/or the Revolving Loan
Commitments shall be reduced) in an amount equal to such Equity
Proceeds; provided, however, that such Equity Proceeds shall not be
applied to prepay Loans pursuant to this subsection if and to the
extent such Equity Proceeds were derived (x) from exercise of the
Warrants, (y) directly or indirectly from a sale of Securities to
any of the MDC Entities, Dartford, Fenway, the Management Investors
and their respective Affiliates, or to employees or directors of
Holdings and its Subsidiaries pursuant to any employee stock option
or stock purchase plan or other employee benefit plan, and (z) from
sales of Securities to management officers and directors after the
Closing Date to the extent the consideration paid therefor does not
exceed $1,000,000; and provided further, however, that Equity
Proceeds from an initial public offering of Holdings Common Stock
shall not be applied to prepay Loans pursuant to this subsection if
and to the extent such proceeds are applied by Company to repay the
Indebtedness with respect to the Subordinated Bridge Loans and/or
the Subordinated Exchange Notes or the Indebtedness permitted under
subsection 7.1(vi). Holdings shall contribute to Company any Equity
Proceeds received by Holdings as are necessary to enable Company to
comply with this subsection.
(d) Prepayments and Reductions from Insurance and Condemnation
Proceeds. No later than the second Business Day following the date
of receipt by Company or any of its Subsidiaries of any cash
payments under any of the casualty insurance policies covering
damage to or loss of property maintained pursuant to subsection 6.4
resulting from damage to or loss of all or any portion of the
Collateral or any other tangible asset (net of actual and documented
reasonable costs incurred by Company or any of its Subsidiaries in
connection with adjustment and settlement thereof, "Insurance
Proceeds") or any proceeds resulting from the taking of assets by
the power of eminent domain, condemnation or otherwise (net of
actual and documented reasonable costs incurred by Company or any of
its Subsidiaries in connection with adjustment and settlement
thereof, "Condemnation Proceeds") (other than, if no Event of
Default shall have occurred and be continuing or shall be caused
thereby, any portion of any such proceeds that is reinvested (or
scheduled for reinvestment) in assets of the
<PAGE>
general type used in the business of Company and its Subsidiaries
within 360 days from the date of receipt of such proceeds), Company
shall prepay the Loans (and/or the Revolving Loan Commitments shall
be reduced) in the amount of such proceeds not so reinvested (or
scheduled for such reinvestment). Company shall, no later than 360
days after receipt of any such Insurance Proceeds or Condemnation
Proceeds that have not theretofore been applied to the Obligations,
make an additional prepayment of the Loans (and/or the Revolving
Loan Commitments shall be reduced) in the full amount of all such
proceeds that have not therefore been reinvested in such assets.
(e) Prepayments and Reductions from Consolidated Excess Cash
Flow. In the event that there shall be Consolidated Excess Cash Flow
for any Fiscal Year (commencing with the Fiscal Year ending in
December 1998 (or, if the Term Loan Conversion occurs, December
1999)), Company shall, no later than 100 days after the end of such
Fiscal Year, prepay the Loans (and/or the Revolving Loan Commitments
shall be reduced) in an aggregate amount equal to 50% of such
Consolidated Excess Cash Flow for such Fiscal Year.
(f) Prepayments Due to Reductions or Restrictions of Revolving
Loan Commitments. Company shall prepay the Swing Line Loans and/or
the Revolving Loans from time to time to the extent necessary so
that (y) the Total Utilization of Revolving Loan Commitments shall
not at any time exceed the Revolving Loan Commitments then in
effect, and (z) the aggregate principal amount of all outstanding
Swing Line Loans shall not at any time exceed the Swing Line Loan
Commitment then in effect. All Swing Line Loans shall be prepaid in
full prior to the prepayment of any Revolving Loans pursuant to this
subsection 2.4B(iii)(f).
C. Application of Prepayments and Unscheduled Reductions of Revolving
Loan Commitments.
(i) Application of Voluntary Prepayments by Type of Loans. Any
voluntary prepayments pursuant to subsection 2.4B(i) shall be applied:
first to repay outstanding Swing Line Loans to the full extent thereof,
second to repay outstanding Revolving Loans to the full extent thereof,
and third, to repay outstanding Term Loans to the full extent thereof.
(ii) Application of Mandatory Prepayments by Type of Loans. Any
amount (the "Applied Amount") required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsections 2.4B(iii)(a)-(e) shall be applied
first to prepay the Term Loans to the full extent thereof, second, to the
extent of any remaining portion of the Applied Amount, to prepay the Swing
Line Loans to the full extent thereof and to permanently reduce the
Revolving Loan Commitments by the amount of such prepayment, third, to the
extent of any
<PAGE>
remaining portion of the Applied Amount, to prepay the Revolving Loans to
the full extent thereof and to further permanently reduce the Revolving
Loan Commitments by the amount of such prepayment, and fourth, to the
extent of any remaining portion of the Applied Amount, to further
permanently reduce the Revolving Loan Commitments to the full extent
thereof. Notwithstanding the foregoing or anything herein to the contrary,
no portion of the proceeds of Indebtedness permitted under subsection
7.1(vi) which are applied to prepay the Loans shall be applied to
permanently reduce the Revolving Loan Commitments.
(iii) Application of Prepayments of Term Loans to the Scheduled
Installments of Principal Thereof. Any prepayments of the Term Loans
pursuant to subsection 2.4B(i) or 2.4B(iii) shall be applied to prepay the
Term Loans on a pro rata basis in accordance with the outstanding
principal amounts thereof. Any mandatory prepayments applied to the Term
Loans pursuant to this subsection shall be applied on a pro rata basis (in
accordance with the respective outstanding principal amounts thereof) to
each scheduled installment of principal of the Term Loans set forth in
subsection 2.4A(i) that is unpaid at the time of such prepayment.
(iv) Application of Prepayments to Base Rate Loans and Eurodollar
Rate Loans. Considering Term Loans and Revolving Loans being prepaid
separately, any prepayment thereof shall be applied first to Base Rate
Loans to the full extent thereof before application to Eurodollar Rate
Loans, in each case in a manner which minimizes the amount of any payments
required to be made by Company pursuant to subsection 2.6D.
(v) Application of Unscheduled Reductions of Revolving Loan
Commitments. Any voluntary or mandatory reduction of the Revolving Loan
Commitments pursuant to subsection 2.4B(ii) or 2.4B(iii) shall be applied
to reduce the scheduled reductions of the Revolving Loan Commitments set
forth in subsection 2.4A(ii) in reverse chronological order.
D. Application of Proceeds of Collateral and Payments Under Guaranties.
(i) Application of Proceeds of Collateral. Except as provided in
subsection 2.4B(iii)(a) with respect to prepayments from Net Cash Proceeds
of Asset Sales, all proceeds received by Administrative Agent in respect
of any sale of, collection from, or other realization upon all or any part
of the Collateral under any Collateral Document may, in the discretion of
Administrative Agent, be held by Administrative Agent as Collateral for,
and/or (then or at any time thereafter) applied in full or in part by
Administrative Agent against, the applicable Secured Obligations (as
defined in such Collateral Document) in the following order of priority:
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including without limitation
reasonable compensation to
<PAGE>
Administrative Agent and its agents and counsel, and all other
reasonable expenses, liabilities and advances made or incurred by
Administrative Agent in connection therewith, and all amounts for
which Administrative Agent is entitled to indemnification under such
Collateral Document and all advances made by Administrative Agent
thereunder for the account of the applicable Loan Party, and to the
payment of all reasonable costs and expenses paid or incurred by
Administrative Agent in connection with the exercise of any right or
remedy under such Collateral Document, all in accordance with the
terms of this Agreement and such Collateral Document;
(b) thereafter, to the extent of any excess such proceeds, to
the payment of all other such Secured Obligations for the ratable
benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds, to
the payment to or upon the order of such Loan Party or to whosoever
may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
(ii) Application of Payments Under Guaranties. All payments received
by Administrative Agent under any Guaranty shall be applied promptly from
time to time by Administrative Agent in the following order of priority:
(a) To the payment of the reasonable costs and expenses of any
collection or other realization under such Guaranty, including
without limitation reasonable compensation to Administrative Agent
and its agents and counsel, and all expenses, liabilities and
advances made or incurred by Administrative Agent in connection
therewith, all in accordance with the terms of this Agreement and
such Guaranty;
(b) thereafter, to the extent of any excess such payments, to
the payment of all other Guarantied Obligations (as defined in such
Guaranty) for the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such payments, to
the payment to Holdings or the applicable Subsidiary Guarantor or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct.
E. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in same day funds and without defense, setoff or
counterclaim, free of any restriction or
<PAGE>
condition, and delivered to Administrative Agent not later than 12:00 Noon
(New York time) on the date due at the Funding and Payment Office for the
account of Lenders; funds received by Administrative Agent after that time
on such due date shall be deemed to have been paid by Company on the next
succeeding Business Day. Company hereby authorizes Administrative Agent to
charge its accounts with such Administrative Agent in order to cause
timely payment to be made to Administrative Agent of all principal,
interest, fees and expenses due hereunder (subject to sufficient funds
being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except as
provided in subsection 2.2C, all payments in respect of the principal
amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments (and in
any event any payments made in respect of any Loan on a date when interest
is due and payable with respect to such Loan) shall be applied to the
payment of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments shall be apportioned among all outstanding Loans to which such
payments relate, in each case proportionately to Lenders' respective Pro
Rata Shares. Administrative Agent shall promptly distribute to each
Lender, at its applicable Lending Office specified on Schedule 2.1 or at
such other address as such Lender may request, its Pro Rata Share of all
such payments received by Administrative Agent and the commitment fees of
such Lender when received by Administrative Agent pursuant to subsection
2.3. Notwithstanding the foregoing provisions of this subsection 2.4E(iii)
if, pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may
be.
(v) Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
<PAGE>
2.5 Use of Proceeds.
A. Term Loans. The proceeds of the Term Loans, together with up to
$30,000,000 in proceeds of the initial Revolving Loans (the "Acquisition
Revolving Loans"), the proceeds of the Subordinated Bridge Loans and the
proceeds of the equity capitalization of Company described in subsection 4.1C,
shall be applied to (i) finance the Acquisition and (ii) pay Transaction Costs.
B. Revolving Loans; Swing Line Loans. The proceeds of the Acquisition
Revolving Loans shall be applied by Company as provided in subsection 2.5A. The
proceeds of any other Revolving Loans and any Swing Line Loans shall be applied
by Company to finance expenditures which are included in the definition of
Consolidated Capital Expenditures and for working capital and general corporate
purposes, which may include the making of intercompany loans to any of Company's
Wholly Owned Subsidiaries, in accordance with subsection 7.1(iv), for their own
working capital and general corporate purposes.
C. Compliance With Laws. Company hereby undertakes that no portion of the
proceeds of any Loans or other extensions of credit under this Agreement shall
be used by any Loan Party in any manner which would be illegal under, or which
would cause the invalidity or unenforceability (in each case in whole or in
part) of any Loan Document under, any applicable law.
D. Margin Regulations. Without limiting the generality of subsection 2.5C,
no portion of the proceeds of any borrowing under this Agreement shall be used
by Company or any of its Subsidiaries in any manner that might cause the
borrowing or the application of such proceeds to violate Regulation G,
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable after
11:00 A.M. (New York time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have reasonably determined (which determination
shall be final and conclusive
<PAGE>
and binding upon all parties hereto), on any Interest Rate Determination Date
with respect to any Eurodollar Rate Loans, that by reason of circumstances
arising after the date of this Agreement affecting the London interbank market,
adequate and fair means do not exist for ascertaining the interest rate
applicable to such Loans on the basis provided for in the definition of Adjusted
Eurodollar Rate Administrative Agent shall on such date give notice (by telecopy
or by telephone confirmed in writing) to Company and each Lender of such
determination, whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans, until such time as Administrative Agent notifies Company
and Lenders that the circumstances giving rise to such notice no longer exist
(such notification not to be unreasonably withheld or delayed) and (ii) any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to the Loans in respect of which such determination was made shall be
deemed to be rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have reasonably determined (which
determination shall be final and conclusive and binding upon all parties hereto
but shall be made only after consultation with Company and Administrative Agent)
that the making, maintaining or continuation of its Eurodollar Rate Loans (i)
has become unlawful as a result of compliance by such Lender in good faith with
any law, treaty, governmental rule, regulation, guideline or order (or would
conflict with any such treaty, governmental rule, regulation, guideline or order
not having the force of law even though the failure to comply therewith would
not be unlawful) or (ii) has become impracticable, or would cause such Lender
material hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the London interbank market,
then, and in any such event, such Lender shall be an "Affected Lender" and it
shall on that day give notice (by telecopy or by telephone confirmed in writing)
to Company and Administrative Agent of such determination (which notice
Administrative Agent shall promptly transmit to each other Lender). Thereafter
(a) the obligation of the Affected Lender to make Loans as, or to convert Loans
to, Eurodollar Rate Loans, shall be suspended until such notice shall be
withdrawn by the Affected Lender, (b) to the extent such determination by the
Affected Lender relates to a Eurodollar Rate Loan then being requested by
Company pursuant to a Notice of Borrowing or a Notice of Conversion/
Continuation, the Affected Lender shall make such Loan as (or convert such Loan
to, as the case may be) a Base Rate Loan, (c) the Affected Lender's obligation
to maintain its outstanding Eurodollar Rate Loans, as the case may be (the
"Affected Loans"), shall be terminated at the earlier to occur of the expiration
of the Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telecopy or by telephone confirmed in writing) to Administrative
Agent of such rescission on the date on which the Affected Lender gives notice
of its determination as described above (which notice of rescission
Administrative Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the
<PAGE>
obligation of any Lender other than an Affected Lender to make or maintain Loans
as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms
of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Borrowing or a telephonic request for
borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Conversion/Continuation or
a telephonic request for conversion or continuation, (ii) if any prepayment
(including without limitation any prepayment pursuant to subsection 2.4B(i)) or
conversion of any of its Eurodollar Rate Loans occurs on a date that is not the
last day of an Interest Period applicable to that Loan, (iii) if any prepayment
of any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Company, or (iv) as a consequence of any other
default by Company in the repayment of its Eurodollar Rate Loans when required
by the terms of this Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A shall be made as though that Lender had actually funded each of its
relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and during
the continuation of a Potential Event of Default or an Event of Default, (i)
Company may not elect to have a Loan be made or maintained as, or converted to,
a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
<PAGE>
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force of
law):
(i) results in a change in the basis of taxation of such Lender (or
its applicable lending office) (other than a change with respect to any
Tax on the overall net income of such Lender) with respect to this
Agreement or any of its obligations hereunder or any payments to such
Lender (or its applicable lending office) of principal, interest, fees or
any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including,
without limitation, any marginal, emergency, supplemental, special or
other reserve), special deposit, compulsory loan, FDIC insurance or
similar requirement against assets held by, or deposits or other
liabilities in or for the account of, or advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of
such Lender (other than any such reserve or other requirements with
respect to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder, or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Eurodollar Rate Loans hereunder or to
reduce any amount received or receivable by such Lender (or its applicable
lending office) with respect thereto; then, in any such case, Lender shall
promptly notify Company and Administrative Agent thereof and Company shall
promptly pay to such Lender, upon receipt of the statement referred to in the
next sentence, such additional amount or amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender shall reasonably determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be prima facie evidence of such additional amounts.
<PAGE>
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company under
this Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by
or within the United States of America or any political subdivision in or
of the United States of America or any other jurisdiction from which a
payment is made by or on behalf of Company.
(ii) Withholding of Taxes. If Company or any other Person is
required by law to make any deduction or withholding on account of any
such Tax from any sum paid or payable by Company to Administrative Agent
or any Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability
to pay is imposed on Company) for its own account or (if that
liability is imposed on Administrative Agent or such Lender, as the
case may be) on behalf of and in the name of Administrative Agent or
such Lender;
(c) the sum payable by Company in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making
of that deduction, withholding or payment, Administrative Agent or
such Lender, as the case may be, receives on the due date a net sum
equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required
by clause (b) above to pay, Company shall deliver to Administrative
Agent evidence of such deduction, withholding or payment and of the
remittance thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change
after the date hereof (in the case of each Lender listed on the signature
pages hereof) or after the date of the Assignment Agreement pursuant to
which such Lender became a Lender (in the case of each other Lender) in
any such requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of such
deduction, withholding or payment
<PAGE>
from that in effect at the date of this Agreement or at the date of such
Assignment Agreement, as the case may be, in respect of payments to such
Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "Non-US Lender") shall deliver to Administrative Agent
for transmission to Company, on or prior to the Closing Date (in the
case of each Lender listed on the signature pages hereof) or on or
prior to the date of the Assignment Agreement pursuant to which it
becomes a Lender (in the case of each other Lender), and at such
other times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service
Form 1001 or 4224 (or any successor forms), accurately completed and
duly executed by such Lender, together with any other certificate or
statement of exemption required under the Internal Revenue Code or
the regulations issued thereunder to establish that such Lender is
not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and
cannot deliver either Internal Revenue Service Form 1001 or 4224 (or
any successor forms) pursuant to clause (1) above, a Certificate re
Non-Bank Status together with two original copies of Internal
Revenue Service Form W-8 (or any successor form), properly completed
and duly executed by such Lender, together with any other
certificate or statement of exemption required under the Internal
Revenue Code or the regulations issued thereunder to establish that
such Lender is not subject to deduction or withholding of United
States federal income tax with respect to any payments to such
Lender of interest payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby
agrees, from time to time after the initial delivery by such Lender
of such forms, certificates or other evidence, whenever a lapse in
time or change in circumstances renders such forms, certificates or
other evidence obsolete or inaccurate in any material respect, such
Lender shall (1) deliver to Administrative Agent for transmission to
Company two new original copies of Internal Revenue Service Form
1001 or 4224 (or any successor forms), or a Certificate re Non-Bank
Status and two original copies of Internal Revenue Service Form W-8
(or any successor form), as the case may be, accurately completed
and duly executed by such Lender, together with any other
certificate or statement of exemption required in order to confirm
or establish that such Lender is not subject to deduction or
withholding of United States federal
<PAGE>
income tax with respect to payments to such Lender under the Loan
Documents or (2) immediately notify Administrative Agent and Company
of its inability to deliver any such forms, certificates or other
evidence.
(c) Company shall not be required to pay any additional amount
to any Non-US Lender under clause (c) of subsection 2.7B(ii) in
respect of deductions or withholdings of United States federal
income taxes if such Lender shall have failed to satisfy the
requirements of subsection 2.7B(iii)(a) or 2.7B(iii)(b); provided
that if such Lender shall have satisfied such requirements on the
Closing Date (in the case of each Lender listed on the signature
pages hereof) or on the date of the Assignment Agreement pursuant to
which it became a Lender (in the case of each other Lender), nothing
in this subsection 2.7B(iii)(c) shall relieve Company of its
obligation to pay any additional amounts pursuant to clause (c) of
subsection 2.7B(ii) in the event that, as a result of any change in
any applicable law, treaty or governmental rule, regulation or
order, or any change in the interpretation, administration or
application thereof, such Lender is no longer properly entitled to
deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding
as described in subsection 2.7B(iii)(a) or 2.7B(iii)(b).
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by the National Association of Insurance Commissioners, any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its applicable lending
office) with any guideline, request or directive regarding capital adequacy
(whether or not having the force of law) of the National Association of
Insurance Commissioners, any such governmental authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Loans or Commitments or
Letters of Credit or participations therein or other obligations hereunder with
respect to the Loans or the Letters of Credit to a level below that which such
Lender reasonably determines such Lender or such controlling corporation could
have achieved but for such adoption, effectiveness, phase-in, applicability,
change or compliance (taking into consideration the policies of such Lender or
such controlling corporation with regard to capital adequacy), then from time to
time, within fifteen Business Days after receipt by Company from such Lender of
the statement referred to in the next sentence, Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
<PAGE>
D. Substitute Lenders. In the event Company is required under the
provisions of this subsection 2.7 to make payments in a material amount to any
Lender or in the event any Lender fails to lend to Company in accordance with
this Agreement, Company may, so long as no Event of Default or Potential Event
of Default shall have occurred and be continuing, elect to terminate such Lender
as a party to this Agreement; provided that, concurrently with such termination,
(i) Company shall pay that Lender all principal, interest and fees and other
amounts (including without limitation amounts, if any, owed under this
subsection 2.7) due to be paid to such Lender with respect to all periods
through such date of termination, (ii) another financial institution
satisfactory to Company and Administrative Agent (or, in the case of a
Co-Administrative Agent that is also the Lender to be terminated, its successor
Co-Administrative Agent) shall agree, as of such date, to become a Lender for
all purposes under this Agreement (whether by assignment or amendment) and to
assume all obligations of the Lender to be terminated as of such date, and (iii)
all documents and supporting materials necessary, in the judgment of
Administrative Agent (or, in the case of a Co-Administrative Agent that is also
the Lender to be terminated, its successor Co-Administrative Agent) to evidence
the substitution of such Lender shall have been received and approved by
Co-Administrative Agents as of such date.
2.8 Obligation of Lenders and Issuing Lenders to Mitigate.
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender or Issuing Lender to receive payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be
materially reduced and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of such Commitments
or Loans or Letters of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or Loans or Letters of
Credit or the interests of such Lender or Issuing Lender; provided that such
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Company agrees to
pay all incremental expenses incurred by such Lender or Issuing Lender as a
result of utilizing such other lending or letter of credit office. A certificate
as to the amount of any such expenses payable by Company pursuant to this
subsection 2.8 (setting forth in reasonable detail the basis for requesting such
amount) submitted by such Lender or
<PAGE>
Issuing Lender to Company (with a copy to Administrative Agent) shall be
conclusive absent manifest error.
SECTION 3.
LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein.
A. Letters of Credit. In addition to Company requesting that Lenders make
Revolving Loans pursuant to subsection 2.1A(ii), and that Swing Line Lender make
Swing Line Loans pursuant to subsection 2.1A(iii), Company may request, in
accordance with the provisions of this subsection 3.1, from time to time during
the period from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date, that one or more Lenders issue Letters of Credit for the
account of Company for the purposes specified in the definitions of Commercial
Letters of Credit and Standby Letters of Credit. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, any one or more Lenders may, but (except
as provided in subsection 3.1B(ii)) shall not be obligated to, issue such
Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Lender issue (and no Lender
shall issue):
(i) any Letter of Credit if, after giving effect to such issuance,
the Total Utilization of Revolving Loan Commitments would exceed the
Revolving Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such issuance,
the Letter of Credit Usage would exceed $5,000,000;
(iii) any Standby Letter of Credit having an expiration date later
than the earlier of (a) the Revolving Loan Commitment Termination Date and
(b) the date which is one year from the date of issuance of such Standby
Letter of Credit; provided that the immediately preceding clause (b) shall
not prevent any Issuing Lender from agreeing that a Standby Letter of
Credit will automatically be extended for one or more successive periods
not to exceed one year each unless such Issuing Lender elects not to
extend for any such additional period; provided further that, unless
Requisite Lenders otherwise consent, such Issuing Lender shall give notice
that it will not extend such Standby Letter of Credit if it has knowledge
that an Event of Default has occurred and is continuing on the last day on
which such Issuing Lender may give notice to the beneficiary that it will
not extend such Standby Letter of Credit;
(iv) any Commercial Letter of Credit (a) having an expiration date
later than the earlier of (X) 30 days prior to the Revolving Loan
Commitment Termination Date and (Y) the date which is 180 days from the
date of issuance of such Commercial Letter
<PAGE>
of Credit or (b) that is otherwise unacceptable to the applicable Issuing
Lender in its reasonable discretion;
(v) any Letter of Credit denominated in a currency other than
Dollars; or
(vi) any Letter of Credit during any period when a Lender Default
exists, unless each Issuing Lender has entered into arrangements
satisfactory to it and Company to eliminate such Issuing Lender's risk
with respect to the Defaulting Lender, including by cash collateralizing
such Defaulting Lender's Pro Rata Share of the Letter of Credit Usage
(after giving effect to the issuance of the proposed Letter of Credit).
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires the issuance of a
Letter of Credit, it shall deliver to Administrative Agent, at the Funding
and Payment Office, a Notice of Issuance of Letter of Credit no later than
12:00 Noon (New York time) at least five Business Days, or such shorter
period as may be agreed to by the Issuing Lender in any particular
instance, in advance of the proposed date of issuance. The Notice of
Issuance of Letter of Credit shall specify (a) the proposed date of
issuance (which shall be a Business Day), (b) the face amount of or
maximum aggregate liability under, as applicable, the Letter of Credit,
(c) the expiration date of the Letter of Credit, (d) the name and address
of the beneficiary, and (e) the verbatim text of the proposed Letter of
Credit or the proposed terms and conditions thereof, including a precise
description of any documents and the verbatim text of any certificates to
be presented by the beneficiary which, if presented by the beneficiary
prior to the expiration date of the Letter of Credit, would require the
Issuing Lender to make payment under the Letter of Credit; provided that
the Issuing Lender, in its reasonable discretion, may require changes in
the text of the proposed Letter of Credit or any such documents or
certificates; provided further that no Letter of Credit shall require
payment against a conforming draft or other request for payment to be made
thereunder on the same business day (under the laws of the jurisdiction in
which the office of the Issuing Lender to which such draft or other
request for payment is required to be presented is located) that such
draft or other request for payment is presented if such presentation is
made after 10:00 A.M. (in the time zone of such office of the Issuing
Lender) on such business day.
Company shall notify the applicable Issuing Lender (and
Administrative Agent, if Administrative Agent is not such Issuing Lender)
prior to the issuance of any Letter of Credit in the event that any of the
matters to which Company is required to certify in the applicable Notice
of Issuance of Letter of Credit is no longer true and correct as of the
proposed date of issuance of such Letter of Credit, and upon the issuance
of any Letter of Credit, Company shall be deemed to have re-certified, as
of the date of such issuance, as to the matters to which Company is
required to certify in the applicable Notice of Issuance of Letter of
Credit.
<PAGE>
(ii) Determination of Issuing Lender. Upon receipt by Administrative
Agent of a Notice of Issuance of Letter of Credit pursuant to subsection
3.1B(i) requesting the issuance of a Letter of Credit, in the event
Administrative Agent elects to issue such Letter of Credit, Administrative
Agent shall promptly so notify Company, and such Administrative Agent
shall be the Issuing Lender with respect thereto. In the event that
Administrative Agent, in its sole discretion, elects not to issue such
Letter of Credit, Administrative Agent shall promptly so notify the
Company, whereupon Company may request any other Lender to issue such
Letter of Credit by delivering to such Lender a copy of the applicable
Notice of Issuance of Letter of Credit. Any Lender so requested to issue
such Letter of Credit shall promptly notify Company and Administrative
Agent whether or not, in its sole discretion, it has elected to issue such
Letter of Credit, and any such Lender which so elects to issue such Letter
of Credit shall be the Issuing Lender with respect thereto. In the event
that all other Lenders shall have declined to issue such Letter of Credit,
notwithstanding the prior election of Administrative Agent not to issue
such Letter of Credit, Administrative Agent shall be obligated to issue
such Letter of Credit and shall be the Issuing Lender with respect
thereto, notwithstanding the fact that the sum of the Letter of Credit
Usage with respect to such Letter of Credit and with respect to all other
Letters of Credit issued by Administrative Agent, when aggregated with
Administrative Agent's outstanding Revolving Loans and Swing Line Loans,
may exceed Administrative Agent's Revolving Loan Commitment then in
effect.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating procedures (any
such issuance by Administrative Agent being effected through the Funding
and Payment Office), and upon its issuance of such Letter of Credit the
Issuing Lender shall promptly notify Administrative Agent and each Lender
of such issuance, which notice shall be accompanied by a copy of such
Letter of Credit.
(iv) Reports to Lenders. Within 30 days after the end of each
calendar quarter ending after the Closing Date, so long as any Letter of
Credit shall have been outstanding during such calendar quarter, each
Issuing Lender shall deliver to Administrative Agent and Administrative
Agent shall deliver to each Lender a report setting forth for such
calendar quarter the daily maximum amount available to be drawn under the
Letters of Credit that were outstanding during such calendar quarter.
C. Lenders' Purchase of Participations in Letters of Credit. Immediately
upon the issuance of each Letter of Credit, each Lender having a Revolving Loan
Commitment shall be deemed to, and hereby agrees to, have irrevocably purchased
from the Issuing Lender a participation in such Letter of Credit and any
drawings honored or payments made thereunder in an amount equal to such Lender's
Pro Rata Share (with respect to the Revolving Loan Commitments) of the maximum
amount which is or at any time may become available to be drawn or required to
be paid thereunder.
<PAGE>
3.2 Letter of Credit Fees.
Company agrees to pay the following amounts to each Issuing Lender with
respect to Letters of Credit issued by it for the account of Company:
(i) with respect to each Letter of Credit, (a) a fronting fee equal
to 1/4 of 1% per annum of the daily maximum amount available to be drawn
under such Letter of Credit and (b) a Letter of Credit fee equal to the
product of (x) the Applicable Eurodollar Rate Margin with respect to
Revolving Loans and (y) the daily maximum amount available to be drawn
under such Letter of Credit, in each case payable in arrears on and to
each March 15, June 15, September 15 and December 15 of each year,
commencing on March 15, 1997, and computed on the basis of a 360-day year
for the actual number of days elapsed; and
(ii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder (without duplication of
the fees payable under clause (i) above), documentary and processing
charges in accordance with such Issuing Lender's standard schedule for
such charges in effect at the time of such issuance, amendment, transfer
or drawing, as the case may be.
Promptly upon receipt by such Issuing Lender of any amount described in clause
(i)(b) of this subsection 3.2, such Issuing Lender shall distribute to each
other Lender its Pro Rata Share of such amount.
3.3 Drawings and Payments and Reimbursement of Amounts Paid Under Letters of
Credit.
A. Responsibility of Issuing Lender With Respect to Requests For Drawings
and Payments. In determining whether to honor any drawing or request for payment
under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall
be responsible only to determine that the documents and certificates required to
be delivered under such Letter of Credit have been delivered and that they
comply on their face with the requirements of such Letter of Credit.
B. Reimbursement by Company of Amounts Paid Under Letters of Credit. In
the event an Issuing Lender has determined to honor a drawing or request for
payment under a Letter of Credit issued by it, such Issuing Lender shall
immediately notify Company and Administrative Agent, and Company shall reimburse
such Issuing Lender on or before the Business Day immediately following the date
on which such drawing is honored or such payment is made (the applicable
"Reimbursement Date"), in an amount in same day funds equal to the amount of
such drawing; provided that, anything contained in this Agreement to the
contrary notwithstanding, (i) unless Company shall have notified Administrative
Agent and such Issuing Lender prior to 12:00 Noon (New York time) on the date of
such drawing or request for payment that Company intends to reimburse such
Issuing Lender for the amount of such honored
<PAGE>
drawing or payment with funds other than the proceeds of Revolving Loans,
Company shall be deemed to have given a timely Notice of Borrowing to
Administrative Agent requesting Lenders to make Revolving Loans which are Base
Rate Loans, on the applicable Reimbursement Date in an amount equal to the
amount of such honored drawing or payment and (ii) subject to satisfaction or
waiver of the conditions specified in subsection 4.2B, Lenders shall, on the
applicable Reimbursement Date, make Revolving Loans and in the amount of such
honored drawing or payment, the proceeds of which shall be applied directly by
Administrative Agent to reimburse such Issuing Lender for the amount of such
honored drawing or payment; provided further that if for any reason proceeds of
Revolving Loans are not received by such Issuing Lender on the applicable
Reimbursement Date in an amount equal to the amount of such honored drawing or
payment, Company shall reimburse such Issuing Lender, on demand, in an amount in
Dollars and in same day funds equal to the excess of the amount of such honored
drawing or payment over the aggregate amount of such Revolving Loans, if any,
which are so received. Nothing in this subsection 3.3B shall be deemed to
relieve any Lender from its obligation to make Revolving Loans on the terms and
conditions set forth in this Agreement, and Company shall retain any and all
rights it may have against any Lender resulting from the failure of such Lender
to make such Revolving Loans under this subsection 3.3B.
C. Payment by Lenders of Unreimbursed Payments Under Letters of Credit.
(i) Payment by Lenders. In the event that Company shall fail for any
reason to reimburse any Issuing Lender as provided in subsection 3.3B in
an amount equal to the amount of any honored drawing or payment made by
such Issuing Lender under a Letter of Credit issued by it, such Issuing
Lender shall promptly notify each other Lender of the unreimbursed amount
of such honored drawing or payment and of such other Lender's respective
participation therein based on such Lender's Pro Rata Share of the
Revolving Loan Commitments. Each Lender shall make available to such
Issuing Lender an amount equal to its respective participation, in same
day funds, at the office of such Issuing Lender specified in such notice,
not later than 12:00 Noon (New York time) on the first business day (under
the laws of the jurisdiction in which such office of such Issuing Lender
is located) after the date notified by such Issuing Lender. In the event
that any Lender fails to make available to such Issuing Lender on such
business day the amount of such Lender's participation in such Letter of
Credit as provided in this subsection 3.3C, such Issuing Lender shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the rate customarily used by such Issuing Lender for
the correction of errors among banks for three Business Days and
thereafter at the Base Rate. Nothing in this subsection 3.3C shall be
deemed to prejudice the right of any Lender to recover from any Issuing
Lender any amounts made available by such Lender to such Issuing Lender
pursuant to this subsection 3.3C in the event that it is determined by the
final judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit by such Issuing Lender in respect of which
payment was made by such Lender constituted gross negligence or willful
misconduct on the part of such Issuing Lender.
<PAGE>
(ii) Distribution to Lenders of Reimbursements Received From
Company. In the event any Issuing Lender shall have been reimbursed by
other Lenders pursuant to subsection 3.3C(i) for all or any portion of any
honored drawing or payment made by such Issuing Lender under a Letter of
Credit issued by it, such Issuing Lender shall distribute to each other
Lender which has paid all amounts payable by it under subsection 3.3C(i)
with respect to such honored drawing or payment such other Lender's Pro
Rata Share of all payments subsequently received by such Issuing Lender
from Company in reimbursement of such honored drawing or payment when such
payments are received. Any such distribution shall be made to a Lender at
its primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request.
D. Interest on Amounts Paid Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to pay to each
Issuing Lender, with respect to drawings honored or payments made under
any Letters of Credit issued by it, interest on the amount paid by such
Issuing Lender in respect of each such drawing or payment from the date
such drawing is honored or payment is made to but excluding the date such
amount is reimbursed by Company (including any such reimbursement out of
the proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate
equal to (a) for the period from the date such drawing is honored or
payment is made to but excluding the applicable Reimbursement Date, the
Base Rate plus the Applicable Base Rate Margin with respect to Revolving
Loans, and (b) thereafter, a rate which is 2% per annum in excess of the
rate of interest described in the foregoing clause (a). Interest payable
pursuant to this subsection 3.3D(i) shall be computed on the basis of a
360-day year for the actual number of days elapsed in the period during
which it accrues and shall be payable on demand or, if no demand is made,
on the date on which the related drawing or payment under a Letter of
Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly
upon receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i), (a) such Issuing Lender shall distribute to each other
Lender, out of the interest received by such Issuing Lender in respect of
the period from the date of the applicable honored drawing or payment
under a Letter of Credit issued by such Issuing Lender to but excluding
the date on which such Issuing Lender is reimbursed for the amount of such
drawing or payment (including any such reimbursement out of the proceeds
of Revolving Loans pursuant to subsection 3.3B), the amount that such
other Lender would have been entitled to receive in respect of the Letter
of Credit fee that would have been payable in respect of such Letter of
Credit for such period pursuant to subsection 3.2 if no drawing had been
honored or payment had been made under such Letter of Credit, and (b) in
the event such Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of such drawing or
payment, such Issuing Lender shall distribute to each other Lender which
has paid all amounts payable by it under subsection 3.3C(i) with respect
to such drawing or payment such other Lender's
<PAGE>
Pro Rata Share of any interest received by such Issuing Lender in respect
of that portion of such drawing or payment so reimbursed by other Lenders
for the period from the date on which such Issuing Lender was so
reimbursed by other Lenders to and including the date on which such
portion of such drawing or payment is reimbursed by Company. Any such
distribution shall be made to a Lender at its Lending Office set forth on
Schedule 2.1 or at such other address as such Lender may request.
3.4 Obligations Absolute.
The obligation of Company to reimburse each Issuing Lender for drawings
honored or payments made under the Letters of Credit issued by it and to repay
any Revolving Loans made by Lenders pursuant to subsection 3.3B and the
obligations of Lenders under subsection 3.3C(i) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right
which Company or any Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Company whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one
of its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by the applicable Issuing Lender under any Letter of
Credit against presentation of a demand, draft or certificate or other
document which does not substantially comply with the terms of such Letter
of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
<PAGE>
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 Indemnification; Nature of Issuing Lender's Duties.
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing or other request for payment under any such Letter of Credit as a result
of any act or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or governmental authority (all such acts or
omissions herein called "Governmental Acts").
B. Nature of Issuing Lenders' Duties. As between Company and any Issuing
Lender, Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by such Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing or
payment under such Letter of Credit; or (viii) any consequences arising from
causes beyond the control of such Issuing Lender, including, without limitation,
any Governmental Acts, and
<PAGE>
none of the above shall affect or impair, or prevent the vesting of, any of such
Issuing Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection 3.5,
Company shall retain any and all rights it may have against any Issuing Lender
for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
In the event that any law, treaty or governmental rule, regulation or
order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by any Issuing Lender or Lender with any guideline,
request or directive issued or made after the date hereof by any central bank or
other governmental or quasi-governmental authority (whether or not having the
force of law):
(i) results in any change in the basis of taxation of such Issuing
Lender or Lender (or its applicable lending or letter of credit office)
(other than a change with respect to any Tax on the overall net income of
such Issuing Lender or Lender) with respect to the issuing or maintaining
of any Letters of Credit or the purchasing or maintaining of any
participations therein or any other obligations under this Section 3,
whether directly or by such being imposed on or suffered by any particular
Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including,
without limitation, any marginal, emergency, supplemental, special or
other reserve), special deposit, compulsory loan, FDIC insurance or
similar requirement in respect of any Letters of Credit issued by any
Issuing Lender or participations therein purchased by any Lender; or
(iii) imposes any other condition on or affecting such Issuing
Lender or Lender (or its applicable lending or letter of credit office)
regarding this Section 3 or any Letter of Credit or any participation
therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase,
<PAGE>
purchasing or maintaining any participation therein or to reduce any amount
received or receivable by such Issuing Lender or Lender (or its applicable
lending or letter of credit office) with respect thereto; then, in any case,
Company shall promptly pay to such Issuing Lender or Lender, upon receipt of the
statement referred to in the next sentence, such additional amount or amounts
(reasonably determined by such Issuing Lender or Lender) as may be necessary to
compensate such Issuing Lender or Lender for any such increased cost or
reduction in amounts received or receivable hereunder. Such Issuing Lender or
Lender shall deliver to Company a written statement, setting forth in reasonable
detail the basis for calculating the additional amounts owed to such Issuing
Lender or Lender under this subsection 3.6, which statement shall be prima facie
evidence of such additional amounts.
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters of
Credit hereunder are subject to the satisfaction of the following conditions.
4.1 Conditions to Term Loans and Acquisition Revolving Loans.
The obligations of Lenders to make the Term Loans and the Acquisition
Revolving Loans are, in addition to the conditions precedent specified in
subsection 4.2, subject to prior or concurrent satisfaction of the following
conditions:
A. MBW LLC, Holdings and Company Documents.
(i) On or before the Closing Date, each of Holdings and Company
shall deliver or cause to be delivered to Lenders (or to Administrative
Agent for Lenders with sufficient originally executed copies, where
appropriate, for each Lender and its counsel) the following, each, unless
otherwise noted, dated the Closing Date:
(a) Certified copies of its Certificate of Incorporation,
together with a good standing certificate from the Secretary of
State of the State of Delaware and each other state in which it is
qualified as a foreign corporation to do business, each dated a
recent date prior to the Closing Date;
(b) Copies of its Bylaws, certified as of the Closing Date by
its corporate secretary or an assistant secretary as being in full
force and effect without modification or amendment;
(c) Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents and Related Agreements to
which it is a party, certified as of the
<PAGE>
Closing Date by its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
(d) Signature and incumbency certificates of its officers
executing this Agreement and the other Loan Documents;
(e) Executed originals of this Agreement and the other Loan
Documents to which it is a party; and
(f) Such other documents as Agents may reasonably request.
(ii) On or before the Closing Date, MBW LLC shall deliver or cause
to be delivered to Administrative Agent the following, each, unless
otherwise noted, dated the Closing Date:
(a) Certified copies of its Certificate of Formation, together
with a good standing certificate from the Secretary of State of the
State of Delaware and each other state in which it is qualified as a
foreign limited liability company to do business, each dated a
recent date prior to the Closing Date; and
(b) Copies of the MBW LLC Agreement and any other
organizational document in effect with respect to MBW LLC, certified
as of the Closing Date by a manager of MBW LLC as being in full
force and effect without modification or amendment.
B. No Material Adverse Effect. Since September 30, 1996, no Material
Adverse Effect (in the opinions of Administrative Agent or Lenders) shall have
occurred.
C. Corporate and Capital Structure; Capitalization of MBW LLC, Holdings
and Company; Management.
(i) Corporate Structure. The corporate organizational structure,
capital structure and ownership of MBW LLC and Holdings and its
Subsidiaries, after giving effect to the Acquisition, shall be as set
forth on Schedule 4.1C annexed hereto. MBW LLC shall have no Subsidiaries
on the Closing Date other than Holdings and Company.
(ii) Capital Structure and Ownership; Capitalization of MBW LLC,
Holdings and Company. The capital structure and ownership of MBW LLC,
Holdings and Company, both before and after giving effect to the
Acquisition, shall be as set forth on Schedule 4.1C annexed hereto. On or
before the Closing Date, (a) the MDC Entities, Dartford, Fenway and the
Management Investors shall have purchased all of the outstanding
membership interests in MBW LLC for cash consideration of not less than
$33,800,000 and total consideration of not less than $34,800,000 (it being
understood that up to $200,000 of the consideration for the purchase of
membership interests in
<PAGE>
MBW LLC may be paid by management officers and employees after the Closing
Date), (b) MBW LLC shall have contributed to Holdings, as common equity,
the cash proceeds of such sale of membership interests in MBW LLC, and (c)
Holdings shall have contributed to Company, as common equity, the cash
proceeds of such equity contribution by MBW LLC. The MDC Entities shall
have purchased more than 50% of the membership interests of MBW LLC.
Company shall have provided evidence satisfactory to Agents that the
proceeds of the equity capitalization of Company described in the
immediately preceding sentence have been irrevocably committed, prior to
the application of the proceeds of the Term Loans and the Acquisition
Revolving Loans, to the payment of a portion of the purchase price for the
Business and/or Transaction Costs. On the Closing Date, Holdings shall
have issued and placed in escrow pursuant to the Warrant Escrow Agreement
Warrants representing 15% of the fully diluted common equity of Holdings
as of the Closing Date.
(iii) Management. The management structure of Holdings and Company
after giving effect to the Acquisition shall be as set forth on Schedule
4.1C annexed hereto. Agents shall have received duly executed copies of,
and shall be satisfied with the form and substance of, the Employment
Agreements, certified by the corporate secretary of Company as being in
full force and effect as of the Closing Date without modification, waiver
or amendment.
D. Acquisition Agreement. On the Closing Date (i) Agents shall have
received executed or conformed copies of the Acquisition Agreement and any
amendments thereto and documents executed in connection therewith, (ii) such
Acquisition Agreement shall be in full force and effect and, no term or
condition thereof shall have been amended, modified or waived after the
execution thereof except with the prior written consent of Arranging Agent,
(iii) the parties thereto shall not have failed in any material respect to
perform any material obligation or covenant required by any such Acquisition
Agreement to be performed or complied with by any of them on or before the
Closing Date, and (iv) Agents shall have received an Officer's Certificate from
Company to the effect set forth in clauses (ii) and (iii).
E. Issuance of Subordinated Bridge Notes. On or before the Closing Date,
Company shall have issued and sold the Subordinated Bridge Notes in an aggregate
principal amount of not less than $50,000,000 and Company shall have delivered
to Administrative Agent complete, correct and conformed copies of the
Subordinated Bridge Notes, the Subordinated Bridge Loan Agreement, the
Subordinated Bridge Loan Guaranties and the other principal Subordinated Bridge
Loan Documents, all in form and substance reasonably satisfactory to
Administrative Agent. Company shall have provided evidence satisfactory to
Agents that the proceeds of Subordinated Bridge Loans have been irrevocably
committed, prior to the application of the proceeds of the Term Loans and the
Acquisition Revolving Loans, to the payment of a portion of the purchase price
of the Business and/or Transaction Costs.
F. Related Agreements. Administrative Agent shall have received (i) a
fully executed or conformed copy of each Related Agreement and all principal
documents executed
<PAGE>
in connection therewith, and each Related Agreement shall be in full force and
effect (except for those Related Agreements not executed on or prior to the
Closing Date) and no provision thereof shall have been modified or waived in any
respect determined by Agents to be material, in each case without consent of
Agents and (ii) an Officer's Certificate from Company to the effect set forth in
clause (i), and each such Related Agreement (including without limitation the
Transition Agreements) shall be reasonably satisfactory in form and substance to
Agents.
G. Consummation of Acquisition.
(i) All conditions to the Acquisition set forth in the Acquisition
Agreement shall have been satisfied or the fulfillment of any such
conditions shall have been waived with the consent of Administrative
Agent;
(ii) Agents shall have received evidence in form and substance
satisfactory to Agents that the Acquisition shall become effective in
accordance with the terms of the Acquisition Agreement immediately upon
the making of the initial Loans;
(iii) the aggregate cash consideration paid to Seller in connection
with the Acquisition (excluding amounts to be paid after the Closing Date
relating to excess Inventory on the Closing Date) shall not exceed
$116,000,000;
(iv) Transaction Costs shall not exceed $14,000,000, and Agents
shall have received evidence satisfactory in form and substance to Agents
to such effect: and
(v) Agents shall have received an Officer's Certificate of Company
to the effect set forth in clauses (i)-(iv) above and stating that Company
will proceed to consummate the Acquisition immediately upon the making of
the initial Loans.
H. Existing Liens; No Other Indebtedness Outstanding. All security
interests attaching to any of the assets of the Business created to secure
obligations under any Indebtedness of Seller shall have been terminated, and
Company shall have delivered to Administrative Agent UCC-3 termination
statements or assignments (or comparable forms) and any and all other
instruments of release, satisfaction, assignment and/or reconveyance (or
evidence of the filing thereof) as may be necessary or advisable to terminate
all such security interests and all other security interests in the Collateral.
Agents shall have received an Officers' Certificate of Company stating that,
after giving effect to the transactions described in this subsection 4.1H, Loan
Parties shall have no Indebtedness outstanding other than Indebtedness under the
Loan Documents and under the Subordinated Bridge Loan Documents.
I. Necessary Consents. Company shall have obtained all consents necessary
or advisable in connection with the Acquisition, the transactions contemplated
by the Loan Documents and Related Agreements and the continued operation of the
business conducted by Company and its Subsidiaries, and each of the foregoing
shall be in full force and effect and in form and substance satisfactory to
Administrative Agent (except as disclosed to and approved
<PAGE>
by Administrative Agent). All applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority which
would restrain, prevent or otherwise impose adverse conditions on the
Acquisition or the financing thereof, and no action, request for stay, petition
for review or rehearing, reconsideration or appeal shall be pending and any time
for agency action to set aside its consent on its own motion shall have expired.
J. Maximum Utilization of Revolving Loan Commitments On the Closing Date,
after giving effect to the Acquisition, the Total Utilization of Revolving Loan
Commitments shall not exceed $30,000,000.
K. Collateral Access Agreements. Agents shall have received from Company
Collateral Access Agreements in form and substance satisfactory to
Administrative Agent executed by Seller with respect to any facility of Seller
at which equipment of Company is located on the Closing Date. Neither Holdings
nor Company shall own any interest in any real property on the Closing Date
other than its Leasehold Property interest in its offices in Columbus, Ohio.
L. Perfection of Security Interests in Personal Property and Mixed
Collateral. Holdings and Company shall have taken or caused to be taken such
actions in such a manner so that Administrative Agent has, for the benefit of
Agents and Lenders, a valid and perfected First Priority security interest in
the entire personal property and mixed Collateral. Such actions shall include,
without limitation: (i) the delivery pursuant to the applicable Collateral
Documents of (a) certificates (which certificates shall be properly endorsed in
blank for transfer or accompanied by irrevocable undated stock powers duly
endorsed in blank, all in form and substance satisfactory to Administrative
Agent) representing all of the shares of capital stock required to be pledged
pursuant to the Collateral Documents, and (b) all promissory notes or other
instruments (duly endorsed, where appropriate, in a manner satisfactory to
Administrative Agent) evidencing any Collateral; (ii) delivery to Agents of (a)
the results of a recent search, by a Person satisfactory to Agents, of all
effective Uniform Commercial Code financing statements and fixture filings and
all judgment and tax lien filings which may have been made with respect to any
personal or mixed property of any Loan Party, together with copies of all such
filings disclosed by such search; (iii) the delivery to Administrative Agent of
Uniform Commercial Code financing statements and fixture filings executed by the
applicable Loan Parties as to all such Collateral granted by such Loan Parties
for all jurisdictions as may be necessary or desirable to perfect Administrative
Agent's security interest in such Collateral; (iv) the delivery to
Administrative Agent of all cover sheets or other documents or instruments
required to be filed with the PTO or the United States Copyright Office in order
to create or perfect Liens in respect of any IP Collateral or any registered
copyrights of Company; and (v) the delivery to Administrative Agent of evidence
reasonably satisfactory to Administrative Agent that all other filings
(including, without limitation, filings of Uniform Commercial Code termination
statements and termination statements with respect to prior Liens on IP
Collateral), recordings and other actions that Administrative Agent deems
necessary or advisable to establish, preserve and perfect the First Priority
Liens granted to Administrative Agent in personal and mixed property shall have
been made.
<PAGE>
M. Solvency Appraisal; Appraisal of Fixed Assets, Trademarks and
Tradenames. Administrative Agent shall have received a letter from American
Appraisal Associates, Inc. dated the Closing Date and addressed to
Administrative Agent and Lenders, in form, scope and substance reasonably
satisfactory to Administrative Agent and with appropriate attachments,
demonstrating that, after giving effect to the consummation of the Acquisition
and the financing transactions contemplated hereby, Holdings and its
Subsidiaries are Solvent. Administrative Agent shall have received an appraisal
of the fixed assets, trademarks and tradenames acquired by Company in the
Acquisition, prepared by American Appraisal Associates, Inc. and dated not
earlier than 30 days before the Closing Date, in form and substance reasonably
satisfactory to Administrative Agent.
N. Transaction Costs. Not less than three days prior to the Closing Date,
Company shall have delivered to Administrative Agent and Lenders a schedule, in
a form satisfactory to Administrative Agent, setting forth Company's reasonable
best estimate of the Transaction Costs (other than amounts payable to Agents and
Lenders).
O. Opinions of Loan Parties' Counsel. Lenders and their respective counsel
shall have received (i) originally executed copies of one or more favorable
written opinions of White & Case, counsel for the Loan Parties, and Richards &
O'Neil, LLP, counsel for the Loan Parties, each in form and substance reasonably
satisfactory to Agents and their counsel, dated as of the Closing Date and
setting forth substantially the matters in the opinions designated in Exhibit
XIII annexed hereto and as to such other matters as Agents acting on behalf of
Lenders may reasonably request, and (ii) evidence satisfactory to Agents that
Loan Parties have instructed such counsel to deliver such opinions to Lenders.
P. Opinions of Agents' Counsel. Lenders shall have received originally
executed copies of one or more favorable written opinions of O'Melveny & Myers
LLP, counsel to Agents, dated as of the Closing Date, substantially in the form
of Exhibit XIV annexed hereto and as to such other matters as Agents acting on
behalf of Lenders may reasonably request.
Q. Opinions of Counsel Delivered Under Related Agreements. Agents and
their counsel shall have received copies of each of the opinions of counsel
(and, if requested by Administrative Agent, any certificates and letters)
delivered to the parties in connection with the Acquisition and the making of
the Subordinated Bridge Loans, together with, to the extent agreed by such law
firm, a letter from each such counsel authorizing Agents and Lenders to rely on
such opinion as though it were addressed to them.
R. Fees. Company shall have paid to Agents, for distribution (as
appropriate) to Agents and Lenders, the fees payable on the Closing Date
referred to in subsection 2.3.
S. Financial Statements; Pro Forma Statement of Assets. On or before the
Closing Date, Lenders shall have received from Company (i) audited financial
statements of the Business for the years ending December 31 of 1994 and 1995,
consisting of statements of operations for such years, (ii) audited financial
statements of the Business as at September 30,
<PAGE>
1996, consisting of a statement of operations for the nine-month period ending
on such date, (iii) a statement of assets acquired as of September 30, 1996, in
reasonable detail, and (iv) a pro forma consolidated statement of assets of
Holdings and its Subsidiaries as at September 30, 1996 prepared in accordance
with GAAP and reflecting the consummation of the Acquisition, the related
financings and the other transactions contemplated by the Loan Documents and the
Related Agreements, which pro forma statement of assets shall be in form and
substance satisfactory to Lenders and shall be certified by the chief financial
officer of Company as (a) prepared based on good faith assumptions and on the
best information available to Company as of the date of delivery thereof and (b)
fairly presenting on a pro forma basis the financial position of Holdings and
Company as at September 30, 1996, as adjusted as described in this clause (iv),
assuming that such events had occurred at such date.
T. Insurance Appraisal; Evidence of Insurance. Administrative Agent shall
have received (i) a copy of the insurance report prepared by Aon Risk Services
with respect to Company and its Subsidiaries and such report shall be in form
and substance satisfactory to Agents, and (ii) satisfactory certificates of
insurance with respect to each of the insurance policies required pursuant to
subsection 6.4, and Agents shall be satisfied with the nature and scope of these
insurance policies.
U. Representations and Warranties; Performance of Agreements. Company
shall have delivered to Administrative Agent an Officer's Certificate, in form
and substance satisfactory to Administrative Agent, to the effect that the
representations and warranties in Section 5 hereof are true and correct in all
material respects on and as of the Closing Date to the same extent as though
made on and as of that date and that Company shall have performed in all
material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by them on or before the
Closing Date, except as otherwise disclosed to and agreed to in writing by
Administrative Agent.
V. Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agents, acting
on behalf of Lenders, and their counsel shall be satisfactory in form and
substance to Agents and such counsel, and Agents and such counsel shall have
received all such counterpart originals or certified copies of such documents as
Agents may reasonably request.
4.2 Conditions to All Loans.
The obligations of Lenders to make Loans on each Funding Date are subject
to the following further conditions precedent:
A. Administrative Agent shall have received on or before that Funding
Date, in accordance with the provisions of subsection 2.1B, an originally
executed Notice of Borrowing, signed by the chief executive officer, the chief
financial officer or the controller of Company
<PAGE>
or by any executive officer of Company designated by any of the above-described
officers on behalf of Company in a writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true and correct in all material respects on
and as of that Funding Date to the same extent as though made on and as of
that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations
and warranties shall have been true and correct in all material respects
on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event
of Default;
(iii) Each Loan Party shall have performed in all material respects
all agreements and satisfied all conditions which this Agreement and the
other Loan Documents provide shall be performed or satisfied by it on or
before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it, on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall not
violate any law including, without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System; and
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Holdings or any of its Subsidiaries or
any property of Holdings or any of its Subsidiaries that has not been
disclosed by Company in writing and that is required to be so disclosed
pursuant to subsection 5.6 or 6.1(x) prior to the making of the last
preceding Loans (or, in the case of the initial Loans, prior to the
execution of this Agreement), and there shall have occurred no development
not so disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed that, in either event, in the
opinion of Administrative Agent or of Requisite Lenders, would be expected
to have a Material Adverse Effect; and no injunction or other restraining
order shall have been issued and no hearing to cause an injunction or
other restraining order to be issued shall be pending or noticed with
respect to any action, suit or proceeding seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as
a result of, the transactions contemplated by this Agreement or the making
of Loans hereunder.
<PAGE>
4.3 Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, signed by the chief executive officer, the chief financial officer or
the controller of Company or by any executive officer of Company designated by
any of the above-described officers on behalf of Company in a writing delivered
to Administrative Agent, together with all other information specified in
subsection 3.1B(i) and such other documents or information as the applicable
Issuing Lender may reasonably require in connection with the issuance of such
Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
SECTION 5.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lender to issue Letters of Credit and to induce other
Lenders to purchase participations therein, each of Holdings and Company
represents and warrants to each Lender, on the date of this Agreement, on each
Funding Date, and on the date of issuance of each Letter of Credit, that the
following statements are true and correct:
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.
A. Organization and Powers. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation. Each Loan Party has all requisite corporate power and authority
to own and operate its properties, to carry on its business as now conducted and
as proposed to be conducted, to enter into the Loan Documents and to carry out
the transactions contemplated thereby. Company has all requisite corporate power
and authority to issue and pay the Notes.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary
<PAGE>
to carry out its business and operations, except in jurisdictions where the
failure to be so qualified, authorized or in good standing has not had and will
not have a Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.12.
D. Company and Subsidiaries. All of the Subsidiaries of Holdings as of the
Closing Date after giving effect to the Acquisition are identified in Schedule
5.1 annexed hereto. The capital stock of each of the Subsidiaries of Company
identified in Schedule 5.1 annexed hereto is duly authorized, validly issued,
fully paid and nonassessable and none of such capital stock constitutes Margin
Stock. Company and each of the Subsidiaries of Holdings identified in Schedule
5.1 annexed hereto are duly organized, validly existing and in good standing
under the laws of their respective jurisdictions of incorporation or formation
set forth therein, have full corporate power and authority to own their assets
and properties and to operate their business as presently owned and conducted
and as proposed to be conducted, and are qualified to do business and in good
standing in every jurisdiction where their assets are located and wherever
necessary to carry out their business and operations, in each case except where
failure to be so qualified or in good standing or a lack of such corporate power
and authority has not had and will not have a Material Adverse Effect. Schedule
5.1 annexed hereto correctly sets forth the ownership interest of Company in
each of its Subsidiaries identified therein.
E. Acquisitions. Each Loan Party shall have, upon consummation thereof,
all requisite corporate power and authority to consummate, on the terms set
forth in the applicable acquisition agreement and related documents, each
Permitted Acquisition consummated by it pursuant to subsection 7.7(vii). Upon
consummation of any such Permitted Acquisition, such Permitted Acquisition shall
have been duly authorized by all necessary corporate action of such Loan Party.
5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents and the Related Agreements and the issuance, delivery and
payment of the Notes have been duly authorized by all necessary corporate or
other action on the part of each of the Loan Parties thereto.
B. No Conflict. After giving effect to the consummation of the
transactions contemplated hereby to occur on the Closing Date, the execution,
delivery and performance by each of the Loan Parties of the Loan Document and
the Related Agreements to which they are parties, the issuance, delivery and
payment of the Notes and the consummation of the transactions contemplated by
the Loan Documents do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to MBW LLC or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws (or other
analogous organizational document) of any Loan Party or any of its Subsidiaries
or any order, judgment
<PAGE>
or decree of any court or other agency of government binding on any Loan Party
or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of any Loan Party or any of its Subsidiaries, (iii)
result in or require the creation or imposition of any Lien upon any of the
properties or assets of any Loan Party or any of its Subsidiaries (other than
any Liens created under any of the Loan Documents in favor of Administrative
Agent on behalf of Lenders), or (iv) require any approval of stockholders or
partners or any approval or consent of any Person under any Contractual
Obligation of any Loan Party or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the Closing Date.
C. Governmental Consents. The execution, delivery and performance by the
Loan Parties of the Loan Documents and Related Agreements to which they are
party, the issuance, delivery and payment of the Notes and the consummation of
the transactions contemplated by the Loan Documents do not and will not require
any registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body except for such registrations, consents, approvals, notices or other
actions which will be made, obtained or taken on or before the Closing Date.
D. Binding Obligation. Each of the Loan Documents and the Related
Agreements has been duly executed and delivered by each of the Loan Parties
party thereto and is the legally valid and binding obligation of each such Loan
Party, enforceable against such Loan Party in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.
E. Valid Issuance of Holdings Common Stock, Subordinated Bridge Notes,
Subordinated Exchange Notes and Warrants.
(i) Holdings Common Stock. The Holdings Common Stock to be sold on
or before the Closing Date, when issued and delivered, will be duly and
validly issued, fully paid and nonassessable. The issuance and sale of
such Holdings Common Stock, upon such issuance and sale, will either (a)
have been registered or qualified under applicable federal and state
securities laws or (b) be exempt therefrom.
(ii) Subordinated Bridge Notes and Subordinated Exchange Notes.
Company has the corporate power and authority to issue the Subordinated
Bridge Notes and the Subordinated Exchange Notes. The Subordinated Bridge
Notes and the Subordinated Exchange Notes, when issued and paid for, will
be the legally valid and binding obligations of Company, enforceable
against Company in accordance with their respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability. The subordination
provisions of the Subordinated Bridge Loan Agreement, the Subordinated
Bridge Notes and the Subordinated Bridge Loan Guaranties will be
enforceable against the holders of the
<PAGE>
Subordinated Bridge Notes, and the subordination provisions of the
Subordinated Exchange Note Indenture, the Subordinated Exchange Notes and
the other Subordinated Exchange Note Documents will be enforceable against
the holders of the Subordinated Exchange Notes, and the Loans and all
other monetary Obligations hereunder are and will be within the definition
of "Senior Indebtedness" included in such provisions. The Subordinated
Bridge Notes and the Subordinated Exchange Notes, when issued and sold,
will either (a) have been registered or qualified under applicable federal
and state securities laws or (b) be exempt therefrom.
(iii) Warrants. The Warrants, when issued and delivered, will be
duly and validly issued, fully paid and nonassessable. The issuance and
sale of such Warrants, upon such issuance and sale, will either (a) have
been registered or qualified under applicable federal and state securities
laws or (b) be exempt therefrom.
5.3 Financial Condition; Projections.
A. Financial Statements. Company has heretofore delivered to Lenders, at
Lenders' request, the following financial statements and information: (i) the
audited statements of operations of the Business as at December 31 of 1994 and
1995 for the calendar years then ended, together with the report on such
consolidated financial statements of Coopers & Lybrand LLP setting forth in each
case in comparative form the corresponding figures for the previous calendar
year, and (iii) the audited statement of operations of the Business as at
September 30, 1996 for the nine months then ended, together with the
corresponding figures for the corresponding period of the previous calendar
year. All such statements were prepared in conformity with GAAP and fairly
present, in all material respects, the financial position of the entities
described in such financial statements as at the respective dates thereof and
the results of operations of the entities described therein for each of the
periods then ended. Neither Company nor the Business has (and will not
immediately following the funding of the initial Loans have) any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that is not reflected in the most recent
financial statements delivered pursuant to subsection 6.1, the notes thereto and
which in any such case is material in relation to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Holdings
and its Subsidiaries taken as a whole.
B. Projections. On and as of the Closing Date, the financial projections
of Company and its Subsidiaries for the period from December 31, 1996 through
December 31, 2002 (giving effect to the Acquisition) previously delivered to
Lenders (the "Projections") are based on good faith estimates and assumptions
made by the management of Company, it being recognized, however, that
projections as to future events are not to be viewed as facts and that the
actual results during the period or periods covered by the Projections may
differ from the projected results and that the differences may be material.
Notwithstanding the foregoing, as of the Closing Date, management of Company
believed that the Projections were reasonable and attainable.
<PAGE>
5.4 No Material Adverse Change; No Restricted Junior Payments.
Since September 30, 1996, no event or change has occurred that has caused
or evidences, either in any case or in the aggregate, a Material Adverse Effect.
Neither Company nor any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any Restricted
Junior Payment or agreed to do so except as permitted by subsection 7.5.
5.5 Title to Properties; Liens; Intellectual Property.
A. After giving effect to the transactions contemplated by this Agreement
to occur on the Closing Date, Holdings and its Subsidiaries have good,
sufficient and legal title to all of their respective properties and assets
reflected in the financial statements referred to in subsection 5.3 or in the
most recent financial statements delivered pursuant to subsection 6.1, except
for assets disposed of since the date of such financial statements in the
ordinary course of business or as otherwise permitted under subsection 7.7.
Except as permitted by this Agreement, all such properties and assets are free
and clear of Liens.
B. After giving effect to the Acquisition, Company has acquired, pursuant
to the Acquisition Agreement, that which Seller has represented is the ownership
of all patents, copyrights (whether registered or unregistered), trademarks
(whether registered or unregistered), trade names, trade dress, service marks,
assumed names and know-how (such items, together with all applications therefor
and all other intellectual property and proprietary rights, whether or not
subject to statutory registration or protection, being collectively referred to
herein as "Intellectual Property") relating exclusively to, or used exclusively
in connection with, the Business which (i) are owned by Seller on the Closing
Date and (ii) are necessary, together with the rights licensed to Company under
the Shared Technology License Agreement and the Patent License Agreement, for
the operation of the Business as conducted on the Closing Date, except as set
forth on Schedule 5.5B annexed hereto; provided, however, that such Intellectual
Property does not include any rights to the brand name "Country Crock,"
"Pennant" or "Bakers Source."
C. Each Loan Party owns, or is licensed to use, all Intellectual Property
necessary for the operation of its business as conducted except for Intellectual
Property the failure to own or license which could not reasonably be expected to
have a Material Adverse Effect. No claim of which any Loan Party has been given
notice has been asserted and is pending by any Person challenging or questioning
the use by any Loan Party of any such Intellectual Property the validity or
effectiveness of any such Intellectual Property, nor does Holdings or Company
know of any valid basis for any such claim, except for such claims that in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
5.6 Litigation; Adverse Facts.
<PAGE>
There is no action, suit, proceeding, arbitration or governmental
investigation (whether or not purportedly on behalf of Holdings or any of its
Subsidiaries) at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of Company,
threatened against or affecting Holdings or any of its Subsidiaries or any
property of Holdings or any of its Subsidiaries that, either individually or in
the aggregate together with all other such actions, proceedings and
investigations, has had, or could reasonably be expected to result in, a
Material Adverse Effect. Neither Holdings nor any of its Subsidiaries is or has
been (i) in violation of any applicable law (including any Pure Food and Drug
Laws) that has had, or could reasonably be expected to result in, a Material
Adverse Effect or (ii) subject to or in default with respect to any final
judgment, writ, injunction, decree, rule or regulation of any court or any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, that has had, or could
reasonably be expected to result in, a Material Adverse Effect.
5.7 Payment of Taxes.
Except to the extent permitted by subsection 6.3, all material tax returns
and reports of Holdings and its Subsidiaries required to be filed by any of them
have been timely filed, and all material taxes, assessments, fees and other
governmental charges upon Holdings and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. Company does not know of any
proposed tax assessment against Holdings or any of its Subsidiaries other than
those which are being actively contested by Holdings or such Subsidiary in good
faith and by appropriate proceedings and for which reserves or other appropriate
provisions, if any, as may be required in conformity with GAAP shall have been
made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements; Material
Contracts.
A. Neither Holdings nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither Holdings nor any of its Subsidiaries is a party to or is
otherwise subject to any agreement or instrument or any charter or other
internal restriction which has had, or could reasonably be expected (based upon
assumptions that are reasonable at the time made) to result in, individually or
in the aggregate, a Material Adverse Effect.
C. Schedule 5.8 contains a true, correct and complete list of all the
Material Contracts in effect on the Closing Date. All such Material Contracts
are in full force and effect and no defaults currently exist thereunder, except
where the failure to be in full force and effect,
<PAGE>
and except for such defaults which, could not reasonably be expected to have a
Material Adverse Effect.
5.9 Governmental Regulation.
Neither Holdings nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.10 Securities Activities.
Neither Holdings nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
5.11 Employee Benefit Plans.
A. Holdings and each of its ERISA Affiliates are in substantial compliance
with all applicable provisions and requirements of ERISA with respect to each
Employee Benefit Plan, and have substantially performed all their obligations
under each Employee Benefit Plan, except to the extent that any non-compliance
with ERISA or any such failure to perform would not result in material liability
of Holdings or any of its ERISA Affiliates.
B. No ERISA Event has occurred which has resulted or is reasonably likely
to result in any material liability to the PBGC or to any other Person.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code and/or Section 601 of ERISA, neither Holdings nor any of its
Subsidiaries maintains or contributes to any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) that provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employees of Holdings or any of its Subsidiaries, except to the extent that the
provision of such benefits would not have a Material Adverse Effect.
D. No Pension Plan has an Unfunded Current Liability in an amount that
would have a Material Adverse Effect.
5.12 Certain Fees.
No broker's or finder's fee or commission will be payable with respect to
this Agreement or any of the loan transactions contemplated hereby, and Company
hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or
<PAGE>
therewith and any expenses (including reasonable fees, expenses and
disbursements of counsel) arising in connection with any such claim, demand or
liability.
5.13 Environmental Protection.
(i) The operations of Holdings and each of its Subsidiaries (including,
without limitation, all operations and conditions at or in the Facilities)
comply in all material respects with all Environmental Laws;
(ii) Holdings and each of its Subsidiaries have obtained all material
Governmental Authorizations under Environmental Laws necessary to their
respective operations, and all such Governmental Authorizations are in good
standing, and Holdings and each of its Subsidiaries are in compliance with all
material terms and conditions of such Governmental Authorizations;
(iii) Neither Holdings nor any of its Subsidiaries has received (a) any
notice or claim to the effect that it is or may be liable to any Person as a
result of or in connection with any Hazardous Materials or (b) any letter or
request for information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9604) or comparable
state laws, and, to the best knowledge of Company, none of the operations of
Holdings or any of its Subsidiaries is the subject of any federal or state
investigation relating to or in connection with any Hazardous Materials at any
Facility or at any other location;
(iv) None of the operations of Holdings or any of its Subsidiaries is
subject to any judicial or administrative proceeding alleging the violation of
or liability under any Environmental Laws which could reasonably be expected to
have a Material Adverse Effect;
(v) To the knowledge of Company, neither Holdings nor any of its
Subsidiaries nor any of their respective Facilities or operations are subject to
any outstanding written order or agreement with any governmental authority or
private party relating to (a) any Environmental Laws or (b) any Environmental
Claims that could reasonably be expected to have a Material Adverse Effect;
(vi) Neither Holdings nor any of its Subsidiaries has any material
contingent liability in connection with any Release of any Hazardous Materials
by Holdings or any of its Subsidiaries;
(vii) Neither Holdings nor any of its Subsidiaries nor, to the knowledge
of Company, any predecessor of Holdings or any of its Subsidiaries has filed any
notice under any Environmental Law indicating past or present treatment or
Release of Hazardous Materials at any Facility, and none of Holdings' or any of
its Subsidiaries' operations involves the generation, transportation, treatment,
storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270
or any state equivalent;
<PAGE>
(viii) To the knowledge of Company, no Hazardous Materials exist on or
under any Facility in a manner that has a reasonable possibility of giving rise
to an Environmental Claim having a Material Adverse Effect, and neither Holdings
nor any of its Subsidiaries has filed any notice or report of a Release of any
Hazardous Materials that has a reasonable possibility of giving rise to an
Environmental Claim having a Material Adverse Effect;
(ix) Neither Holdings nor any of its Subsidiaries nor, to the knowledge of
Company, any of their respective predecessors has disposed of any Hazardous
Materials in a manner that has a reasonable possibility of giving rise to an
Environmental Claim having a Material Adverse Effect;
(x) To the knowledge of Company, no underground storage tanks or surface
impoundments are on or at any Facility; and
(xi) To the knowledge of Company, no Lien in favor of any Person relating
to or in connection with any Environmental Claim has been filed or has been
attached to any Facility.
5.14 Employee Matters.
There is no strike or work stoppage in existence or threatened involving
Holdings or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
5.15 Solvency.
Each Loan Party is, and Company and its Subsidiaries, taken as a whole,
are, and, upon the incurrence of any Obligations by any Loan Party on any date
on which this representation is made, will be, Solvent.
5.16 Matters Relating to Collateral.
A. Creation, Perfection and Priority of Liens. The execution and delivery
of the Collateral Documents by Loan Parties, together with (i) the actions taken
on or prior to the date hereof pursuant to subsections 4.1L, 6.9 and 6.10 and
(ii) the delivery to Administrative Agent of any Pledged Collateral not
delivered to Administrative Agent at the time of execution and delivery of the
applicable Collateral Document (all of which Pledged Collateral has been so
delivered) are effective to create in favor of Administrative Agent for the
benefit of Agents and Lenders, as security for the respective Secured
Obligations (as defined in the applicable Collateral Document in respect of any
Collateral), a valid and perfected First Priority Lien on all of the Collateral,
and all filings and other actions necessary or desirable to perfect and maintain
the perfection and First Priority status of such Liens have been duly made or
taken and remain in full force and effect, other than the filing of any UCC
financing statements delivered to Administrative Agent for filing (but not yet
filed) and the periodic filing of UCC continuation statements in respect of UCC
financing statements filed by or on behalf of Administrative Agent.
<PAGE>
B. Governmental Authorizations. No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for either (i) the pledge or grant by any Loan Party of the
Liens purported to be created in favor of Administrative Agent pursuant to any
of the Collateral Documents or (ii) the exercise by Administrative Agent of any
rights or remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Collateral Documents or created or provided for
by applicable law), except for filings or recordings contemplated by subsection
5.16A and except as may be required, in connection with the disposition of any
Pledged Collateral, by laws generally affecting the offering and sale of
securities.
C. Absence of Third-Party Filings. Except such as may have been filed in
favor of Administrative Agent as contemplated by subsection 5.16A, (i) no
effective UCC financing statement, fixture filing or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office and (ii) no effective filing covering all or any part of the IP
Collateral is on file in the PTO or the United States Copyright Office.
D. Margin Regulations. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation G, Regulation T, Regulation
U or Regulation X of the Board of Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to any Agent
by or on behalf of any Loan Party with respect to any of the Collateral (in each
case taken as a whole with respect to any particular Collateral) is accurate and
complete in all material respects.
5.17 Related Agreements.
A. Delivery of Related Agreements. Company has delivered to Agents
complete and correct copies of each Related Agreement and of all exhibits and
schedules thereto.
B. Seller's Warranties. Except to the extent otherwise set forth herein or
in the schedules hereto, to Holdings' and Company's knowledge each of the
representations and warranties given by Seller to Company in the Acquisition
Agreement is true and correct in all material respects as of the date hereof (or
as of any earlier date to which such representation and warranty specifically
relates) and will be true and correct in all material respects as of the Closing
Date (or as of such earlier date, as the case may be), in each case subject to
the qualifications set forth in the schedules to the Acquisition Agreement.
C. Warranties of Company. Subject to the qualifications and the schedules
set forth therein, each of the representations and warranties given by Company
to Seller in the Acquisition Agreement is true and correct in all material
respects as of the date hereof and will be true and correct in all material
respects as of the Closing Date.
D. Survival. Notwithstanding anything in the Acquisition Agreement to the
contrary, the representations and warranties of Company set forth in subsections
5.17B and 5.17C shall,
<PAGE>
solely for purposes of this Agreement, survive the Closing Date for the benefit
of Agents and Lenders.
5.18 Disclosure.
The representations of Holdings and its Subsidiaries contained in the Loan
Documents, the Related Agreements and in any other document, certificate or
written statement furnished to Lenders by or on behalf of Holdings or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement, when taken as a whole, do not contain any untrue statement of a
material fact or omit to state a material fact (known to Holdings or the
applicable Subsidiary, in the case of any document not furnished by Holdings or
such Subsidiary) necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were
made. Any projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions believed by
Company to be reasonable at the time made, it being recognized by Lenders that
such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results. There is no fact known (or which should upon
the reasonable exercise of diligence be known) to Company (other than matters of
a general economic nature) that has had, or could reasonably be expected to
result in, a Material Adverse Effect and that has not been disclosed herein or
in such other documents, certificates and statements furnished to Lenders for
use in connection with the transactions contemplated hereby.
5.19 Subordination of Seller Notes.
The subordination provisions of any Permitted Seller Notes are enforceable
against the holders thereof, and the Loans and other monetary Obligations
hereunder are and will be within the definition of "Senior Indebtedness"
included in such provisions.
SECTION 6.
AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
6.1 Financial Statements and Other Reports.
Company will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to
<PAGE>
Administrative Agent (and Administrative Agent will, after receipt thereof,
deliver to each Lender):
(i) Monthly Financials: (a) as soon as available after each fiscal
month-end ending after the Closing Date through and including February
1997, case volume and sales reports for each such fiscal month in
substantially the form presented to Agents prior to the Closing Date and
any monthly reports in the form of Exhibit 1 and Exhibit 2 to the
Transition Services Agreement prepared for such month pursuant to the
Transition Services Agreement, all in reasonable detail and certified by
the chief financial officer of Company as being fairly stated in all
material respects, and (b) as soon as available and in any event within 30
days (or 45 days, in the case of April and May of 1997) after each fiscal
month-end (other than June, September, December and March) commencing with
April 1997, the consolidated and consolidating statements of income
(through the "Earnings Before Tax" line) of Company and its Subsidiaries
for such fiscal month and for the period from the beginning of the then
current Fiscal Year to the end of such month, setting forth in each case
in comparative form the corresponding figures for the corresponding
periods of the previous fiscal year and the corresponding figures from the
consolidated plan and financial forecast for the current Fiscal Year
delivered pursuant to subsection 6.1(xiii), all in reasonable detail and
certified by the chief financial officer of Company as being fairly stated
in all material respects, subject to changes resulting from audit and
normal year-end adjustments;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each Fiscal Quarter, (a) the consolidated
and consolidating balance sheets of Company and its Subsidiaries as at the
end of such Fiscal Quarter and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of Company 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, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous fiscal year and the
corresponding figures from the consolidated plan and financial forecast
for the current Fiscal Year delivered pursuant to subsection 6.1(xiii),
all in reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the financial
condition of Company and its Subsidiaries as at the dates indicated and
the results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, and (b) a narrative report describing the operations of
Company and its Subsidiaries in the form prepared for presentation to
senior management for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Quarter;
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Company and its Subsidiaries as at the end
of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows
<PAGE>
of Company and its Subsidiaries for such Fiscal Year, setting forth in
each case in comparative form the corresponding figures for the previous
fiscal year and the corresponding figures from the consolidated plan and
financial forecast delivered pursuant to subsection 6.1(xiii) for the
Fiscal Year covered by such financial statements, all in reasonable detail
and certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, (b) a narrative
report describing the operations of Company and its Subsidiaries in the
form prepared for presentation to senior management for such Fiscal Year,
and (c) in the case of such consolidated financial statements, a report
thereon of independent certified public accountants of recognized national
standing selected by Company and reasonably satisfactory to Administrative
Agent, which report shall be unqualified as to the ability of Company and
its Subsidiaries to continue as a going concern and as to scope of audit,
and shall state that such consolidated financial statements fairly
present, in all material respects, the consolidated financial position of
Company and its Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years
(except as otherwise disclosed in such financial statements) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards;
(iv) Officer's and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (ii) and (iii) above, (a) an Officer's Certificate of
Company stating that the signer has reviewed the terms of this Agreement
and have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signer does not have
knowledge of the existence as at the date of such Officer's Certificate,
of any condition or event that constitutes an Event of Default or
Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action Company has taken, is taking and proposes to take with respect
thereto; and (b) a Compliance Certificate demonstrating in reasonable
detail compliance during and at the end of the applicable accounting
periods with the restrictions contained in Section 7, in each case to the
extent compliance with such restrictions is required to be tested during
or at the end of the applicable accounting period;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Company and its Subsidiaries
delivered pursuant to subdivisions (i), (ii), (iii) or (xiii) of this
subsection 6.1 will differ in any material respect from the consolidated
financial
<PAGE>
statements that would have been delivered pursuant to such subdivisions
had no such change in accounting principles and policies been made, then
(a) together with the first delivery of financial statements pursuant to
subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following
such change, consolidated financial statements of Company and its
Subsidiaries for (y) the current Fiscal Year to the effective date of such
change and (z) the two full Fiscal Years immediately preceding the Fiscal
Year in which such change is made, in each case prepared on a pro forma
basis as if such change had been in effect during such periods, and (b)
together with each delivery of financial statements pursuant to
subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following
such change, a written statement of the chief accounting officer or chief
financial officer of Company setting forth the differences which would
have resulted if such financial statements had been prepared without
giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon stating whether, in
connection with their audit examination, any condition or event, insofar
as such condition or event relates to the covenants set forth in
subsection 7.6, that constitutes an Event of Default or Potential Event of
Default has come to their attention and, if such a condition or event has
come to their attention, specifying the nature and period of existence
thereof; provided that such accountants shall not be liable by reason of
any failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of their audit
examination;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its
security holders, (b) all regular and periodic reports and all
registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by Holdings or any of its Subsidiaries with
any securities exchange or with the Securities and Exchange Commission or
any governmental or private regulatory authority, and (c) all press
releases and other statements made available generally by Holdings or any
of its Subsidiaries to the public concerning material developments in the
business of Holdings or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of Company
obtaining knowledge (a) of any condition or event that constitutes an
Event of Default or Potential Event of Default, or becoming aware that any
Lender has given any notice (other than
<PAGE>
to Administrative Agent) or taken any other action with respect to a
claimed Event of Default or Potential Event of Default, (b) that any
Person has given any notice to Company or any of its Subsidiaries or taken
any other action with respect to a claimed default or event or condition
of the type referred to in subsection 8.2, (c) of any condition or event
that would be required to be disclosed in a current report filed by
Company with the Securities and Exchange Commission on Form 8-K (Items 1,
2, 4, 5 and 6 of such Form as in effect on the date hereof) if Company
were required to file such reports under the Exchange Act, or (d) of the
occurrence of any event or change that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect, an Officer's
Certificate specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action taken
by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action
Company has taken, is taking and proposes to take with respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any officer
of Company obtaining knowledge of the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial
or otherwise), governmental investigation or arbitration against or
affecting Holdings or any of its Subsidiaries or any property of Holdings
or any of its Subsidiaries (collectively, "Proceedings") not previously
disclosed in writing by Company to Lenders or Administrative Agent any
material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within 45 days after the end of each Fiscal
Quarter, a schedule of all Proceedings involving an alleged liability of,
or claims against or affecting, Holdings or any of its Subsidiaries equal
to or greater than $250,000 and promptly after request by Administrative
Agent such other information as may be reasonably requested by
Administrative Agent to enable Administrative Agent and its counsel to
evaluate any of such Proceedings;
(xi) ERISA Events: promptly upon becoming aware of the occurrence of
any ERISA Event that could reasonably be expected to result in a material
liability, a written notice specifying the nature thereof, what action
Holdings or any of its ERISA Affiliates has taken, is taking or proposes
to take with respect thereto and, when known, any action
<PAGE>
taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) all
written notices received by Holdings or any of its ERISA Affiliates from a
Multiemployer Plan sponsor concerning an ERISA Event; and (b) such other
documents or governmental reports or filings relating to any Employee
Benefit Plan as Administrative Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event no
later than 60 days after the beginning of each Fiscal Year, a monthly
consolidated and consolidating plan and financial forecast for such Fiscal
Year, including, without limitation, (a) forecasted consolidated and
consolidating balance sheets and forecasted consolidated and consolidating
statements of income and cash flows of Company and its Subsidiaries for
such Fiscal Year, together with a pro forma Compliance Certificate for
such Fiscal Year and an explanation of the assumptions on which such
forecasts are based, and (b) such other information and projections as
Administrative Agent may reasonably request;
(xiv) Insurance: upon request by Administrative Agent, as soon as
practicable and in any event by the last day of each Fiscal Year, a report
in form and substance satisfactory to Administrative Agent outlining all
material insurance coverage maintained as of the date of such report by
Holdings and its Subsidiaries and all material insurance coverage planned
to be maintained by Holdings and its Subsidiaries in the immediately
succeeding Fiscal Year;
(xv) Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, with respect to significant environmental matters
at any Facility or which relate to an Environmental Claim which could
result in a Material Adverse Effect;
(xvi) Board of Directors: with reasonable promptness, written notice
of any change in the Board of Directors of Company;
(xvii) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company
and (b) all of the data required to be set forth in Schedule 5.1 annexed
hereto with respect to all Subsidiaries of Company (it being understood
that such written notice shall be deemed to supplement Schedule 5.1
annexed hereto for all purposes of this Agreement);
(xviii) Historical Financial Statements: as soon as available and in
any event no later than 45 days after the Closing Date, (a) unaudited
financial statements of the Business for the years ending December 31 of
1992 and 1993, consisting of statements
<PAGE>
of operations for such years, and (b) unaudited financial statements of
the Business as of September 30, 1995, consisting of a statement of
operations for the nine-month period ending on such date, all in
reasonable detail and certified by the chief financial officer of Company
that they fairly present the financial condition of the Business at the
dates indicated and the results of its operations for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments; and
(xix) Other Information: with reasonable promptness, such other
information and data with respect to Holdings or any of its Subsidiaries
as from time to time may be reasonably requested by Administrative Agent.
6.2 Corporate Existence, etc.
Except as permitted under subsection 7.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to the
business of Holdings and its Subsidiaries (on a consolidated basis).
6.3 Payment of Taxes and Claims; Tax Consolidation.
A. Company will, and will cause each of its Subsidiaries to, pay all
material taxes and all assessments and other governmental charges imposed upon
it or any of its properties or assets or in respect of any of its income,
businesses or franchises before any penalty accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a Lien upon any of its properties or assets, prior to the time when any
penalty or fine shall be incurred with respect thereto; provided that no such
charge or claim need be paid if it is being contested in good faith by
appropriate proceedings timely instituted and diligently conducted and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
B. Company will not, nor will it permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
(other than Company and its Subsidiaries).
6.4 Maintenance of Properties; Insurance.
Company will, and will cause each of its Subsidiaries to, maintain or
cause to be maintained in good repair, working order and condition, ordinary
wear and tear excepted, all material properties used or useful in the business
of Company and its Subsidiaries and from time to time will make or cause to be
made all appropriate repairs, renewals and replacements thereof. Company will
maintain or cause to be maintained, with financially sound and reputable
insurers, insurance with respect to its properties and business and the
properties and businesses of its Subsidiaries against loss or damage of the
kinds customarily carried or maintained under
<PAGE>
similar circumstances by corporations of established reputation engaged in
similar businesses. Each such policy of casualty insurance covering damage to or
loss of property shall name Administrative Agent for the benefit of Agents and
Lenders as the loss payee thereunder for all losses, subject to application of
proceeds as required by subsection 2.4B(iii)(d), and shall provide for at least
30 days' prior written notice to Administrative Agent of any modification or
cancellation of such policy.
6.5 Inspection; Lender Meeting.
Company shall, and shall cause each of its Subsidiaries to, permit any
authorized representatives designated by any Agent or Lender to visit and
inspect any of the properties of Company or any of its Subsidiaries, including
its and their financial and accounting records, and to make copies and take
extracts therefrom, and to discuss its and their affairs, finances and accounts
with its and their officers and independent public accountants, all upon
reasonable advance notice and at such reasonable times during normal business
hours and as often as may be reasonably requested. Without in any way limiting
the foregoing, Company will, upon the request of Administrative Agent,
participate in a meeting of Agents and Lenders once during each Fiscal Year to
be held at Company's corporate offices (or such other location as may be agreed
to by Company and Administrative Agent) at such time as may be agreed to by
Company and Administrative Agent.
6.6 Compliance with Laws, etc.
Company shall, and shall cause each of its Subsidiaries to, comply with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including all Pure Food and Drug Laws), noncompliance
with which could reasonably be expected to cause a Material Adverse Effect.
6.7 Environmental Disclosure and Inspection.
A. Company shall, and shall cause each of its Subsidiaries to, exercise
all due diligence in order to comply and cause (i) all tenants under any leases
or occupancy agreements affecting any portion of the Facilities and (ii) all
other Persons on or occupying such property, to comply with all Environmental
Laws.
B. Company agrees that Administrative Agent may, from time to time and in
its reasonable discretion, retain, at Company's expense, an independent
professional consultant to review any report relating to Hazardous Materials
prepared by or for Company and to conduct its own investigation of any Facility
currently owned, leased, operated or used by Company or any of its Subsidiaries,
and Company agrees to use all reasonable efforts to obtain permission for
Administrative Agent's professional consultant to conduct its own investigation
of any such Facility previously owned, leased, operated or used by Company or
any of its Subsidiaries. Company shall use its reasonable efforts to obtain for
Administrative Agent and its agents, employees, consultants and contractors the
right, upon reasonable notice to Company, to enter
<PAGE>
into or on to the Facilities currently owned, leased, operated or used by
Company or any of its Subsidiaries to perform such tests on such property as are
reasonably necessary to conduct such a review and/or investigation. Any such
investigation of any Facility shall be conducted, unless otherwise agreed to by
Company and Administrative Agent, during normal business hours and, to the
extent reasonably practicable, shall be conducted so as not to interfere with
the ongoing operations at any such Facility or to cause any damage or loss to
any property at such Facility. Company and Administrative Agent hereby
acknowledge and agree that any report of any investigation conducted at the
request of Administrative Agent pursuant to this subsection 6.7B will be
obtained and shall be used by Administrative Agent and Lenders for the purposes
of Lenders' internal credit decisions, to monitor and police the Loans and to
protect Lenders' security interests, if any, created by the Loan Documents.
Administrative Agent agrees to deliver a copy of any such report to Company with
the understanding that Company acknowledges and agrees that (i) it will
indemnify and hold harmless each Agent and Lender from any costs, losses or
liabilities relating to any Loan Party's use of or reliance on such report, (ii)
no Agent nor any Lender makes any representation or warranty with respect to
such report, and (iii) by delivering such report to Company, no Agent nor any
Lender is requiring or recommending the implementation of any suggestions or
recommendations contained in such report.
C. Company shall promptly advise Administrative Agent in writing and in
reasonable detail of (i) any Release of any Hazardous Materials required to be
reported to any federal, state, local or foreign governmental or regulatory
agency under any applicable Environmental Laws, (ii) any and all written
communications with respect to any Environmental Claims that have a reasonable
possibility of giving rise to a Material Adverse Effect or with respect to any
Release of Hazardous Materials required to be reported to any federal, state or
local governmental or regulatory agency, (iii) any remedial action taken by
Company or any other Person in response to (x) any Hazardous Materials on, under
or about any Facility, the existence of which has a reasonable possibility of
resulting in an Environmental Claim having a Material Adverse Effect, or (y) any
Environmental Claim that could have a Material Adverse Effect, (iv) Company's
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of any Facility that could cause such Facility or any part thereof
to be subject to any restrictions on the ownership, occupancy, transferability
or use thereof under any Environmental Laws, and (v) any request for information
from any governmental agency that suggests such agency is investigating whether
Company or any of its Subsidiaries may be potentially responsible for a Release
of Hazardous Materials.
D. Company shall promptly notify Administrative Agent of (i) any proposed
acquisition of stock, assets, or property by Company or any of its Subsidiaries
that could reasonably be expected to expose Company or any of its Subsidiaries
to, or result in, Environmental Claims that could have a Material Adverse Effect
or that could reasonably be expected to have a material adverse effect on any
Governmental Authorization then held by Company or any of its Subsidiaries and
(ii) any proposed action to be taken by Company or any of its Subsidiaries to
commence manufacturing, industrial or other similar operations that could
reasonably be expected to subject Company or any of its Subsidiaries to
additional laws, rules
<PAGE>
or regulations, including, without limitation, laws, rules and regulations
requiring additional environmental permits or licenses.
E. Company shall, at its own expense, provide copies of such documents or
information as Administrative Agent may reasonably request in relation to any
matters disclosed pursuant to this subsection 6.7.
6.8 Company's Remedial Action Regarding Hazardous Materials.
Company shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all necessary remedial action in connection with the
presence, storage, use, disposal, transportation or Release of any Hazardous
Materials on or under any Facility in order to comply with all applicable
Environmental Laws and Governmental Authorizations unless the failure to so
comply could not reasonably be expected to have a Material Adverse Effect. In
the event Company or any of its Subsidiaries takes any remedial action with
respect to any Hazardous Materials on or under any Facility, Company or such
Subsidiary shall conduct and complete such remedial action in material
compliance with all applicable Environmental Laws, and in accordance with the
policies, orders and directives of all federal, state and local governmental
authorities except when, and only to the extent that, Company's or such
Subsidiary's liability for such presence, storage, use, disposal, transportation
or Release of any Hazardous Materials is being contested in good faith by
Company or such Subsidiary.
6.9 Execution of Subsidiary Guaranty and Subsidiary Security Agreements by
Subsidiaries and Future Subsidiaries.
In the event that any Person becomes a Subsidiary of Company after the
date hereof, Company will promptly notify Administrative Agent of that fact and
cause each such Subsidiary to execute and deliver to Administrative Agent a
counterpart of the Subsidiary Guaranty and the Pledge Agreement, the Security
Agreement and the Patent and Trademark Security Agreement (collectively, the
"Subsidiary Security Agreements"), and to take all such further actions and
execute all such further documents and instruments as may be required to grant
and perfect in favor of Administrative Agent, for the benefit of Lenders, a
First Priority security interest in all of the personal property assets of such
Subsidiary described in the Subsidiary Security Agreements. Company shall
deliver to Administrative Agent, together with such Loan Documents, (i)
certified copies of such Subsidiary's Articles or Certificate of Incorporation
(or comparable constituent documents), together, if applicable, with a good
standing certificate from the Secretary of State of the jurisdiction of its
incorporation, each to be dated a recent date prior to their delivery to
Administrative Agent, (ii) a copy, if applicable, of such Subsidiary's Bylaws,
certified by its corporate secretary or an assistant corporate secretary as of a
recent date prior to their delivery to Administrative Agent, (iii) a certificate
executed by the secretary or an assistant secretary of such Subsidiary as to (a)
the incumbency and signatures of the officers of such Subsidiary executing the
Subsidiary Guaranty and to which such Subsidiary is a party and (b) the fact
that the attached resolutions of the Board of Directors of such Subsidiary
authorizing the execution, delivery and performance of the Subsidiary Guaranty
and the Subsidiary Security
<PAGE>
Agreements to which such Subsidiary is a party are in full force and effect and
have not been modified or rescinded, and (iv) a favorable opinion of counsel to
such Subsidiary, in form and substance satisfactory to Administrative Agent and
its counsel, as to (a) the due organization and good standing of such
Subsidiary, (b) the due authorization, execution and delivery by such Subsidiary
of the Subsidiary Guaranty and the Subsidiary Security Agreements to which such
Subsidiary is a party, (c) the enforceability of the Subsidiary Guaranty and the
Subsidiary Security Agreements to which such Subsidiary is a party against such
Subsidiary, and (d) such other matters as Administrative Agent may reasonably
request, all of the foregoing to be reasonably satisfactory in form and
substance to Administrative Agent and its counsel.
6.10 Conforming Leasehold Interests; Matters Relating to Additional Real
Property Collateral.
A. Conforming Leasehold Interests. If Company or any of its Subsidiaries
acquires any Leasehold Property, Company shall, or shall cause such Subsidiary
to, use its best efforts (without requiring Company or such Subsidiary to
relinquish any material rights or incur any material obligations or to expend
more than a nominal amount of money over and above the reimbursement, if
required, of the landlord's out-of-pocket costs, including attorneys fees) to
cause such Leasehold Property to be a Conforming Leasehold Interest.
B. Additional Mortgages, Etc. From and after the Closing Date, in the
event that (i) Company or any Subsidiary Guarantor acquires any fee interest in
real property or any Leasehold Property or (ii) at the time any Person becomes a
Subsidiary Guarantor, such Person owns or holds any fee interest in real
property or any Leasehold Property, in either case excluding any such Real
Property Asset the encumbrancing of which requires the consent of any applicable
lessor or (in the case of clause (ii) above) then-existing senior lienholder,
where Company and its Subsidiaries are unable to obtain such lessor's or senior
lienholder's consent (any such non-excluded Real Property Asset described in the
foregoing clause (i) or (ii) being a "Mortgaged Property"), Company or such
Subsidiary Guarantor shall deliver to Administrative Agent, as soon as
practicable after such Person acquires such Mortgaged Property or becomes a
Subsidiary Guarantor, as the case may be, the following:
(i) Additional Mortgage. A fully executed and notarized Mortgage in
proper form for recording in all appropriate places in all applicable
jurisdictions, encumbering the interest of such Loan Party in such
Mortgaged Property;
(ii) Opinions of Counsel. (a) A favorable opinion of counsel to such
Loan Party, in form and substance satisfactory to Administrative Agent and
its counsel, as to the due authorization, execution and delivery by such
Loan Party of such Mortgage and such other matters as Administrative Agent
may reasonably request, and (b) if required by Administrative Agent, an
opinion of counsel (which counsel shall be reasonably satisfactory to
Administrative Agent) in the state in which such Mortgaged Property is
located with respect to the enforceability of the form of Mortgage to be
recorded in such state and such other matters (including any matters
governed by the laws of such state
<PAGE>
regarding personal property security interests in respect of any
Collateral) as Administrative Agent may reasonably request, in each case
in form and substance reasonably satisfactory to Administrative Agent;
(iii) Landlord Consent and Estoppel; Recorded Leasehold Interest. In
the case of a Mortgaged Property consisting of a Leasehold Property, (a) a
Landlord Consent and Estoppel and (b) evidence that such Leasehold
Property is a Recorded Leasehold Interest;
(iv) Title Insurance. (a) If required by Administrative Agent, an
ALTA mortgagee title insurance policy or an unconditional commitment
therefor (a "Mortgage Policy") issued by the Title Company with respect to
such Mortgaged Property, in an amount satisfactory to Administrative
Agent, insuring fee simple title to, or a valid leasehold interest in,
such Mortgaged Property vested in such Loan Party and assuring
Administrative Agent that such Mortgage creates a valid and enforceable
First Priority mortgage Lien on such Mortgaged Property, subject only to a
standard survey exception, which Mortgage Policy (1) shall include an
endorsement for mechanics' liens, for future advances under this Agreement
and for any other matters reasonably requested by Administrative Agent and
(2) shall provide for affirmative insurance and such reinsurance as
Administrative Agent may reasonably request, all of the foregoing in form
and substance reasonably satisfactory to Administrative Agent; and (b)
evidence satisfactory to Administrative Agent that such Loan Party has (i)
delivered to the Title Company all certificates and affidavits required by
the Title Company in connection with the issuance of the Mortgage Policy
and (ii) paid to the Title Company or to the appropriate governmental
authorities all expenses and premiums of the Title Company in connection
with the issuance of the Mortgage Policy and all recording and stamp taxes
(including mortgage recording and intangible taxes) payable in connection
with recording the Mortgage in the appropriate real estate records;
(v) Title Report. If no Mortgage Policy is required with respect to
such Mortgaged Property, a title report issued by the Title Company with
respect thereto, dated not more than 30 days prior to the date such
Mortgage is to be recorded and satisfactory in form and substance to
Administrative Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies of all
recorded documents listed as exceptions to title or otherwise referred to
in the Mortgage Policy or title report delivered pursuant to clause (v) or
(vi) above;
(vii) Matters Relating to Flood Hazard Properties. (a) Evidence,
which may be in the form of a letter from an insurance broker or a
municipal engineer, as to (1) whether such Mortgaged Property is a Flood
Hazard Property and (2) if so, whether the community in which such Flood
Hazard Property is located is participating in the National Flood
Insurance Program, (b) if such Mortgaged Property is a Flood Hazard
Property, such Loan Party's written acknowledgement of receipt of written
notification from Administrative Agent (1) that such Mortgaged Property is
a Flood Hazard Property
<PAGE>
and (2) as to whether the community in which such Flood Hazard Property is
located is participating in the National Flood Insurance Program, and (c)
in the event such Mortgaged Property is a Flood Hazard Property that is
located in a community that participates in the National Flood Insurance
Program, evidence that Company has obtained flood insurance in respect of
such Flood Hazard Property to the extent required under the applicable
regulations of the Board of Governors of the Federal Reserve System; and
(viii) Environmental Audit. If required by Administrative Agent,
reports and other information, in form, scope and substance satisfactory
to Administrative Agent and prepared by environmental consultants
satisfactory to Administrative Agent, concerning any environmental hazards
or liabilities to which Company or any of its Subsidiaries may be subject
with respect to such Mortgaged Property.
6.11 Further Assurances.
At any time or from time to time upon the request of Administrative Agent,
Company will, at its expense, promptly execute, acknowledge and deliver such
further documents and do such other acts and things as Administrative Agent may
reasonably request in order to effect fully the purposes of the Loan Documents
and to provide for payment of the Obligations in accordance with the terms of
this Agreement, the Notes and the other Loan Documents. In furtherance and not
in limitation of the foregoing, each of Holdings and Company shall take, and
cause each of its Subsidiaries to take, such actions as Administrative Agent may
reasonably request from time to time (including, without limitation, the
execution and delivery of guaranties, security agreements, pledge agreements,
Mortgages, stock powers, financing statements and other documents, the filing or
recording of any of the foregoing, title insurance with respect to any of the
foregoing that relates to an interest in real property, the delivery of stock
certificates and other collateral with respect to which perfection is obtained
by possession, and the obtaining of Collateral Access Agreements, in form and
substance satisfactory to Administrative Agent, executed by any Person which is
party to a co-packing agreement with Company or any of its Subsidiaries under
which equipment of Company or its Subsidiaries is maintained at a facility of
such Person) to ensure that the Obligations are guarantied by Holdings and
Subsidiary Guarantors and are secured by substantially all of the assets of
Company and its Subsidiaries and all of the capital stock of Company and
Subsidiary Guarantors. In the event that Company or any of its Subsidiaries
creates a new Subsidiary, all of the capital stock or partnership interests of
such new Subsidiary shall be duly and validly pledged to Administrative Agent
for the benefit of Agents and Lenders pursuant to the Collateral Documents,
subject to no other Liens.
<PAGE>
SECTION 7.
NEGATIVE COVENANTS
Each of Holdings and Company covenants and agrees that, so long as any of
the Commitments hereunder shall remain in effect and until payment in full of
all of the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Holdings and Company, as applicable, shall perform, and shall cause
each of its Subsidiaries to perform, all covenants in this Section 7.
7.1 Indebtedness.
Holdings and Company shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Holdings and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon
any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so extinguished
(other than any such Indebtedness corresponding to extinguished Contingent
Obligations permitted under subsections 7.4(i)(b) and (c));
(iii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness (a) under Capital Leases capitalized on the
consolidated balance sheet of Company as liabilities, (b) in respect of
sale and lease-back transactions expressly permitted under subsection 7.8
and (c) secured by Liens permitted under subsection 7.2A(iii); provided
that the aggregate amount of Indebtedness permitted under this clause
(iii) shall not exceed $5,000,000 at any time outstanding;
(iv) Company may become and remain liable with respect to
Indebtedness to any of its domestic Wholly Owned Subsidiaries, and any
domestic Wholly Owned Subsidiary of Company may become and remain liable
with respect to Indebtedness to Company or any other domestic Wholly Owned
Subsidiary of Company, provided that (a) all such intercompany
Indebtedness shall be evidenced by promissory notes, (b) all such
intercompany Indebtedness owed by Company to any of its respective
Subsidiaries shall be subordinated in right of payment to the payment in
full of the Obligations pursuant to the terms of the applicable promissory
notes or an intercompany subordination agreement, in each case in form and
substance satisfactory to Administrative Agent, and (c) any payment by
Company or by any Subsidiary of Company under any guaranty of the
Obligations shall result in a pro tanto reduction of the amount of any
intercompany Indebtedness owed by Company or by such Subsidiary to Company
or to any of its Subsidiaries for whose benefit such payment is made;
<PAGE>
(v) Company may become and remain liable with respect to
Indebtedness under the Subordinated Bridge Loan Documents and under the
Subordinated Exchange Note Documents;
(vi) Company may become and remain liable with respect to
Indebtedness the proceeds of which are applied to refinance all or a
portion of the Term Loans, the Acquisition Revolving Loans, the
Subordinated Bridge Loans and the Subordinated Exchange Notes; provided,
that such Indebtedness shall be subordinated in right of payment to the
Obligations pursuant to documentation containing maturities, amortization
schedules, covenants, defaults, remedies, subordination provisions and
other material terms which taken as a whole are no less favorable to
Company, its Subsidiaries and Lenders than the corresponding terms of the
Subordinated Bridge Loan Documents and the Subordinated Exchange Note
Documents, with interest payable thereon in amounts consistent with the
then prevailing rate in the market for comparable debt Securities;
(vii) Company may become and remain liable with respect to Permitted
Seller Notes; provided that the aggregate principal amount of such
Permitted Seller Notes issued after the Closing Date shall not exceed
$10,000,000; and
(viii) Holdings may become and remain liable with respect to
Indebtedness to Company in respect of advances permitted under subsection
7.3(vi); provided that (a) the aggregate principal amount of such
Indebtedness shall not exceed the amount of such advances, (b) all such
Indebtedness shall be evidenced by promissory notes, and (c) any payment
by Holdings under the Holdings Guaranty or any other guaranty of the
Obligations shall result in a pro tanto reduction of the amount of such
Indebtedness owed by Holdings to Company; and
(ix) Company and its Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to
exceed at any time outstanding $5,000,000.
7.2 Liens and Related Matters.
A. Prohibition on Liens. Holdings and Company shall not, and shall not
permit any of their respective Subsidiaries to, directly or indirectly, create,
incur, assume or permit to exist any Lien on or with respect to any property or
asset of any kind (including any document or instrument in respect of goods or
accounts receivable) of Holdings or any of its Subsidiaries, whether now owned
or hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement, or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any state or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
<PAGE>
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens securing Indebtedness permitted by subsection
7.1(iii)(c) incurred (a) to finance the acquisition, construction or
improvement of any tangible personal property assets, provided that (1)
such Liens shall be created within 180 days after the acquisition,
construction or improvement of such assets, and (2) the principal amount
of Indebtedness secured by any such Liens shall at no time exceed 100%,
and the proceeds of such Indebtedness shall be used to provide not less
than 80%, of the original purchase price of such asset or the amount
expended to construct or improve such asset, as the case may be; or (b) to
renew, extend or refinance any Indebtedness described in clause (a),
provided that the amount of any such Indebtedness does not exceed the
amount of Indebtedness so renewed, extended or refinanced which is unpaid
and outstanding immediately prior to such renewal, extension or
refinancing; provided, that in the case of clause (a) or (b) such Liens
attach solely the assets financed with such Indebtedness;
(iv) Liens on any asset securing Indebtedness permitted by Section
7.1(iii)(b); provided that (a) the proceeds of such Indebtedness shall be
at least equal to 80% of the fair market value (as determined in good
faith by the Board of Directors, or any duly authorized committee thereof,
of Company) of such asset and (b) at the time of incurrence of such
Indebtedness, no Event of Default shall have occurred and be continuing or
would result therefrom; and
(v) Other Liens on assets of Company and its Subsidiaries securing
Indebtedness in an aggregate amount not to exceed $2,500,000 at any time
outstanding.
B. Equitable Lien in Favor of Lenders. If Company or any of its
Subsidiaries shall create or assume any consensual Lien upon any of its
properties or assets, whether now owned or hereafter acquired, other than Liens
excepted by the provisions of subsection 7.2A, it shall make or cause to be made
effective provision whereby the Obligations will be secured by such Lien equally
and ratably with any and all other Indebtedness secured thereby as long as any
such Indebtedness shall be so secured; provided that, notwithstanding the
foregoing, this covenant shall not be construed as a consent by Requisite
Lenders to the creation or assumption of any such Lien not permitted by the
provisions of subsection 7.2A.
C. No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, neither Company nor any
of its Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein Company will not, and will not permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any
<PAGE>
other distributions on any of such Subsidiary's capital stock owned by Company
or any other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed
by such Subsidiary to Company or any other Subsidiary of Company, (iii) make
loans or advances to Company or any other Subsidiary of Company, or (iv)
transfer any of its property or assets to Company or any other Subsidiary of
Company.
7.3 Investments; Joint Ventures.
Holdings and Company shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, make or own any Investment
in any Person, including any Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in
Cash Equivalents;
(ii) Holdings may continue to own the Investments owned by it as of
the Closing Date (after giving effect to the Acquisition) in Company;
(iii) Company and its Subsidiaries may make intercompany loans to
the extent permitted under subsection 7.1(iv);
(iv) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.6D;
(v) Company and its Subsidiaries may make and own Investments in
connection with a Permitted Acquisition;
(vi) Company may make advances to Holdings, in lieu of the payment
of cash dividends, to enable Holdings to make the payments contemplated by
subsections 7.5(vi)(a) and (b);
(vii) Company may make loans and advances to employees and directors
of Holdings or Company to purchase limited liability interests of MBW LLC,
provided that the aggregate amount of such loans and advances shall not
exceed $1,000,000 at any time outstanding; and
(viii) Company and its Subsidiaries may make and own other
Investments in an aggregate amount not to exceed at any time $2,500,000.
7.4 Contingent Obligations.
Holdings and Company shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, create or become or remain
liable with respect to any Contingent Obligation, except:
<PAGE>
(i) Holdings and Subsidiaries of Company may become and remain
liable with respect to Contingent Obligations arising under (a) their
respective Guaranties, (b) the Subordinated Bridge Loan Guaranties, and
(c) guarantees of Indebtedness under the Subordinated Exchange Note
Documents or permitted under subsection 7.1(vi), provided that the
obligations of Holdings or such Subsidiaries under guarantees described in
this clause (c) shall be subordinated in right of payment to the
Obligations pursuant to documentation containing subordination provisions
and other material terms no less favorable to Company, its Subsidiaries
and Lenders than the corresponding terms of the Subordinated Bridge Loan
Guaranties;
(ii) Company may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit;
(iii) Company may become and remain liable with respect to
Contingent Obligations under Interest Rate Agreements entered into with
Lenders or Affiliates of Lenders with respect to which the aggregate net
amount which Company would be liable to pay to counterparties thereunder
in the event all such Interest Rate Agreements were terminated at the time
of determination shall not exceed $2,500,000 at any time;
(iv) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred in the ordinary course
of business in connection with Asset Sales or other sales of assets;
(v) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations under guarantees in the ordinary course
of business of the obligations of suppliers, landlords, customers,
franchisees and licensees of Company and its Subsidiaries in an aggregate
amount not to exceed at any time $250,000;
(vi) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations under food product futures arrangements
consistent with past practices of the Business and of any business
acquired under subsection 7.7(vii) for the supply of food products used in
the business of Company and its Subsidiaries; and
(vii) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations shall at no
time exceed $250,000.
7.5 Restricted Junior Payments.
Holdings and Company shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, declare, order, pay, make or
set apart any sum for any Restricted Junior Payment; provided that (i) Company
may make scheduled interest payments in respect
<PAGE>
of (a) the Subordinated Bridge Loans in accordance with the terms of the
Subordinated Bridge Loan Agreement and (b) the Subordinated Exchange Notes in
accordance with the terms thereof and of the Subordinated Exchange Note
Indenture; provided, that to the extent the Subordinated Bridge Loan Agreement
and the Subordinated Exchange Note Indenture permit Company to pay interest
thereon or liquidated damages with respect thereto in like-kind instruments in a
principal amount equal to the amount of such interest or liquidated damages,
Company shall pay such interest or liquidated damages in such like-kind
instruments; (ii) Company may make Restricted Junior Payments to the extent
necessary to redeem or defease all or any portion of the Indebtedness under the
Subordinated Bridge Loan Documents with proceeds from the issuance of
Subordinated Exchange Notes; (iii) Company and/or Holdings, as applicable, may
make Restricted Junior Payments to the extent necessary to redeem or defease all
or any portion of the Indebtedness under the Subordinated Bridge Loan Documents
and the Subordinated Exchange Note Documents with proceeds from Indebtedness
permitted under subsection 7.1(vi) and/or an initial public offering of Holdings
Common Stock; (iv) Company may make scheduled interest payments in respect of
Permitted Seller Notes permitted under subsection 7.1(vii) in accordance with
the terms of such Permitted Seller Notes; (v) Company may make regularly
scheduled payments of interest in respect of any Subordinated Indebtedness in
accordance with the terms of, and only to the extent required by, and subject to
the subordination provisions contained in, the indenture or other agreement
pursuant to which such Subordinated Indebtedness was issued, as such indenture
or other agreement may be amended from time to time to the extent permitted
under subsection 7.12B; provided, that to the extent the terms of such
Subordinated Indebtedness permit Company to pay interest or liquidated damages
on such Subordinated Indebtedness in like-kind instruments in a principal amount
equal to the amount of such interest or liquidated damages, Company shall pay
such interest or liquidated damages with such like-kind instruments; (vi)
Company may make Restricted Junior Payments to Holdings (a) in an aggregate
amount not to exceed $250,000 in any Fiscal Year, to the extent necessary to
permit MBW LLC and Holdings to pay general administrative costs and expenses,
(b) to the extent necessary to permit Holdings to discharge the consolidated tax
liabilities of Holdings and its Subsidiaries, and (c) to the extent necessary to
permit Holdings or MBW LLC to pay transaction fees to the MDC Entities and/or
Dartford and/or Fenway in connection with acquisitions made after the Closing
Date in accordance with the terms of the MDC Advisory Services Agreement, the
Dartford Management Agreement and the Fenway Agreement, in each case so long as
Holdings or MBW LLC applies the amount of any such Restricted Junior Payments
for such purposes; (vii) so long as no Event of Default or Potential Event of
Default shall have occurred and be continuing or shall be caused thereby,
Company and Holdings may make Restricted Junior Payments in an aggregate amount
not to exceed $2,000,000 to permit MBW LLC to repurchase limited liability
interests in MBW LLC or Holdings to repurchase Holdings Common Stock from
officers, directors or employees of MBW LLC or any of its Subsidiaries or from
Dartford following termination of employment of any such officer, director or
employee by reason of death, disability, retirement or resignation or following
other events customarily requiring or permitting such repurchase, in each case
so long as MBW LLC or Holdings, as applicable, applies the amount of any such
Restricted Junior Payment for such purpose; and (viii) so long as (x) no Event
of Default or Potential Event of Default shall have occurred and be continuing
or shall be caused thereby, (y) Company shall be in compliance, on a pro forma
basis giving effect
<PAGE>
thereto, with the covenants set forth in subsection 7.6 hereof and (z) the
Leverage Ratio (calculated on a pro forma basis giving effect thereto) shall not
be greater than 3.50:1.00 (and Company shall have delivered to Administrative
Agent an Officer's Certificate (together with supporting information therefor),
in form and substance reasonably satisfactory to Administrative Agent,
certifying to the effect of clauses (y) and (z)), Company and Holdings may make
Restricted Junior Payments to the extent necessary to permit MBW LLC to
repurchase limited partnership interests from Dartford upon Dartford's exercise
of the Company Repurchase Option (as such term is defined in the MBW LLC
Agreement) as such option is in effect as of the Closing Date, in each case so
long as MBW LLC applies the amount of such Restricted Junior Payments for such
purposes.
7.6 Financial Covenants.
A. Minimum Consolidated Cash Interest Coverage Ratio. Holdings and Company
shall not permit the Consolidated Cash Interest Coverage Ratio for any
four-Fiscal Quarter period ending during any of the test periods set forth in
the table below to be less than the correlative ratio for such test period set
forth in the table below:
===============================================================
MINIMUM CONSOLIDATED
TEST PERIOD CASH INTEREST
COVERAGE RATIO
===============================================================
1/01/97 - 12/31/97 1.60:1.00
---------------------------------------------------------------
1/01/98 - 12/31/98 1.75:1.00
---------------------------------------------------------------
1/01/99 - 12/31/99 1.90:1.00
---------------------------------------------------------------
1/01/00 - 12/31/00 2.00:1.00
---------------------------------------------------------------
1/01/01 - 12/31/01 2.25:1.00
---------------------------------------------------------------
1/01/02 - 12/31/02 2.50:1.00
===============================================================
B. Maximum Leverage Ratio. Holdings and Company shall not permit the ratio
of (i) the excess of (a) Consolidated Total Debt as of the last day of any
Fiscal Quarter ending during any of the test periods set forth in the table
below minus (b) cash on hand of Company to the extent the amount of such cash
exceeds $3,500,000 as of such date, to (ii) Consolidated EBITDA for the
four-Fiscal Quarter period ending on such date to exceed the correlative ratio
for such test period set forth in the table below:
<PAGE>
===============================================================
MAXIMUM
TEST PERIOD LEVERAGE RATIO
===============================================================
1/01/97 - 12/31/97 5.75:1.00
---------------------------------------------------------------
1/01/98 - 12/31/98 5.25:1.00
---------------------------------------------------------------
1/01/99 - 12/31/99 5.00:1.00
---------------------------------------------------------------
1/01/00 - 12/31/00 4.50:1.00
---------------------------------------------------------------
1/01/01 - 12/31/01 4.00:1.00
---------------------------------------------------------------
1/01/02 - 12/31/02 4.00:1.00
===============================================================
C. Minimum Fixed Charge Coverage Ratio. Holdings and Company shall not
permit the ratio of (i) Consolidated EBITDA for any four-Fiscal Quarter period
ending during any of the test periods set forth in the table below to (ii)
Consolidated Fixed Charges for such four-Fiscal Quarter period to be less than
the correlative ratio for such test period set forth in the table below:
===============================================================
MINIMUM
TEST PERIOD FIXED CHARGE COVER-
AGE
RATIO
===============================================================
1/01/97 - 12/31/97 1.25:1.00
---------------------------------------------------------------
1/01/98 - 12/31/98 1.35:1.00
---------------------------------------------------------------
1/01/99 - 12/31/99 1.40:1.00
---------------------------------------------------------------
1/01/00 - 12/31/00 1.50:1.00
---------------------------------------------------------------
1/01/01 - 12/31/01 1.55:1.00
---------------------------------------------------------------
1/01/02 - 12/31/02 1.65:1.00
===============================================================
D. Maximum Consolidated Capital Expenditures. Holdings and Company shall
not, and shall not permit any of their respective Subsidiaries to, make or incur
Consolidated Capital Expenditures, in any Fiscal Year indicated below, in an
aggregate amount in excess of the corresponding amount (the "Maximum
Consolidated Capital Expenditures Amount") set forth below opposite such Fiscal
Year; provided that the Maximum Consolidated Capital Expenditures Amount for any
Fiscal Year shall be increased by an amount equal to the excess, if any (but in
no event more than 50% of the Maximum Consolidated Capital Expenditures Amount
for the previous Fiscal Year), of the Maximum Consolidated Capital Expenditures
<PAGE>
Amount for the previous Fiscal Year over the actual amount of Consolidated
Capital Expenditures for such previous Fiscal Year:
===============================================================
MAXIMUM
FISCAL YEAR CONSOLIDATED CAPITAL
(OR PORTION THEREOF) EXPENDITURES AMOUNT
===============================================================
Fiscal Year ending in $1,000,000
December 1997
---------------------------------------------------------------
Fiscal Year ending in
December 1998 $1,000,000
and each Fiscal Year
thereafter
===============================================================
; provided, however, that for purposes of this subsection 7.6D, Consolidated
Capital Expenditures shall not include expenditures not exceeding $3,000,000 in
the aggregate incurred on or prior to June 30, 1998 (i) to relocate Company's
assets, (ii) to purchase computers and computer-related equipment and (iii) to
pay transition related expenses in connection with the foregoing.
E. Certain Calculations.
(i) With respect to calculations of Consolidated Fixed Charges,
Consolidated EBITDA and Consolidated Cash Interest Expense for any four-Fiscal
Quarter period including the Closing Date (each such period being a "Pro Forma
Calculation Period"), such calculations shall be made on a pro forma basis
assuming, in each case, (a) that the Closing Date, the Acquisition and the
related borrowings by Company pursuant to this Agreement and the Subordinated
Bridge Loan Agreement occurred on the first day of the applicable Pro Forma
Calculation Period; (b) that Consolidated EBITDA and Consolidated Capital
Expenditures for the applicable Fiscal Quarters ending prior to the Closing Date
are as set forth on Schedule 7.6E annexed hereto; and (c) that, with respect to
calculations of Consolidated Cash Interest Expense and each component of
Consolidated Fixed Charges other than Consolidated Capital Expenditures
(Consolidated Cash Interest Expense and each such component being, individually,
a "Fixed Charge Component"), the amount of each such Fixed Charge Component (1)
for the Pro Forma Calculation Period ending in March 1997 shall equal the
product of the amount of such Fixed Charge Component for the Fiscal Quarter
ending in March 1997 multiplied by 4, (2) for the Pro Forma Calculation Period
ending in June 1997 shall equal the product of the amount of such Fixed Charge
Component for the two-Fiscal Quarter period ending in June 1997 multiplied by 2,
and (3) for the Pro Forma Calculation Period ending in September 1997 shall
equal the product of the amount of such Fixed Charge Component for the
three-Fiscal Quarter period ending in June 1997 multiplied by 4/3; provided,
however, that if the Term Loan Conversion occurs, Consolidated Cash Interest
Expense for such Pro Forma Calculation Period shall equal the sum of (x) actual
Consolidated Cash Interest Expense for the Fiscal Quarter in
<PAGE>
which the Term Loan Conversion Date occurs and each Fiscal Quarter ending after
the Closing Date but prior to the Term Loan Conversion Date plus (y) for each
Fiscal Quarter ending during such Pro Forma Calculation Period but prior to the
Closing Date, an amount of pro forma interest accrued calculated by assuming
that all Indebtedness outstanding immediately after such Term Loan Conversion
was borrowed on the first day of such Pro Forma Calculation Period, that all
Loans outstanding were Eurodollar Rate Loans, that the applicable interest rate
for the Loans was the average effective interest rate on the Loans on the date
of determination, and that all other Indebtedness outstanding accrued interest
at the interest rates applicable thereto on the date of determination.
(ii) With respect to any period during which new Subsidiaries, assets or
businesses are acquired pursuant to subsection 7.7(vii), for purposes of
determining compliance with the financial covenants set forth in this subsection
7.6, Consolidated EBITDA and Consolidated Interest Expense shall be calculated
with respect to such periods and such Subsidiaries, assets or businesses on a
pro forma basis (including any pro forma expense and cost reductions calculated
on a basis consistent with Regulation S-X promulgated under the Securities Act)
using the historical financial statements of all entities or assets so acquired
or to be acquired and the consolidated financial statements of Company and its
Subsidiaries which shall be reformulated (i) as if such acquisition, and any
acquisitions which have been consummated during such period, and any
Indebtedness or other liabilities incurred in connection with any such
acquisition had been consummated or incurred at the beginning of such period
(and assuming that such Indebtedness bears interest during any portion of the
applicable measurement period prior to the relevant acquisition at the weighted
average of the interest rates applicable to outstanding Loans during such
period), and (ii) otherwise in conformity with certain procedures to be agreed
upon between Administrative Agent and Company, all such calculations to be in
form and substance satisfactory to Administrative Agent.
7.7 Restriction on Fundamental Changes; Asset Sales.
Holdings and Company shall not, and shall not permit any of their
respective Subsidiaries to, alter the corporate, capital or legal structure of
Holdings or any of its Subsidiaries, create any new Subsidiaries or enter into
any transaction of merger or consolidation, or liquidate, windup or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
sub-lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business, property or fixed
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise any part of the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person, except:
(i) Company may make the Acquisition on the Closing Date;
(ii) any Subsidiary of Company may be merged with or into Company or
any wholly owned Subsidiary Guarantor, or be liquidated, wound up or
dissolved, or all or any substantial part of its business, property or
assets may be conveyed, sold, leased, transferred or otherwise disposed
of, in one transaction or a series of transactions, to
<PAGE>
Company or any wholly owned Subsidiary Guarantor; provided that, in the
case of such a merger, Company or such wholly owned Subsidiary Guarantor
shall be the continuing or surviving corporation;
(iii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.6D;
(iv) Company and its Subsidiaries may acquire inventory, equipment
and other assets in the ordinary course of business;
(v) Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof (determined in good faith by the
board of directors of Company);
(vi) Company and its Subsidiaries may make any Asset Sale of assets
that have, in the aggregate, a fair market value (determined in good faith
by the board of directors of Company) not in excess of 10% of Consolidated
EBITDA for the four-Fiscal Quarter period most recently ended prior to
such Asset Sale; provided that (x) the consideration received for such
assets shall be in an amount at least equal to the fair market value
thereof (determined in good faith by the board of directors of Company);
(y) not less than 80% of the consideration received shall be cash; and (z)
the proceeds of such Asset Sales shall be applied as required by
subsection 2.4B(iii)(a); and
(vii) At any time and from time to time after Company shall have
refinanced all outstanding Indebtedness under the Subordinated Bridge Loan
Documents and under the Subordinated Exchange Note Documents with the
proceeds of Indebtedness permitted under subsection 7.1(vi), Company or
any Subsidiary of Company may make acquisitions of assets and businesses
(including acquisitions of the capital stock or other equity interests of
another Person), provided that:
(a) immediately prior to and after giving effect to any such
acquisition, Company and its Subsidiaries shall be in compliance
with the provisions of subsection 7.11 hereof;
(b) after giving effect to any such acquisition, the sum of
(x) the amount of cash on hand of Company plus (y) the amount by
which the Revolving Loan Commitments exceed the Total Utilization of
Revolving Loan Commitments, shall equal or exceed $7,500,000;
(c) (1) Company shall be in compliance, on a pro forma basis
giving effect to the proposed acquisition, with the covenants set
forth in subsection 7.6 hereof, (2) if any such acquisition is made
prior to the first Anniversary, the Leverage Ratio (calculated on a
pro forma basis giving effect to the proposed
<PAGE>
acquisition) shall not be greater than the ratio set forth in
subsection 7.6B applicable at the time of such acquisition minus
0.25, (3) Consolidated EBITDA attributable to any assets so
acquired, as projected by Company for the twelve-month period
immediately following the date of such acquisition, shall not exceed
25% of Consolidated EBITDA for the four-Fiscal Quarter period most
recently ended prior to the date of such acquisition, and (4) no
Event of Default or Potential Event of Default shall have occurred
and be continuing at the time of such acquisition or shall be caused
thereby; and Company shall have delivered to Administrative Agent an
Officer's Certificate (together with supporting information
therefor), in form and substance reasonably satisfactory to
Administrative Agent, certifying as to the foregoing;
(d) any assets acquired pursuant to such acquisition shall be
subject to a First Priority Lien in favor of the Administrative
Agent on behalf of Lenders pursuant to the Collateral Documents; and
(e) each such acquisition shall be made on a fully consensual
basis between Company and its Subsidiaries, on the one hand, and the
seller or sellers of such assets or such business, on the other
hand.
7.8 Sales and Lease-Backs.
Holdings and Company shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, become or remain liable as
lessee or as a guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any property (whether real, personal or
mixed), whether now owned or hereafter acquired, (i) which Company or any of its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person (other than Company or any of its Subsidiaries) or (ii) which Company or
any of its Subsidiaries intends to use for substantially the same purpose as any
other property which has been or is to be sold or transferred by Company or any
of its Subsidiaries to any Person (other than Company or any of its
Subsidiaries) in connection with such lease, except that Company and its
Subsidiaries may enter into such sale and lease-back transactions so long as the
aggregate sales price under all such transactions in any Fiscal Year does not
exceed $2,500,000.
7.9 Transactions with Shareholders and Affiliates.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Company or with any Affiliate of Company or of any
such holder, on terms that are less favorable to Company or that Subsidiary, as
the case may be, than those that might be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
shall not apply to (i) any transaction between Company and any of its Wholly
Owned Subsidiaries or between any of its Wholly Owned
<PAGE>
Subsidiaries, (ii) reasonable and customary fees paid to members of the boards
of directors of Holdings and its Subsidiaries, (iii) any payment from Company to
Holdings expressly permitted under subsection 7.5, (iv) fees, expenses and other
amounts payable to the MDC Entities and Dartford on the Closing Date, (v) the
Management Fees, (vi) any employment agreement entered into by Holdings or any
of its Subsidiaries in the ordinary course of business, and (vii) any issuance
of capital stock of Holdings in connection with employment arrangements, stock
options and stock ownership plans of Holdings or any of its Subsidiaries entered
into in the ordinary course of business.
7.10 Disposal of Subsidiary Stock.
Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except as permitted under this
Agreement or the Collateral Documents or to qualify directors if required
by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including
such Subsidiary), except as permitted under this Agreement or the
Collateral Documents or to Company, another Wholly Owned Subsidiary of
Company, or to qualify directors if required by applicable law.
7.11 Conduct of Business.
Company shall not, and shall not permit any of its Subsidiaries to, engage
in any business other than (i) the businesses engaged in by Company and its
Subsidiaries on the Closing Date (after giving effect to the Acquisition) and
those food businesses which are reasonably related to such businesses, and (ii)
such other lines of business as may be consented to by Administrative Agent and
Requisite Lenders.
7.12 Amendments or Waivers of Certain Related Agreements; Amendments of
Documents Relating to Subordinated Indebtedness; Designation of
"Designated Senior Indebtedness"; Preferred Stock.
A. Amendments or Waivers of Certain Related Agreements. Neither Holdings
nor any of its Subsidiaries will agree to any material amendment to, or waive
any of its material rights under, any of the Acquisition Agreement, the
Assumption Agreement, the Warrant Agreement, the Warrant Escrow Agreement, the
Warrants, the MDC Advisory Services Agreement, the Dartford Management
Agreement, the Fenway Agreement or the Transition Agreements after the Closing
Date if such amendment or waiver would be adverse to Lenders without in each
case obtaining the prior written consent of Requisite Lenders to such amendment
or waiver.
<PAGE>
B. Amendments of Documents Relating to Subordinated Indebtedness. Company
shall not, and shall not permit any of its Subsidiaries to, amend or otherwise
change the terms of any Subordinated Indebtedness, or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such Subordinated
Indebtedness, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Subordinated Indebtedness (or
trustee or other representative on their behalf) which would be adverse to
Company or Lenders.
C. Designation of "Designated Senior Indebtedness". Company shall not
designate any Indebtedness as "Designated Senior Indebtedness" (as defined in
the Subordinated Bridge Loan Agreement or the Subordinated Exchange Note
Indenture, as applicable) for purposes of the Subordinated Bridge Loan Agreement
or the Subordinated Exchange Note Indenture, as applicable, without the prior
written consent of Requisite Lenders.
D. Preferred Stock. Without the prior written approval of Requisite
Lenders, neither Holdings nor Company shall amend, restate, supplement or
otherwise modify its Certificate of Incorporation if the effect of such
amendment, restatement, supplement or modification is to provide for the
issuance of any preferred stock of Company or of Holdings or the filing or
amendment of any certificate of designation with respect thereto.
7.13 Fiscal Year.
Holdings and Company shall not change their Fiscal Year-end from the last
Saturday of December.
SECTION 8.
EVENTS OF DEFAULT
IF any of the following conditions or events ("Events of Default") shall
occur:
8.1 Failure to Make Payments When Due.
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of prepayment or
otherwise; failure by Company to pay when due any amount payable to an Issuing
Lender in reimbursement of any drawing
<PAGE>
honored or payment made under a Letter of Credit; or failure by Company to pay
any interest on any Loan or any fee or any other amount due under this Agreement
within five days after the date due; or
8.2 Default in Other Agreements.
(i) Failure of Company or any of its Subsidiaries to pay when due (a) any
principal of or interest on any Indebtedness (other than Indebtedness referred
to in subsection 8.1) in an individual principal amount of $500,000 or more or
any items of Indebtedness with an aggregate principal amount of $1,000,000 or
more or (b) any Contingent Obligation in an individual principal amount of
$500,000 or more or any Contingent Obligations with an aggregate principal
amount of $1,000,000 or more, in each case beyond the end of any grace period
provided therefor; or (ii) breach or default by Company or any of its
Subsidiaries with respect to any other material term of (a) any evidence of any
Indebtedness in an individual principal amount of $500,000 or more or any items
of Indebtedness with an aggregate principal amount of $1,000,000 or more or any
Contingent Obligation in an individual principal amount of $500,000 or more or
any Contingent Obligations with an aggregate principal amount of $1,000,000 or
more or (b) any loan agreement, mortgage, indenture or other agreement relating
to such Indebtedness or Contingent Obligation(s), if in any case under this
clause (ii) the effect of such breach or default is to cause, or to permit the
holder or holders of that Indebtedness or Contingent Obligation(s) (or a trustee
on behalf of such holder or holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may be
(upon the giving or receiving of notice, lapse of time, both, or otherwise); or
8.3 Breach of Certain Covenants.
Failure of Holdings or Company to perform or comply with any term or
condition contained in subsection 2.4, 2.5 or 6.2 or Section 7 of this
Agreement; or
8.4 Breach of Warranty.
Any material representation, warranty, certification or other statement
made by MBW LLC or Holdings or any of its Subsidiaries in any Loan Document or
in any statement or certificate at any time given by MBW LLC or Holdings or any
of its Subsidiaries in writing pursuant hereto or thereto or in connection
herewith or therewith shall be false in any material respect on the date as of
which made; or
8.5 Other Defaults Under Loan Documents.
Any Loan Party shall default in the performance of or compliance with any
term contained in this Agreement or any of the other Loan Documents, other than
any such term referred to in any other subsection of this Section 8, and such
default shall not have been remedied or waived within 30 days after the earlier
of (i) an officer of Company becoming
<PAGE>
aware of such default or (ii) receipt by Company of notice from any Agent or
Lender of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of MBW LLC, Holdings or Company or any of its
Subsidiaries (other than Immaterial Subsidiaries) in an involuntary case under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, which decree or order is not stayed; or
any other similar relief shall be granted under any applicable federal or state
law; or (ii) an involuntary case shall be commenced against MBW LLC, Holdings or
Company or any of its Subsidiaries (other than Immaterial Subsidiaries) under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over MBW
LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial
Subsidiaries), or over all or a substantial part of its property, shall have
been entered; or there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of MBW LLC, Holdings or Company or
any of its Subsidiaries (other than Immaterial Subsidiaries) for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of MBW LLC, Holdings or Company or any of its Subsidiaries (other than
Immaterial Subsidiaries), and any such event described in this clause (ii) shall
continue for 60 days unless dismissed, bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) MBW LLC, Holdings or Company or any of its Subsidiaries (other than
Immaterial Subsidiaries) shall have an order for relief entered with respect to
it or commence a voluntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case, or to
the conversion of an involuntary case to a voluntary case, under any such law,
or shall consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or MBW
LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial
Subsidiaries) shall make any assignment for the benefit of creditors; or (ii)
MBW LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial
Subsidiaries) shall be unable, or shall fail generally, or shall admit in
writing its inability, to pay its debts as such debts become due; or the Board
of Directors of MBW LLC, Holdings or Company or any of its Subsidiaries (other
than Immaterial Subsidiaries) (or any committee thereof) shall adopt any
resolution or otherwise authorize any action to approve any of the actions
referred to in clause (i) above or this clause (ii); or
<PAGE>
8.8 Judgments and Attachments.
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $500,000 or (ii) in
the aggregate at any time an amount in excess of $1,000,000 (in either case not
adequately covered by insurance as to which a solvent and unaffiliated insurance
company has acknowledged coverage) shall be entered or filed against Holdings or
Company or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days (or
in any event later than five days prior to the date of any proposed sale
thereunder); or
8.9 Dissolution.
Any order, judgment or decree shall be entered against Holdings or Company
or any of its Subsidiaries decreeing the dissolution or split up of Holdings or
Company or that Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of 30 days; or
8.10 Employee Benefit Plans.
There shall occur one or more ERISA Events which individually or in the
aggregate results in a Material Adverse Effect; or there shall exist an Unfunded
Current Liability, individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which there is no Unfunded Current Liability), which would have a Material
Adverse Effect; or
8.11 Change in Control.
(i) Prior to the consummation of any initial public offering of Holdings
Common Stock, MBW LLC shall cease to own directly 100% of the outstanding
capital stock of Holdings (other than Holdings Common Stock issued to employees
or directors of Holdings and its Subsidiaries pursuant to any employee stock
option or stock purchase plan or other employee benefit plan or to any Person
pursuant to the Warrant Agreement); or (ii) Holdings shall at any time cease to
own directly 100% of the outstanding capital stock of Company; or (iii) prior to
the consummation of any initial public offering of Holdings Common Stock, (a)
the MDC Entities, Dartford and Fenway shall at any time not own, in the
aggregate, at least 51% of the combined voting power of Company's voting
Securities; or (b) any Person (other than the MDC Entities, Dartford and
Fenway), including a "group" (within the meaning of Sections 13(d) and 14(d)(2)
of the Exchange Act) which includes such Person, shall purchase or otherwise
acquire, directly or indirectly, beneficial ownership of Securities of Company
and, as a result of such purchase or acquisition, any Person (together with its
associates and Affiliates), shall directly or indirectly beneficially own in the
aggregate Securities representing more than 30% of the combined voting power of
Company voting Securities; or (iv) at any time after the consummation of any
initial public offering of Holdings Common Stock, (a) the MDC Entities, Dartford
and Fenway together shall own, directly or indirectly, in the aggregate, a
lesser percentage of the combined voting power of Company voting Securities than
any other holder, including a "group" (within
<PAGE>
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) which includes
such holder, of such voting Securities; (b) a majority of the members of the
Board of Directors of Company shall not be Continuing Directors; or (c) any
Person (other than the MDC Entities, Dartford and Fenway), including a "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) which
includes such Person, shall purchase or otherwise acquire, directly or
indirectly, beneficial ownership of Securities of Company and, as a result of
such purchase or acquisition, any Person (together with its associates and
Affiliates), shall directly or indirectly beneficially own in the aggregate
Securities representing more than 25% of the combined voting power of Company
voting Securities; or
8.12 Invalidity of Guaranties.
At any time after the execution and delivery thereof, any Guaranty of the
Obligations of Company, for any reason other than the satisfaction in full of
all Obligations, ceases to be in full force and effect or is declared to be null
and void (except with respect to the obligations thereunder of Immaterial
Subsidiaries of Company) or any Loan Party (other than Immaterial Subsidiaries
of Company) denies in writing that it has any further liability, including,
without limitation, with respect to future advances by Lenders, under any Loan
Document to which it is a party; or
8.13 Failure of Security.
Any Collateral Document shall, at any time, cease to be in full force and
effect (other than by reason of a release of Collateral thereunder in accordance
with the terms hereof or thereof, the satisfaction in full of the Obligations or
any other termination of such Collateral Document in accordance with the terms
hereof or thereof) or shall be declared null and void; or the validity or
enforceability thereof shall be contested in writing by any Loan Party; or Agent
shall not have or shall cease to have a valid security interest in any
Collateral purported to be covered thereby, perfected and with the priority
required by the relevant Collateral Document, for any reason other than the
failure of Agents or any Lender to take any action within its control, subject
only to Liens permitted under the applicable Collateral Documents; or
8.14 Failure to Consummate Acquisition.
The Acquisition shall not be consummated in accordance with this Agreement
and the applicable Related Agreements concurrently with the making of the
initial Loans, or the Acquisition shall be unwound, reversed or otherwise
rescinded in whole or in part for any reason; or
8.15 Termination or Breach of Certain Transition Agreements.
The Co-Pack Agreement or the Flavor Supply Agreement shall terminate for
any reason whatsoever or Seller shall fail to perform its obligations under any
such agreement and such
<PAGE>
failure could reasonably be expected to result in a Material Adverse Effect,
and, in either case, Company shall not have made arrangements satisfactory to
Requisite Lenders for obtaining any services that are required to be provided by
Seller to Company under such agreement that are not being so provided as a
result of such termination or failure to perform; or
8.16 Conduct of Business By Holdings and MBW LLC.
(i) Holdings shall (a) engage in any business other than entering into and
performing its obligations under and in accordance with the Loan Documents and
Related Agreements to which it is a party and performing the transactions
contemplated thereby or permitted thereunder or (b) own any assets other than
(1) the capital stock of Company and (2) Cash and Cash Equivalents in an amount
not to exceed $50,000 at any one time for the purpose of paying general
operating expenses of Holdings; or (ii) MBW LLC shall (a) engage in any business
other than entering into and performing its obligations under and in accordance
with the MBW LLC Agreement and the Loan Documents to which it is a party or (b)
own any assets other than (1) the capital stock of Holdings and (2) Cash and
Cash Equivalents in an amount not to exceed $50,000 at any one time for the
purpose of paying general operating expenses of MBW LLC; or
8.17 Default Under Subordination Provisions.
Company or any guarantor of Subordinated Indebtedness shall fail to comply
with the subordination provisions contained in the Subordinated Bridge Loan
Agreement, the Subordinated Exchange Note Indenture or any other instrument,
indenture or agreement pursuant to which such Subordinated Indebtedness is
issued;
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit) and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan, the
obligation of Administrative Agent to issue any Letter of Credit and the right
of any Lender to issue any Letter of Credit hereunder shall thereupon terminate,
and (ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request of Requisite
Lenders, by written notice to Company, declare all or any portion of the amounts
described in clauses (a) through (c) above to be, and the same shall forthwith
become, immediately due and payable, and the obligation of each Lender to make
any Loan, the obligation of Administrative Agent to issue any Letter of Credit
and the right of any Lender to issue any Letter of Credit hereunder shall
thereupon terminate; provided that the foregoing shall not affect in any way the
obligations of Lenders under subsection 3.3C(i).
<PAGE>
Any amounts described in clause (b) above, when received by Administrative
Agent, shall be held by Administrative Agent pursuant to the terms of the
Collateral Account Agreement and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph, if
at any time within 60 days after an acceleration of the Loans pursuant to such
paragraph Company shall pay all arrears of interest and all payments on account
of principal which shall have become due otherwise than as a result of such
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Potential Events of Default (other than non-payment of the principal
of and accrued interest on the Loans, in each case which is due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant to
subsection 10.6, then Requisite Lenders, by written notice to Company, may at
their option rescind and annul such acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions of this paragraph
are intended merely to bind Lenders to a decision which may be made at the
election of Requisite Lenders and are not intended to benefit Company and do not
grant Company the right to require Lenders to rescind or annul any acceleration
hereunder or preclude Agents or Lenders from exercising any of the rights or
remedies available to them under any of the Loan Documents, even if the
conditions set forth in this paragraph are met.
SECTION 9.
AGENTS
9.1 Appointment.
A. Chase is hereby appointed Administrative Agent hereunder and under the
other Loan Documents and each Lender hereby authorizes Administrative Agent to
act as its agent in accordance with the terms of this Agreement and the other
Loan Documents. CSI is hereby appointed Arranging Agent hereunder and under the
other Loan Documents and each Lender hereby authorizes Arranging Agent to act as
its agent in accordance with the terms of this Agreement and the other Loan
Documents. Each Agent agrees to act upon the express conditions contained in
this Agreement and the other Loan Documents, as applicable. The provisions of
this Section 9 are solely for the benefit of Agents and Lenders and Company
shall have no rights as a third party beneficiary of any of the provisions
thereof. In performing its functions and duties under this Agreement, each Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for Company or any of its Subsidiaries. Upon the conclusion of the
Initial Period, all obligations of Arranging Agent hereunder shall terminate.
B. Appointment of Supplemental Collateral Agents. It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact
<PAGE>
business as agent or trustee in such jurisdiction. It is recognized that in case
of litigation under this Agreement or any of the other Loan Documents, and in
particular in case of the enforcement of any of the Loan Documents, or in case
Administrative Agent deems that by reason of any present or future law of any
jurisdiction Administrative Agent may not exercise any of the rights, powers or
remedies granted herein or in any of the other Loan Documents or take any other
action which may be desirable or necessary in connection therewith, it may be
necessary that Administrative Agent appoint an additional individual or
institution as a separate trustee, co-trustee, collateral agent or collateral
co-agent (any such additional individual or institution being referred to herein
individually as a "Supplemental Collateral Agent" and collectively as
"Supplemental Collateral Agents").
In the event that Administrative Agent appoints a Supplemental Collateral
Agent with respect to any Collateral, (i) each and every right, power, privilege
or duty expressed or intended by this Agreement or any of the other Loan
Documents to be exercised by or vested in or conveyed to Administrative Agent
with respect to such Collateral shall be exercisable by and vest in such
Supplemental Collateral Agent to the extent, and only to the extent, necessary
to enable such Supplemental Collateral Agent to exercise such rights, powers and
privileges with respect to such Collateral and to perform such duties with
respect to such Collateral, and every covenant and obligation contained in the
Loan Documents and necessary to the exercise or performance thereof by such
Supplemental Collateral Agent shall run to and be enforceable by either
Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent shall be deemed to be
references to Administrative Agent and/or such Supplemental Collateral Agent, as
the context may require.
Should any instrument in writing from Company or any other Loan Party be
required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral Agent,
or a successor thereto, shall die, become incapable of acting, resign or be
removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
9.2 Powers; General Immunity.
A. Duties Specified. Each Lender irrevocably authorizes each Agent to take
such action on such Lender's behalf and to exercise such powers hereunder and
under the other Loan Documents as are specifically delegated to such Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. Each Agent shall have only those duties and responsibilities
that are expressly specified in this Agreement and the other Loan Documents, and
it may perform such duties by or through its agents or employees. No Agent
<PAGE>
shall have, by reason of this Agreement or any of the other Loan Documents, a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or any of the other Loan Documents, expressed or implied, is intended to or
shall be so construed as to impose upon any Agent any obligations in respect of
this Agreement or any of the other Loan Documents except as expressly set forth
herein or therein.
B. No Responsibility for Certain Matters. No Agent shall be responsible to
any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statement or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished by any Agent to Lenders or by or on behalf of Company and/or
its Subsidiaries to any Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Company or any other Person liable for the
payment of any Obligations, nor shall any Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or the use of the Letters of Credit or
as to the existence or possible existence of any Event of Default or Potential
Event of Default. Anything contained in this Agreement to the contrary
notwithstanding, Administrative Agent shall have no liability arising from
confirmations of the amount of outstanding Loans or the Total Utilization of
Revolving Loan Commitments or the component amounts thereof.
C. Exculpatory Provisions. Neither any Agent nor any of such Agent's
respective officers, directors, employees or agents shall be liable to Lenders
for any action taken or omitted by such Agent under or in connection with any of
the Loan Documents except to the extent caused by such Agent's gross negligence
or willful misconduct. If any Agent shall request instructions from Lenders with
respect to any act or action (including the failure to take an action) in
connection with this Agreement or any of the other Loan Documents, such Agent
shall be entitled to refrain from such act or taking such action unless and
until such Agent shall have received instructions from Requisite Lenders (or
such other Lenders as may be required to give such instructions under subsection
10.6). Without prejudice to the generality of the foregoing, (i) such Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its Subsidiaries), accountants,
experts and other professional advisors selected by it; and (ii) no Lender shall
have any right of action whatsoever against such Agent as a result of such Agent
acting or (where so instructed) refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of Requisite
Lenders (or such other Lenders as may be required to give such instructions
under subsection 10.6). Such Agent shall be entitled to refrain from exercising
any power, discretion or authority vested in it under this Agreement or any of
the other Loan Documents unless and until it has obtained the instructions
<PAGE>
of Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6).
D. Agents Entitled to Act as Lender. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" or "Lenders" or any similar
term shall, unless the context clearly otherwise indicates, include such Agent
in its individual capacity. Each Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Company or any of its Affiliates as if
it were not performing the duties specified herein, and may accept fees and
other consideration from Company and/or its Subsidiaries for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders.
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness.
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Company and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. No Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or, except as expressly provided elsewhere in this Agreement, to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter, and no Agent shall have any responsibility with respect to the
accuracy of or the completeness of any information provided to Lenders.
9.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against such Agent in performing its duties hereunder or under the
other Loan Documents or otherwise in its capacity as such Agent in any way
relating to or arising out of this Agreement or the other Loan Documents;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct.
<PAGE>
9.5 Successor Agents and Swing Line Lender.
A. Successor Agents. Any Agent may resign at any time by giving 30 days'
prior written notice thereof to the other Agents, Lenders and Company, and any
Agent may be removed at any time with or without cause by an instrument or
concurrent instruments in writing delivered to Company and Administrative Agent
and signed by Requisite Lenders. Upon any such notice of resignation or any such
removal, Requisite Lenders shall have the right, upon five Business Days' notice
to Company, to appoint a successor Agent. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Agent and the retiring or removed Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Agent's resignation or removal hereunder as 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 Agent under this Agreement.
B. Successor Swing Line Lender. Any resignation or removal of
Administrative Agent pursuant to subsection 9.5A shall also constitute the
resignation or removal of Chase or its successor as Swing Line Lender, and any
successor Administrative Agent appointed pursuant to subsection 9.5A shall, upon
its acceptance of such appointment, become the successor Swing Line Lender for
all purposes hereunder. In such event (i) Company shall prepay any outstanding
Swing Line Loans made by the retiring or removed Administrative Agent in its
capacity as Swing Line Lender, (ii) upon such prepayment, the retiring or
removed Administrative Agent and Swing Line Lender shall surrender the Swing
Line Note held by it to Company for cancellation, and (iii) Company shall issue
a new Swing Line Note to the successor Administrative Agent and Swing Line
Lender substantially in the form of Exhibit VI annexed hereto, in the principal
amount of the Swing Line Loan Commitment then in effect and with other
appropriate insertions.
9.6 Collateral Documents.
Each Lender and Agent hereby further authorizes Administrative Agent to
enter into each Collateral Document as secured party on behalf of and for the
benefit of Agents and Lenders and agrees to be bound by the terms of each
Collateral Document; provided that Administrative Agent shall not enter into or
consent to any amendment, modification, termination or waiver of any provision
contained in any Collateral Document without the prior consent of Requisite
Lenders (or, if required pursuant to subsection 10.6, all Lenders); provided
further, however, that, without further written consent or authorization from
Requisite Lenders, Administrative Agent may execute any documents or instruments
necessary to effect the release of any asset constituting Collateral from the
Lien of the applicable Collateral Document in the event that such asset is sold
or otherwise disposed of in a transaction effected in accordance with subsection
7.7. Anything contained in any of the Loan Documents to the contrary
notwithstanding, each Lender agrees that no Lender shall have any right
individually to realize upon any of the Collateral under any Collateral Document
(including, without limitation, through the exercise of a right of set-off
against call deposits of such Lender in which any funds on deposit in the
Collateral
<PAGE>
Account may from time to time be invested), it being understood and agreed that
all rights and remedies under the Collateral Documents may be exercised solely
by Administrative Agent for the benefit of Lenders in accordance with the terms
thereof.
SECTION 10.
MISCELLANEOUS
10.1 Assignments and Participations in Loans, Letters of Credit.
A. General. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign, transfer or negotiate to any Eligible Assignee,
or (ii) sell participations to any Person in, all or any part of its Commitments
(together with its Letters of Credit or participations therein made or arising
pursuant to its Revolving Loan Commitment) or any Loan or Loans made by it or
any other interest herein or in any other Obligations owed to it; provided that
no such sale, assignment, transfer or participation shall, without the consent
of Company, require Company to file a registration statement with the Securities
and Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided further, that no
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 10.1B(ii); provided further,
that no such sale, assignment, transfer or participation of any Letter of Credit
or any participation therein may be made separately from a sale, assignment,
transfer or participation of a corresponding interest in the Revolving Loan
Commitment and the Revolving Loans of the Lender effecting such sale,
assignment, transfer or participation; and provided further, that anything
contained herein to the contrary notwithstanding, the Swing Line Loan Commitment
and the Swing Line Loans of Swing Line Lender may not be sold, assigned or
transferred as described in clause (i) above to any Person other than a
successor Administrative Agent and Swing Line Lender to the extent contemplated
by subsection 9.5. Except as otherwise provided in this subsection 10.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or any granting of participations in, all or any part of its
Commitments or the Loans, the Letters of Credit or participations therein or the
other Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
of Credit, or participation therein or other Obligation may (a) be
assigned in any amount to another Lender who is a Non-Defaulting Lender,
or to an Affiliate of the assigning Lender or another Lender who, in
either such case, is a Non-Defaulting Lender, with the consent of
Administrative Agent (which consent shall not be unreasonably withheld)
and the giving of notice to Company; provided that, after giving effect to
a proposed assignment to another Lender, the assigning Lender shall have
an aggregate Commitment
<PAGE>
of at least $5,000,000 unless the proposed assignment constitutes the
aggregate amount of the Commitments, Loans, Letters of Credit, and
participations therein and other Obligations of the assigning Lender, or
(b) be assigned in an aggregate amount of not less than $5,000,000 (or
such lesser amount as shall constitute the aggregate amount of the
Commitments, Loans, Letters of Credit, and participations therein and
other Obligations of the assigning Lender) to any other Eligible Assignee
with the consent of Administrative Agent (which consent shall not be
unreasonably withheld) and the giving of notice to Company. To the extent
of any such assignment in accordance with either clause (a) or (b) above,
the assigning Lender shall be relieved of its obligations with respect to
its Commitments, Loans, Letters of Credit, or participations therein or
other Obligations or the portion thereof so assigned. The parties to each
such assignment shall execute and deliver to Administrative Agent, for its
acceptance and recording in the Register, an Assignment Agreement,
together with a processing fee of $3,000 payable by the assigning Lender
and such certificates, documents or other evidence, if any, with respect
to United States federal income tax withholding matters as the assignee
under such Assignment Agreement may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii) (a). Upon such
execution, delivery, acceptance and recordation, from and after the
effective date specified in such Assignment Agreement, (y) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and
(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive the
termination of this Agreement under subsection 10.9B) and be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto; provided that, anything contained in any of the Loan
Documents to the contrary notwithstanding, if such Lender is the Issuing
Lender with respect to any outstanding Letters of Credit such Lender shall
continue to have all rights and obligations of an Issuing Lender with
respect to such Letters of Credit until the cancellation or expiration of
such Letters of Credit and the reimbursement of any amounts drawn
thereunder). The Commitments hereunder shall be modified to reflect the
Commitments of such assignee and any remaining Commitments of such
assigning Lender and, if any such assignment occurs after the issuance of
the Notes hereunder, the assigning Lender shall surrender its applicable
Notes and, upon such surrender, new Notes shall be issued to the assignee
and, if applicable, to the assigning Lender, substantially in the form of
Exhibit IV, Exhibit V or Exhibit VI annexed hereto, as the case may be,
with appropriate insertions, to reflect the new Commitments and/or
outstanding Term Loans of the assignee and the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register.
Upon its receipt of an Assignment Agreement executed by an assigning
Lender and an assignee representing that it is an Eligible Assignee,
together with the processing fee referred to in subsection 10.1B(i) and
any certificates, documents or other evidence with respect to
<PAGE>
United States federal income tax withholding matters that such assignee
may be required to deliver to Administrative Agent pursuant to subsection
2.7B(iii) (a), Administrative Agent shall, if such Assignment Agreement
has been completed and is in substantially the form of Exhibit XV hereto
and if Administrative Agent have consented to the assignment evidenced
thereby (to the extent such consent is required pursuant to subsection
10.1B(i)), (a) accept such Assignment Agreement by executing a counterpart
thereof as provided therein (which acceptance shall evidence any required
consent of Administrative Agent to such assignment), (b) record the
information contained therein in the Register, and (c) give prompt notice
thereof to Company. Administrative Agent shall maintain a copy of each
Assignment Agreement delivered to and accepted by it as provided in this
subsection 10.1B(ii).
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
(i) effecting the extension of the final maturity of the Loan allocated to such
participation, (ii) effecting a reduction of the principal amount of or
affecting the rate of interest payable on any Loan allocated to such
participation, (iii) releasing all or substantially all of the Collateral, or
(iv) releasing all of the Guarantors from their obligations under the
Guaranties, and all amounts payable by Company hereunder (including, without
limitation, amounts payable to such Lender pursuant to subsections 2.6D, 2.7 and
3.6) shall be determined as if such Lender had not sold such participation.
Company and each Lender hereby acknowledge and agree that, solely for purposes
of subsections 10.4 and 10.5, (a) any participation will give rise to a direct
obligation of Company to the participant and (b) the participant shall be
considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. Information. Each Lender may furnish any information concerning Company
and its Subsidiaries in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to subsection 10.20.
F. Limitation. No assignee, participant or other transferee or any
Lender's rights shall be entitled to receive any greater payment under
subsection 2.7 than such Lender would have been entitled to receive with respect
to the rights transferred, unless such transfer is made with Company's prior
written consent or at a time when the circumstances giving rise to such greater
payment did not exist.
<PAGE>
G. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (i) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.
10.2 Expenses.
Whether or not the transactions contemplated hereby shall be consummated,
Company agrees to pay promptly (i) all the actual and reasonable costs and out
of pocket expenses of Administrative Agent in connection with the preparation of
the Loan Documents; (ii) all the actual and reasonable costs of furnishing all
opinions by counsel for Company (including, without limitation, any opinions
requested by Lenders as to any legal matters arising hereunder) and of Company's
performance of and compliance with all agreements and conditions on its part to
be performed or complied with under this Agreement and the other Loan Documents
including, without limitation, with respect to confirming compliance with
environmental and insurance requirements; (iii) the reasonable fees, expenses
and disbursements of counsel to Agents (including allocated costs of internal
counsel) in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loans and any consents, amendments,
waivers or other modifications hereto or thereto and any other documents or
matters requested by Company; (iv) all other actual and reasonable costs and
expenses incurred by Agents in connection with the negotiation, preparation and
execution of the Loan Documents and the transactions contemplated hereby and
thereby; and (v) after the occurrence of an Event of Default, all costs and
expenses, including reasonable attorneys' fees (including allocated costs of
internal counsel) and costs of settlement, incurred by Agents and Lenders in
enforcing any Obligations of or in collecting any payments due from Company
hereunder or under the other Loan Documents by reason of such Event of Default
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 Indemnity.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend, indemnify, pay and hold harmless Agents and Lenders,
and the officers, directors, trustees, partners, employees, agents, attorneys
and affiliates of any of Agents and Lenders (collectively called the
"Indemnitees") from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or
<PAGE>
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including, without limitation, securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby (including, without limitation, Lenders'
agreement to make the Loans hereunder or the use or intended use of the proceeds
of any of the Loans or the issuance of Letters of Credit hereunder or the use or
intended use of any of the Letters of Credit) (collectively called the
"Indemnified Liabilities"); provided that Company shall not have any obligation
to any Indemnitee hereunder with respect to any Indemnified Liabilities to the
extent, and only to the extent, of any particular liability, obligation, loss,
damage, penalty, claim, cost, expense or disbursement that arose from the gross
negligence or willful misconduct of that Indemnitee as determined by a final
judgment of a court of competent jurisdiction. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Company shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them.
10.4 Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence and during
the continuance of any Event of Default each Lender is hereby authorized by
Company at any time or from time to time, without notice to Company or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender (at any office of that
Lender wherever located) to or for the credit or the account of Company against
and on account of the obligations and liabilities of Company to that Lender
under this Agreement, the Notes, the Letters of Credit and participations
therein, including, but not limited to, all claims of any nature or description
arising out of or connected with this Agreement, the Notes, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured. Company hereby further grants to
each Agent and Lender a security interest in all deposits and accounts
maintained with such Agent or Lender as security for the Obligations.
<PAGE>
10.5 Ratable Sharing.
Lenders hereby agree among themselves that if any of them shall, whether
by voluntary payment (other than a voluntary prepayment of Loans made and
applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "Aggregate
Amounts Due" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; provided that if all or part of such proportionately
greater payment received by such purchasing Lender is thereafter recovered from
such Lender upon the bankruptcy, reorganization or insolvency proceeding of
Company or otherwise, those purchases shall be rescinded and the purchase prices
paid for such participations shall be returned to such purchasing Lender ratably
to the extent of such recovery, but without interest. Company expressly consents
to the foregoing arrangement and agrees that any holder of a participation so
purchased may exercise any and all rights of banker's lien, set-off or
counterclaim with respect to any and all monies owing by Company to that holder
with respect thereto as fully as if that holder were owed the amount of the
participation held by that holder.
10.6 Amendments and Waivers.
A. No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, or consent to any departure by Company or any
other Loan Party therefrom, shall in any event be effective without the written
concurrence of Requisite Lenders; provided that any such amendment,
modification, termination, waiver or consent which: reduces the principal amount
of any of the Loans; changes in any manner the definition of "Requisite Lenders"
or "Pro Rata Share"; changes in any manner any provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of all
Lenders; postpones the scheduled final maturity date of any of the Loans;
postpones the date or reduces the amount of any scheduled payment (but not
prepayment) of principal of any of the Loans; postpones the date or reduces the
amount of any scheduled reduction of the Revolving Loan Commitments; postpones
the date on which any interest or any fees are payable; decreases the interest
rate borne by any of the Loans (other than any waiver of any increase in the
interest rate applicable to any of the Loans pursuant to subsection 2.2E) or the
amount of any fees payable hereunder; increases the maximum duration of Interest
Periods permitted hereunder; releases all or
<PAGE>
substantially all of the Collateral; releases Holdings from its obligations
under the Holdings Guaranty or releases all or substantially all of the
Subsidiary Guarantors from their obligations under the Subsidiary Guaranty;
reduces the amount or postpones the due date of any amount payable in respect
of, or extends the required expiration date of, any Letter of Credit; changes
the obligations of Lenders relating to the purchase of participations in Letters
of Credit in any manner that could be adverse to any Issuing Lender; or changes
in any manner the provisions contained in subsection 8.1 or this subsection
10.6; shall be effective only if evidenced by a writing signed by or on behalf
of all Lenders to whom are owed Obligations being directly affected by such
amendment, modification, termination, waiver or consent. In addition, (i) any
amendment, modification, termination or waiver of any of the provisions
contained in Section 4 shall be effective only if evidenced by a writing signed
by or on behalf of Administrative Agent and Requisite Lenders, (ii) no
amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the Lender which is the
holder of that Note, (iii) no amendment, modification, termination or waiver of
any provision of this Agreement which disproportionately and adversely affects
the obligation of any Loan Party to make payments (including without limitation
mandatory prepayments) to the holders of the Term Loans or the holders of the
Revolving Loans and Revolving Loan Commitments, shall be effective without the
written concurrence of the holders of 51% in principal amount of the class
(i.e., Term Loans or Revolving Loans and Revolving Loan Commitments each being a
"class" of Loans) of Loans so disproportionately and adversely affected; (iv) no
increase in the Commitments of any Lender over the amount thereof then in effect
shall be effective without the written concurrence of that Lender, it being
understood and agreed that in no event shall waivers or modifications of
conditions precedent, covenants, Events of Default, Potential Events of Default
or of a mandatory prepayment or a reduction of any or all of the Commitments be
deemed to constitute an increase of the Commitment of any Lender and that an
increase in the available portion of any Commitment of any Lender shall not be
deemed to constitute an increase in the Commitment of such Lender, (v) no
amendment, modification, termination or waiver of any provision of subsection
2.1A(iii) or any other provision of this Agreement relating to the Swing Line
Loan Commitment or the Swing Line Loans shall be effective without the written
concurrence of Swing Line Lender, (vi) no amendment, modification, termination
or waiver of any provision of Section 3 relating to the rights or obligations of
any or all Issuing Lenders shall be effective without the written concurrence of
Administrative Agent and each Lender who is an Issuing Lender with respect to
any Letter of Credit then outstanding, and (vii) no amendment, modification,
termination or waiver of any provision of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of Administrative Agent shall be effective without the written
concurrence of Administrative Agent. Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Company in any case
shall entitle Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Company, on
Company.
<PAGE>
B. If, in connection with any proposed change, waiver, discharge or
termination to any of the provision of this Agreement as contemplated by the
proviso in the first sentence of this subsection 10.6, the consent of Requisite
Lenders is obtained but consent of one or more of such other Lenders whose
consent is required is not obtained, then Company may, so long as all
non-consenting Lenders are so treated, elect to terminate such Lender as a party
to this Agreement; provided that, concurrently with such termination, (i)
Company shall pay that Lender all principal, interest and fees and other amounts
due to be paid to such Lender with respect to all periods through such date of
termination, (ii) another financial institution satisfactory to Company and
Administrative Agent (or if Administrative Agent is also a Lender to be
terminated, the successor Administrative Agent) shall agree, as of such date, to
become a Lender for all purposes under this Agreement (whether by assignment or
amendment) and to assume all obligations of the Lender to be terminated as of
such date, and (iii) all documents and supporting materials necessary, in the
judgment of Administrative Agent (or if Administrative Agent is also a Lender to
be terminated, the successor Administrative Agent) to evidence the substitution
of such Lender shall have been received and approved by Administrative Agent as
of such date.
10.7 Independence of Covenants.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telecopied, telexed or sent by United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telecopy or telex, or four Business Days
after depositing it in the United States mail, registered or certified, with
postage prepaid and properly addressed; provided that notices to Administrative
Agent shall not be effective until received. For the purposes hereof, the
address of each party hereto shall be as set forth under such party's name on
the signature pages hereof or (i) as to Company and Administrative Agent, such
other address as shall be designated by such Person in a written notice
delivered to the other parties hereto and (ii) as to each other party, such
other address as shall be designated by such party in a written notice delivered
to Administrative Agent.
10.9 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
<PAGE>
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4, 10.4, 10.5 and 10.20 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn or paid thereunder, and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Administrative Agent or any Lender in
the exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
Neither Administrative Agent nor any Lender shall be under any obligation
to marshal any assets in favor of Company or any other party or against or in
payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Administrative Agent or Lenders (or to Administrative
Agent for the benefit of Lenders), or Administrative Agent or Lenders enforce
any security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.
10.12 Severability.
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other
<PAGE>
kind of entity. The amounts payable at any time hereunder to each Lender shall
be a separate and independent debt, and each Lender shall be entitled to protect
and enforce its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
10.14 Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
10.15 Applicable Law.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
10.16 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither Holdings'
nor Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Holdings or Company without the prior written consent
of all Lenders.
10.17 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST HOLDINGS OR COMPANY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH OF HOLDINGS AND COMPANY, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEX-
CLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
<PAGE>
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO HOLDINGS OR COMPANY, AS APPLICABLE, AT ITS ADDRESS PROVIDED
IN ACCORDANCE WITH SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER HOLDINGS OR COMPANY, AS
APPLICABLE, IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST HOLDINGS OR
COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.
10.18 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP OR OTHER RELATIONSHIP THAT IS BEING ESTABLISHED.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. Each party
hereto acknowledges that this waiver is a material inducement to enter into a
business relationship, that each has already relied on this waiver in entering
into this Agreement, and that each will continue to rely on this waiver in their
related future dealings. Each party hereto further warrants and represents that
it has reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO),
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE
<PAGE>
OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE
LOANS MADE HEREUNDER. In the event of litigation, this Agreement may be filed as
a written consent to a trial by the court.
10.19 Confidentiality.
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature, it being understood and agreed by
Company that in any event a Lender may make disclosures reasonably required by
any bona fide assignee, transferee or participant in connection with the
contemplated assignment or transfer by such Lender of any Loans or any
participation therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process or by the National
Association of Insurance Commissioners or in connection with the exercise of any
remedy under the Loan Documents; provided that, unless specifically prohibited
by applicable law or court order, each Lender shall notify Company of any
request by any governmental agency or representative thereof (other than any
such request in connection with any examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; and provided, further that
in no event shall any Lender be obligated or required to return any materials
furnished by Company or any of its Subsidiaries.
10.20 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY AND HOLDINGS: MBW FOODS INC.
By: /s/ Ray Chung
--------------------------------------
Executive Vice President
MBW HOLDINGS INC.
By: /s/ Ray Chung
--------------------------------------
Executive Vice President
Notice Address:
445 Hutchinson Avenue
Columbus, Ohio 43235
Attention: Chief Financial Officer
Facsimile: (415) 982-3023
with a copy to:
McCown De Leeuw & Co.
101 East 52nd Street
31st Floor
New York, New York 10022
Attention: Tyler T. Zachem
Facsimile: (212) 355-6283
(212) 355-6945
S-1
<PAGE>
and a copy to:
Dartford Partnership L.L.C.
801 Montgomery Street, Suite 400
San Francisco, California 94133
Attention: James B. Ardrey
Facsimile: (415) 982-3023
and a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Frank L. Schiff, Esq.
Facsimile: (212) 819-7817
S-2
<PAGE>
AGENT AND LENDERS: THE CHASE MANHATTAN BANK,
individually and as Administrative Agent
By: /s/ Karen M. Sharf
Vice President
Notice Address:
270 Park Avenue, 10th Floor
New York, New York 10017
Attention: Karen Sharf
Telephone: (212) 270-5659
Facsimile: (212) 270-5120
with a copy to:
One Chase Plaza
8th Floor
New York, New York 10081
Attention: Janet Belden
Loan Servicing Group
Telephone: (212) 552-7277
Facsimile: (212) 552-5658
S-3
<PAGE>
FLEET NATIONAL BANK
By: /s/ John E. Duncan
--------------------------------------
Title: Managing Director
Notice Address:
Fleet National Bank
One Federal Street, MAOFD03C
Boston, Massachusetts 02211
Attention: James Silva
Telephone: (617) 346-4399
Facsimile: (617) 346-4806
With a copy to:
Fleet National Bank
One Federal Street, MAOFD03C
Boston, Massachusetts 02211
Attention: Paul Tarantino
Telephone: (617) 346-4401
Facsimile: (617) 346-4806
S-4
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ C. Andrew Piculell
--------------------------------------
Title: Vice President
Notice Address:
Bank of Boston
Diversified Finance
100 Federal Street, MS 01-08-05
Boston, Massachusetts 02110
Attention: Clifford A. Gaysunas
Assistant Vice President
Telephone: (617) 434-3051
Facsimile: (617) 434-4929
With a copy to:
Bank of Boston
Commercial Loan Services
100 Federal Street, MS 01-08-04
Boston, Massachusetts 02110
Attention: Joan Broderick
Administrative Officer
Telephone: (617) 434-2456
Facsimile: (617) 434-9820
S-5
<PAGE>
HELLER FINANCIAL, INC.
By: /s/ Robert A. Pierce
--------------------------------------
Vice President
Notice Address:
Heller Financial
500 West Monroe Street
Chicago, Illinois 60661
Attention: Robert A. Pierce
Telephone: (312) 441-6998
Facsimile: (312) 441-7367
S-6
<PAGE>
MARINE MIDLAND BANK
By: /s/ Thomas McGann
--------------------------------------
Title: Senior Vice President
Notice Address:
Midland Bank (New York)
140 Broadway, 5th Floor
New York, New York 10005-1185
Attention: Russell Thomas
Telephone: (212) 658-2729
Facsimile: (212) 658-2586
S-7
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Kwan L. Grays
--------------------------------------
Title: Assistant Vice President
Notice Address:
PNC Bank
345 Park Avenue, 29th Floor
New York, New York 10154
Attention: Mark Williams
Telephone: (212) 409-3724
Facsimile: (212) 409-3737
With a copy to:
PNC Bank
345 Park Avenue, 29th Floor
New York, New York 10154
Attention: Anna Di Rocco
Telephone: (212) 409-3717
Facsimile: (212) 409-3737
S-8
<PAGE>
SUNTRUST BANK, ATLANTA
By: /s/ Andrew S. McGhee
--------------------------------------
Title: Group Vice President
By: /s/ Susan Hall
--------------------------------------
Title: Vice President
Notice Address:
Suntrust Bank, Atlanta
25 Park Place, 23rd Floor
Atlanta, Georgia 30303
Attention: Dennis H. James, Jr.
Telephone: (404) 588-7963
Facsimile: (404) 588-8833
With a copy to:
Suntrust Bank, Atlanta
25 Park Place, 23rd Floor
Atlanta, Georgia 30303
Attention: Devyonne Aabeel
Telephone: (404) 588-7077
Facsimile: (404) 588-8833
S-9
<PAGE>
WELLS FARGO BANK, N.A.
By: /s/ Kathleen Weiss
--------------------------------------
Vice President
Notice Address:
555 Montgomery Street, 17th Floor
San Francisco, California 94111
Attention: Kathleen Weiss
Telephone: (415) 396-1274
Facsimile: (415) 362-5081
S-10
<PAGE>
EXHIBIT I
[FORM OF NOTICE OF BORROWING]
NOTICE OF BORROWING
Pursuant to that certain Credit Agreement dated as of December __, 1996,
as amended, restated, supplemented or otherwise modified to the date hereof
(said Credit Agreement, as so amended, restated, supplemented or otherwise
modified, being the "Credit Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among MBW
Foods Inc., a Delaware corporation ("Company"), MBW Holdings Inc., a Delaware
corporation, the financial institutions listed therein as Lenders, The Chase
Manhattan Bank, as administrative agent (in such capacity, "Administrative
Agent"), and Chase Securities Inc., as Arranging Agent, this represents
Company's request to borrow as follows:
1. Date of borrowing: ___________________, [199_] [200_]
2. Amount of borrowing: $___________________
3. Lender(s): |_| a. Lenders, in accordance with their applicable
Pro Rata Shares
|_| b. Swing Line Lender
4. Type of Loans: |_| a. Term Loans
|_| b. Revolving Loans
|_| c. Swing Line Loan
5. Interest rate option:(1) |_| a. Base Rate Loan(s)
|_| b. Eurodollar Rate Loans with an initial
Interest Period of ____________ month(s)
The proceeds of such Loans are to be deposited in Company's account at
Administrative Agent.
The undersigned officer, to the best of his or her knowledge, and Company
certify that:
- ----------
(1) Term Loans and Revolving Loans may be Base Rate Loans or Eurodollar
Rate Loans. Swing Line Loans shall be Base Rate Loans.
I-vii
<PAGE>
(i) The representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct in all
material respects on and as of the date hereof to the same extent as
though made on and as of the date hereof, except to the extent such
representations and warranties specifically relate to an earlier date, in
which case such representations and warranties were true and correct in
all material respects on and as of such earlier date;
(ii) No event has occurred and is continuing or would result from
the consummation of the borrowing contemplated hereby that would
constitute an Event of Default or a Potential Event of Default; [and]
(iii) Company has performed in all material respects all agreements
and satisfied all conditions which the Credit Agreement provides shall be
performed or satisfied by it on or before the date hereof[; and][.]
[(iv) FOR REVOLVING LOANS: The amount of the proposed borrowing will
not cause the Total Utilization of Revolving Loan Commitments to exceed
the Revolving Loan Commitments.]
DATED: ____________________ MBW FOODS INC.
By: ______________________________________
Name:
Title:
I-viii
<PAGE>
EXHIBIT II
[FORM OF NOTICE OF CONVERSION/CONTINUATION]
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Credit Agreement dated as of December __, 1996,
as amended, restated, supplemented or otherwise modified to the date hereof
(said Credit Agreement, as so amended, restated, supplemented or otherwise
modified, being the "Credit Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among MBW
Foods Inc., a Delaware corporation ("Company"), MBW Holdings Inc., a Delaware
corporation, the financial institutions listed therein as Lenders, The Chase
Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging
Agent, this represents Company's request to convert or continue Loans as
follows:
1. Date of conversion/continuation: __________________, [199_] [200_]
2. Amount of Loans being converted/continued: $___________________
3. Type of Loans being converted/continued:
|_| a. Term Loans
|_| b. Revolving Loans
4. Nature of conversion/continuation:
|_| a. Conversion of Base Rate Loans to Eurodollar Rate Loans
|_| b. Conversion of Eurodollar Rate Loans to Base Rate Loans
|_| c. Continuation of Eurodollar Rate Loans as such
5. If Loans are being continued as or converted to Eurodollar Rate Loans, the
duration of the new Interest Period that commences on the conversion/
continuation date: _______________ month(s)
II-1
<PAGE>
In the case of a conversion to or continuation of Eurodollar Rate Loans,
the undersigned officer, to the best of his or her knowledge, and Company
certify that no Event of Default or Potential Event of Default has occurred and
is continuing under the Credit Agreement.
DATED: ____________________ MBW FOODS INC.
By: ______________________________________
Name:
Title:
II-2
<PAGE>
EXHIBIT III
[FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT]
NOTICE OF ISSUANCE OF LETTER OF CREDIT
Pursuant to that certain Credit Agreement dated as of December __, 1996,
as amended, restated, supplemented or otherwise modified to the date hereof
(said Credit Agreement, as so amended, restated, supplemented or otherwise
modified, being the "Credit Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among MBW
Foods Inc., a Delaware corporation ("Company"), MBW Holdings Inc., a Delaware
corporation, the financial institutions listed therein as Lenders, The Chase
Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging
Agent, this represents Company's request for the issuance of a Letter of Credit
by Administrative Agent as follows:
1. Date of issuance of Letter of Credit: ________________, [199_] [200_]
2. Type of Letter of Credit:
|_| a. Commercial Letter of Credit
|_| b. Standby Letter of Credit
3. Face amount of Letter of Credit: $________________________
4. Expiration date of Letter of Credit: ________________, [199_] [200_]
5. Name and address of beneficiary:
___________________________________________
___________________________________________
___________________________________________
___________________________________________
6. Attached hereto is:
|_| a. the verbatim text of such proposed Letter of Credit
|_| b. a description of the proposed terms and conditions of such
Letter of Credit, including a precise description of any
documents to be presented by the beneficiary which, if
presented by the beneficiary prior to the expiration date of
such Letter of Credit, would require the Issuing Lender to make
payment under such Letter of Credit.
III-1
<PAGE>
The undersigned officer, to the best of his or her knowledge, and Company
certify that:
(i) The representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct in all
material respects on and as of the date hereof to the same extent as
though made on and as of the date hereof, except to the extent such
representations and warranties specifically relate to an earlier date, in
which case such representations and warranties were true and correct in
all material respects on and as of such earlier date;
(ii) No event has occurred and is continuing or would result from
the issuance of the Letter of Credit contemplated hereby that would
constitute an Event of Default or a Potential Event of Default;
(iii) Company has performed in all material respects all agreements
and satisfied all conditions which the Credit Agreement provides shall be
performed or satisfied by it on or before the date hereof; and
(iv) The issuance of the proposed Letter of Credit will not cause
(a) the Letter of Credit Usage to exceed $5,000,000 or (b) the Total
Utilization of Revolving Loan Commitments to exceed the Revolving Loan
Commitments.
DATED: ____________________ MBW FOODS INC.
By: ______________________________________
Name:
Title:
III-2
<PAGE>
EXHIBIT IV
[FORM OF TERM NOTE]
MBW FOODS INC.
PROMISSORY NOTE DUE DECEMBER 15, 2002
$(1) New York, New York
[Closing Date]
FOR VALUE RECEIVED, MBW FOODS INC., a Delaware corporation ("Company"),
promises to pay to(2) ("Payee") or its registered assigns the principal amount
of (3) ($[1]) in the installments referred to below.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Credit Agreement dated as of December __, 1996, by and among Company, MBW
Holdings Inc., a Delaware corporation, the financial institutions listed therein
as Lenders, The Chase Manhattan Bank, as administrative agent (in such capacity,
"Administrative Agent"), and Chase Securities Inc., as Arranging Agent (said
Credit Agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time, being the "Credit Agreement", the terms defined
therein and not otherwise defined herein being used herein as therein defined).
Company shall make principal payments on this Note in consecutive
quarterly installments as set forth in the Credit Agreement, commencing on March
15, 1997 and ending on December 15, 2002. Each such installment shall be due on
the date specified in the Credit Agreement and in an amount determined in
accordance with the provisions thereof; provided that the last such installment
shall be in an amount sufficient to repay the entire unpaid principal balance of
this Note, together with all accrued and unpaid interest thereon.
This Note is one of Company's "Term Notes" in the aggregate principal
amount of $15,000,000 and is issued pursuant to and entitled to the benefits of
the Credit Agreement, to
- ----------
(1) Insert amount of Lender's Term Loan in numbers.
(2) Insert Lender's name in capital letters.
(3) Insert amount of Lender's Term Loan in words.
IV-1
<PAGE>
which reference is hereby made for a more complete statement of the terms and
conditions under which the Term Loan evidenced hereby was made and is to be
repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Funding and Payment Office or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer of
this Note shall have been accepted by Administrative Agent and recorded in the
Register as provided in subsection 10.1B(ii) of the Credit Agreement, Company
and Administrative Agent shall be entitled to deem and treat Payee as the owner
and holder of this Note and the Loan evidenced hereby. Payee hereby agrees, by
its acceptance hereof, that before disposing of this Note or any part hereof it
will make a notation hereon of all principal payments previously made hereunder
and of the date to which interest hereon has been paid; provided, however, that
the failure to make a notation of any payment made on this Note shall not limit
or otherwise affect the obligations of Company hereunder with respect to
payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
This Note is entitled to the benefits of the Guaranties and is secured
pursuant to the Collateral Documents.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as provided
in subsections 10.1 and 10.16 of the Credit Agreement.
IV-2
<PAGE>
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligations of Company, which
are absolute and unconditional, to pay the principal of and interest on this
Note at the place, at the respective times, and in the currency herein
prescribed.
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
MBW FOODS INC.
By: ______________________________________
Name:
Title:
IV-3
<PAGE>
EXHIBIT V
[FORM OF REVOLVING NOTE]
MBW FOODS INC.
PROMISSORY NOTE DUE DECEMBER 15, 2001
$(1) New York, New York
[Closing Date]
FOR VALUE RECEIVED, MBW FOODS INC., a Delaware corporation ("Company"),
promises to pay to the order of(2) ("Payee") or its registered assigns, on or
before December 15, 2001, the lesser of (x) (3) ($[1]) and (y) the unpaid
principal amount of all advances made by Payee to Company as Revolving Loans
under the Credit Agreement referred to below.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Credit Agreement dated as of December __, 1996, by and among Company, MBW
Holdings Inc., a Delaware corporation, the financial institutions listed therein
as Lenders, The Chase Manhattan Bank, as administrative agent (in such capacity,
"Administrative Agent"), and Chase Securities Inc., as Arranging Agent (said
Credit Agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time, being the "Credit Agreement", the terms defined
therein and not otherwise defined herein being used herein as therein defined).
This Note is one of Company's "Revolving Notes" in the aggregate principal
amount of $45,000,000 and is issued pursuant to and entitled to the benefits of
the Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Revolving Loans evidenced
hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Funding and Payment Office or at such other place as shall be designated in
writing for such purpose in accordance with the
- ----------
(1) Insert amount of Lender's Revolving Loan Commitment in numbers.
(2) Insert Lender's name in capital letters.
(3) Insert amount of Lender's Revolving Loan Commitment in words.
V-1
<PAGE>
terms of the Credit Agreement. Unless and until an Assignment Agreement
effecting the assignment or transfer of this Note shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii) of the Credit Agreement, Company and Administrative Agent shall be
entitled to deem and treat Payee as the owner and holder of this Note and the
Loans evidenced hereby. Payee hereby agrees, by its acceptance hereof, that
before disposing of this Note or any part hereof it will make a notation hereon
of all principal payments previously made hereunder and of the date to which
interest hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise affect
the obligations of Company hereunder with respect to payments of principal of or
interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
This Note is entitled to the benefits of the Guaranties and is secured
pursuant to the Collateral Documents.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as provided
in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligations of Company, which
are absolute and unconditional, to pay the principal of and interest on this
Note at the place, at the respective times, and in the currency herein
prescribed.
V-2
<PAGE>
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
MBW FOODS INC.
By: ______________________________________
Name:
Title:
V-3
<PAGE>
TRANSACTIONS
ON
REVOLVING NOTE
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made By
- ---- --------- --------- -------------- ----------- -------
V-4
<PAGE>
EXHIBIT VI
[FORM OF SWING LINE NOTE]
MBW FOODS INC.
PROMISSORY NOTE DUE DECEMBER 15, 2001
$2,000,000 New York, New York
[Closing Date]
FOR VALUE RECEIVED, MBW FOODS INC., a Delaware corporation ("Company"),
promises to pay to [NAME OF SWING LINE LENDER] ("Payee") or its registered
assigns, on or before December 15, 2001, the lesser of (x) TWO MILLION AND NO
DOLLARS ($2,000,000.00) and (y) the unpaid principal amount of all advances made
by Payee to Company as Swing Line Loans under the Credit Agreement referred to
below.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Credit Agreement dated as of December __, 1996, by and among Company, MBW
Holdings Inc., a Delaware corporation, the financial institutions listed therein
as Lenders, The Chase Manhattan Bank, as administrative agent (in such capacity,
"Administrative Agent") and Chase Securities Inc., as Arranging Agent (said
Credit Agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time, being the "Credit Agreement", the terms defined
therein and not otherwise defined herein being used herein as therein defined).
This Note is Company's "Swing Line Note" and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Swing Line Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Funding and Payment Office or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Whenever any payment on this Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
VI-1
<PAGE>
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
This Note is entitled to the benefits of the Guaranty and is secured
pursuant to the Collateral Documents.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as provided
in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligations of Company, which
are absolute and unconditional, to pay the principal of and interest on this
Note at the place, at the respective times, and in the currency herein
prescribed.
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
[Remainder of page intentionally left blank]
VI-2
<PAGE>
IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
MBW FOODS INC.
By: ______________________________________
Name:
Title:
VI-3
<PAGE>
TRANSACTIONS
ON
SWING LINE NOTE
Outstanding
Amount of Amount of Principal
Loan Made Principal Paid Balance Notation
Date This Date This Date This Date Made By
---- --------- -------------- ----------- --------
VI-4
<PAGE>
EXHIBIT VII
[FORM OF SUBSIDIARY GUARANTY]
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY is entered into as of __________, [199__][200__]
by THE UNDERSIGNED DIRECT AND INDIRECT SUBSIDIARIES of MBW Foods Inc., a
Delaware corporation ("Company") (each such undersigned Subsidiary a "Guarantor"
and collectively, "Guarantors"; provided that after the date hereof, Guarantors
shall be deemed to include any Additional Guarantors (as hereinafter defined)),
in favor of and for the benefit of THE CHASE MANHATTAN BANK, as administrative
agent for and representative of (in such capacity herein called "Guarantied
Party") the financial institutions ("Lenders") party to the Credit Agreement
referred to below and any Interest Rate Exchangers (as hereinafter defined).
RECITALS
A. Company has entered into that certain Credit Agreement dated as of
December __, 1996 (said Credit Agreement, as amended, restated, supplemented or
otherwise modified from time to time, being the "Credit Agreement"; capitalized
terms defined therein and not otherwise defined herein being used herein as
therein defined) with MBW Holdings Inc., a Delaware corporation ("Holdings"),
Lenders, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities
Inc., as Arranging Agent.
B. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreements (collectively, the "Lender
Interest Rate Agreements") with or one or more Lenders or their Affiliates (in
such capacity, collectively, "Interest Rate Exchangers") in accordance with the
terms of the Credit Agreement, and it is desired that the obligations of Company
under the Lender Interest Rate Agreements, including without limitation the
obligation of Company to make payments thereunder in the event of early
termination thereof (all such obligations being the "Interest Rate
Obligations"), together with all obligations of Company under the Credit
Agreement and the other Loan Documents, be guarantied hereunder.
C. A portion of the proceeds of the Loans may be advanced to Guarantors
and thus the Guarantied Obligations (as hereinafter defined) are being incurred
for and will inure to the benefit of Guarantors (which benefits are hereby
acknowledged).
D. It is a condition precedent to the making of the initial Loans under
the Credit Agreement that Company's obligations thereunder be guarantied by
Guarantors.
VII-1
<PAGE>
E. Guarantors are willing irrevocably and unconditionally to guaranty such
obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Lenders and Guarantied Party to enter into the Credit
Agreement and to make Loans and other extensions of credit thereunder and to
induce Interest Rate Exchangers to enter into the Lender Interest Rate
Agreements, Guarantors hereby agree as follows:
SECTION 1.
DEFINITIONS
1.1 Certain Defined Terms.
As used in this Guaranty, the following terms shall have the following
meanings unless the context otherwise requires:
"Beneficiaries" means Guarantied Party, Lenders and any Interest
Rate Exchangers.
"Guarantied Obligations" has the meaning assigned to that term in
subsection 2.1.
"Guaranty" means this Subsidiary Guaranty dated as of __________,
[199__][200__], as it may be amended, restated, supplemented or otherwise
modified from time to time.
"payment in full", "paid in full" or any similar term means payment
in full of the Guarantied Obligations, including without limitation all
principal, interest, costs, fees and expenses (including without
limitation legal fees and expenses) of Beneficiaries as required under the
Loan Documents and the Lender Interest Rate Agreements.
1.2 Interpretation.
(a) References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Guaranty unless otherwise specifically
provided.
(b) In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Guaranty and the terms, conditions and
provisions of the Credit Agreement, the terms, conditions and provisions of this
Guaranty shall prevail.
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SECTION 2.
THE GUARANTY
2.1 Guaranty of the Guarantied Obligations.
Subject to the provisions of subsection 2.2(a), Guarantors jointly and
severally hereby irrevocably and unconditionally guaranty the due and punctual
payment in full of all Guarantied Obligations when the same shall become due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. ss. 362(a)). The term "Guarantied Obligations" is used herein in its most
comprehensive sense and includes:
(a) any and all Obligations of Company and any and all Interest Rate
Obligations, in each case now or hereafter made, incurred or created,
whether absolute or contingent, liquidated or unliquidated, whether due or
not due, and however arising under or in connection with the Credit
Agreement and the other Loan Documents and the Lender Interest Rate
Agreements, including those arising under successive borrowing
transactions under the Credit Agreement which shall either continue the
Obligations of Company or from time to time renew them after they have
been satisfied and including interest which, but for the filing of a
petition in bankruptcy with respect to Company, would have accrued on any
Guarantied Obligations, whether or not a claim is allowed against Company
for such interest in the related bankruptcy proceeding; and
(b) those expenses set forth in subsection 2.8 hereof.
2.2 Limitation on Amount Guarantied; Contribution by Guarantors.
(a) Anything contained in this Guaranty to the contrary notwithstanding,
if any Fraudulent Transfer Law (as hereinafter defined) is determined by a court
of competent jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, the obligations of such Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (i) in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (ii) under
any guaranty of Subordinated Indebtedness which guaranty contains a limitation
as to maximum amount similar to that set forth in this subsection 2.2(a),
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement, indemnification or
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contribution of such Guarantor pursuant to applicable law or pursuant to the
terms of any agreement (including without limitation any such right of
contribution under subsection 2.2(b)).
(b) Guarantors under this Guaranty and Holdings under the Holdings
Guaranty together desire to allocate among themselves (collectively, the
"Contributing Guarantors"), in a fair and equitable manner, their obligations
arising under this Guaranty and the Holdings Guaranty. Accordingly, in the event
any payment or distribution is made on any date by any Guarantor under this
Guaranty or Holdings under the Holdings Guaranty (a "Funding Guarantor") that
exceeds its Fair Share (as defined below) as of such date, that Funding
Guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the amount of such other Contributing Guarantor's
Fair Share Shortfall (as defined below) as of such date, with the result that
all such contributions will cause each Contributing Guarantor's Aggregate
Payments (as defined below) to equal its Fair Share as of such date. "Fair
Share" means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the Fair Share
Contribution Amount (as defined below) with respect to such Contributing
Guarantor to (y) the aggregate of the Fair Share Contribution Amounts with
respect to all Contributing Guarantors multiplied by (ii) the aggregate amount
paid or distributed on or before such date by all Funding Guarantors under this
Guaranty in respect of the obligations guarantied. "Fair Share Shortfall" means,
with respect to a Contributing Guarantor as of any date of determination, the
excess, if any, of the Fair Share of such Contributing Guarantor over the
Aggregate Payments of such Contributing Guarantor. "Fair Share Contribution
Amount" means, with respect to a Contributing Guarantor as of any date of
determination, the maximum aggregate amount of the obligations of such
Contributing Guarantor under this Guaranty or the Holdings Guaranty, as
applicable, determined as of such date, in the case of any Guarantor, in
accordance with subsection 2.2(a) or, if applicable, a similar provision
contained in the Holdings Guaranty; provided that, solely for purposes of
calculating the "Fair Share Contribution Amount" with respect to any
Contributing Guarantor for purposes of this subsection 2.2(b), any assets or
liabilities of such Contributing Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder or under subsection 2.2 of the Holdings Guaranty shall
not be considered as assets or liabilities of such Contributing Guarantor.
"Aggregate Payments" means, with respect to a Contributing Guarantor as of any
date of determination, an amount equal to (i) the aggregate amount of all
payments and distributions made on or before such date by such Contributing
Guarantor in respect of this Guaranty or the Holdings Guaranty, as applicable
(including in respect of this subsection 2.2(b), or subsection 2.2 of the
Holdings Guaranty), minus (ii) the aggregate amount of all payments received on
or before such date by such Contributing Guarantor from the other Contributing
Guarantors as contributions under this subsection 2.2(b) or subsection 2.2 of
the Holdings Guaranty. The amounts payable as contributions hereunder, under
subsection 2.2 of the Holdings Guaranty shall be determined as of the date on
which the related payment or distribution is made by the applicable Funding
Guarantor. The allocation among Contributing Guarantors of their obligations as
set forth in this subsection 2.2(b) or subsection 2.2 of the Holdings Guaranty
shall not be construed in any way to limit the liability of any Contributing
Guarantor hereunder or under the Holdings Guaranty. Holdings is a third party
beneficiary to the contribution agreement set forth in this subsection 2.2(b).
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2.3 Payment by Guarantors; Application of Payments.
Subject to the provisions of subsection 2.2(a), Guarantors hereby jointly
and severally agree, in furtherance of the foregoing and not in limitation of
any other right which any Beneficiary may have at law or in equity against any
Guarantor by virtue hereof, that upon the failure of Company to pay any of the
Guarantied Obligations when and as the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)),
Guarantors will upon demand pay, or cause to be paid, in cash, to Guarantied
Party for the ratable benefit of Beneficiaries, an amount equal to the sum of
the unpaid principal amount of all Guarantied Obligations then due as aforesaid,
accrued and unpaid interest on such Guarantied Obligations (including without
limitation interest which, but for the filing of a petition in bankruptcy with
respect to Company, would have accrued on such Guarantied Obligations, whether
or not a claim is allowed against Company for such interest in the related
bankruptcy proceeding) and all other Guarantied Obligations then owed to
Beneficiaries as aforesaid. All such payments shall be applied promptly from
time to time by Guarantied Party as provided in subsection 2.4D of the Credit
Agreement.
2.4 Liability of Guarantors Absolute.
Each Guarantor agrees that its obligations hereunder are irrevocable,
absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or
surety other than payment in full of the Guarantied Obligations. In furtherance
of the foregoing and without limiting the generality thereof, each Guarantor
agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Guarantied Party may enforce this Guaranty upon the occurrence
of an Event of Default under the Credit Agreement or the occurrence of an
Early Termination Date (as defined in a Master Agreement or an Interest
Rate Swap Agreement or Interest Rate and Currency Exchange Agreement in
the form prepared by the International Swap and Derivatives Association
Inc. or a similar event under any similar swap agreement) under any Lender
Interest Rate Agreement (either such occurrence being an "Event of
Default" for purposes of this Guaranty) notwithstanding the existence of
any dispute between Company and any Beneficiary with respect to the
existence of such Event of Default.
(c) The obligations of each Guarantor hereunder are independent of
the obligations of Company under the Loan Documents or the Lender Interest
Rate Agreements and the obligations of any other guarantor (including any
other Guarantor or Holdings) of the obligations of Company under the Loan
Documents or the Lender Interest Rate Agreements, and a separate action or
actions may be brought and prosecuted against such Guarantor whether or
not any action is brought against Company
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<PAGE>
or any of such other guarantors and whether or not Company is joined in
any such action or actions.
(d) Payment by any Guarantor of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge
any Guarantor's liability for any portion of the Guarantied Obligations
which has not been paid. Without limiting the generality of the foregoing,
if Guarantied Party is awarded a judgment in any suit brought to enforce
any Guarantor's covenant to pay a portion of the Guarantied Obligations,
such judgment shall not be deemed to release such Guarantor from its
covenant to pay the portion of the Guarantied Obligations that is not the
subject of such suit, and such judgment shall not, except to the extent
satisfied by such Guarantor, limit, affect, modify or abridge any other
Guarantor's liability hereunder in respect of the Guarantied Obligations.
(e) Any Beneficiary, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or
enforceability of this Guaranty or giving rise to any reduction,
limitation, impairment, discharge or termination of any Guarantor's
liability hereunder, from time to time may (i) renew, extend, accelerate,
increase the rate of interest on, or otherwise change the time, place,
manner or terms of payment of the Guarantied Obligations, (ii) settle,
compromise, release or discharge, or accept or refuse any offer of
performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement relating thereto and/or subordinate the
payment of the same to the payment of any other obligations; (iii) request
and accept other guaranties of the Guarantied Obligations and take and
hold security for the payment of this Guaranty or the Guarantied
Obligations; (iv) release, surrender, exchange, substitute, compromise,
settle, rescind, waive, alter, subordinate or modify, with or without
consideration, any security for payment of the Guarantied Obligations, any
other guaranties of the Guarantied Obligations, or any other obligation of
any Person (including any other Guarantor or Holdings) with respect to the
Guarantied Obligations; (v) enforce and apply any security now or
hereafter held by or for the benefit of such Beneficiary in respect of
this Guaranty or the Guarantied Obligations and direct the order or manner
of sale thereof, or exercise any other right or remedy that such
Beneficiary may have against any such security, in each case as such
Beneficiary in its discretion may determine consistent with the Credit
Agreement or the applicable Lender Interest Rate Agreement and any
applicable security agreement, including foreclosure on any such security
pursuant to one or more judicial or nonjudicial sales, whether or not
every aspect of any such sale is commercially reasonable, and even though
such action operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of any Guarantor against Company or
any security for the Guarantied Obligations; and (vi) exercise any other
rights available to it under the Loan Documents or the Lender Interest
Rate Agreements.
(f) This Guaranty and the obligations of Guarantors hereunder shall
be valid and enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other
than payment in full of the Guarantied
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<PAGE>
Obligations), including without limitation the occurrence of any of the
following, whether or not any Guarantor shall have had notice or knowledge
of any of them: (i) any failure or omission to assert or enforce or
agreement or election not to assert or enforce, or the stay or enjoining,
by order of court, by operation of law or otherwise, of the exercise or
enforcement of, any claim or demand or any right, power or remedy (whether
arising under the Loan Documents the Lender Interest Rate Agreements, at
law, in equity or otherwise) with respect to the Guarantied Obligations or
any agreement relating thereto, or with respect to the Holdings Guaranty
or any other guaranty of or security for the payment of the Guarantied
Obligations; (ii) any rescission, waiver, amendment or modification of, or
any consent to departure from, any of the terms or provisions (including
without limitation provisions relating to events of default) of the Credit
Agreement, any of the other Loan Documents, any of the Lender Interest
Rate Agreements or any agreement or instrument executed pursuant thereto,
or of the Holdings Guaranty or any other guaranty or security for the
Guarantied Obligations, in each case whether or not in accordance with the
terms of the Credit Agreement or such Loan Document, such Lender Interest
Rate Agreement or any agreement relating to the Holdings Guaranty or such
other guaranty or security; (iii) the Guarantied Obligations, or any
agreement relating thereto, at any time being found to be illegal, invalid
or unenforceable in any respect; (iv) the application of payments received
from any source (other than payments received pursuant to the other Loan
Documents or any of the Lender Interest Rate Agreements or from the
proceeds of any security for the Guarantied Obligations, except to the
extent such security also serves as collateral for indebtedness other than
the Guarantied Obligations) to the payment of indebtedness other than the
Guarantied Obligations, even though any Beneficiary might have elected to
apply such payment to any part or all of the Guarantied Obligations; (v)
any Beneficiary's consent to the change, reorganization or termination of
the corporate structure or existence of Company or any of its Subsidiaries
and to any corresponding restructuring of the Guarantied Obligations; (vi)
any failure to perfect or continue perfection of a security interest in
any collateral which secures any of the Guarantied Obligations; (vii) any
defenses, set-offs or counterclaims which Company may allege or assert
against any Beneficiary in respect of the Guarantied Obligations,
including, but not limited to, failure of consideration, breach of
warranty, payment, statute of frauds, statute of limitations, accord and
satisfaction and usury; and (viii) 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 any Guarantor as an obligor in respect of the
Guarantied Obligations.
2.5 Waivers by Guarantors.
Each Guarantor hereby waives, for the benefit of Beneficiaries:
(a) any right to require any Beneficiary, as a condition of payment
or performance by such Guarantor, to (i) proceed against Company, any
other guarantor (including any other Guarantor [or Holdings) of the
Guarantied Obligations or any other Person, (ii) proceed against or
exhaust any security held from Company, any such other guarantor or any
other Person, (iii) proceed against or have resort to any balance of any
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<PAGE>
deposit account or credit on the books of any Beneficiary in favor of
Company or any other Person, or (iv) pursue any other remedy in the power
of any Beneficiary whatsoever;
(b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of Company including without
limitation any defense based on or arising out of the lack of validity or
the unenforceability of the Guarantied Obligations or any agreement or
instrument relating thereto or by reason of the cessation of the liability
of Company from any cause other than payment in full of the Guarantied
Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(d) any defense based upon any Beneficiary's errors or omissions in
the administration of the Guarantied Obligations, except behavior which
amounts to bad faith;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Guaranty and any
legal or equitable discharge of such Guarantor's obligations hereunder,
(ii) the benefit of any statute of limitations affecting such Guarantor's
liability hereunder or the enforcement hereof, (iii) any rights to
set-offs, recoupments and counterclaims, and (iv) promptness, diligence
and any requirement that any Beneficiary protect, secure, perfect or
insure any security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default under the Credit
Agreement, the Lender Interest Rate Agreements or any agreement or
instrument related thereto, notices of any renewal, extension or
modification of the Guarantied Obligations or any agreement related
thereto, notices of any extension of credit to Company and notices of any
of the matters referred to in subsection 2.4 and any right to consent to
any thereof; and
(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or
which may conflict with the terms of this Guaranty.
2.6 Guarantors' Rights of Subrogation, Contribution, Etc.
Until the Guarantied Obligations have been paid in full and the
Commitments terminated, each Guarantor hereby waives any claim, right or remedy,
direct or indirect, that such Guarantor now has or may hereafter have against
Company or any of its assets in connection with this Guaranty or the performance
by such Guarantor of its obligations hereunder, in each case
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<PAGE>
whether such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise and including, without limitation, (a)
any right of subrogation, reimbursement or indemnification that such Guarantor
now has or may hereafter have against Company, (b) any right to enforce, or to
participate in, any claim, right or remedy that any Beneficiary now has or may
hereafter have against Company, and (c) any benefit of, and any right to
participate in, any collateral or security now or hereafter held by any
Beneficiary. In addition, until the Guarantied Obligations shall have been paid
in full and the Commitments shall have terminated and all Letters of Credit
shall have expired or been cancelled, each Guarantor shall withhold exercise of
any right of contribution such Guarantor may have against any other guarantor
(including any other Guarantor or Holdings) of the Guarantied Obligations
(including without limitation any such right of contribution under subsection
2.2(b)). Each Guarantor further agrees that, to the extent the waiver or
agreement to withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against
Company or against any collateral or security, and any rights of contribution
such Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights any Beneficiary may have against Company, to all
right, title and interest any Beneficiary may have in any such collateral or
security, and to any right any Beneficiary may have against such other
guarantor. If any amount shall be paid to any Guarantor on account of any such
subrogation, reimbursement, indemnification or contribution rights at any time
when all Guarantied Obligations shall not have been paid in full, such amount
shall be held in trust for Guarantied Party on behalf of Beneficiaries and shall
forthwith be paid over to Guarantied Party for the benefit of Beneficiaries to
be credited and applied against the Guarantied Obligations, whether matured or
unmatured, in accordance with the terms hereof.
2.7 Subordination of Other Obligations.
Any indebtedness of Company or any Guarantor now or hereafter held by any
Guarantor (the "Obligee Guarantor") is hereby subordinated in right of payment
to the Guarantied Obligations, and any such indebtedness collected or received
by the Obligee Guarantor after an Event of Default has occurred and is
continuing shall be held in trust for Guarantied Party on behalf of
Beneficiaries and shall forthwith be paid over to Guarantied Party for the
benefit of Beneficiaries to be credited and applied against the Guarantied
Obligations but without affecting, impairing or limiting in any manner the
liability of the Obligee Guarantor under any other provision of this Guaranty.
2.8 Expenses.
Guarantors jointly and severally agree to pay, or cause to be paid, on
demand, and to save Beneficiaries harmless against liability for, any and all
costs and expenses (including fees and disbursements of counsel and allocated
costs of internal counsel) incurred or expended by any Beneficiary in connection
with the enforcement of or preservation of any rights under this Guaranty.
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2.9 Continuing Guaranty.
This Guaranty is a continuing guaranty and shall remain in effect until
all of the Guarantied Obligations shall have been paid in full and the
Commitments shall have terminated and all Letters of Credit shall have expired
or been cancelled. Each Guarantor hereby irrevocably waives any right to revoke
this Guaranty as to future transactions giving rise to any Guarantied
Obligations.
2.10 Authority of Guarantors or Company.
It is not necessary for any Beneficiary to inquire into the capacity or
powers of any Guarantor or Company or the officers, directors or any agents
acting or purporting to act on behalf of any of them.
2.11 Financial Condition of Company.
Any Loans may be granted to Company or continued from time to time, and
any Lender Interest Rate Agreement may be entered into from time to time, in
each case without notice to or authorization from any Guarantor regardless of
the financial or other condition of Company at the time of any such grant or
continuation or at the time such Lender Interest Rate Agreement is entered into,
as the case may be. No Beneficiary shall have any obligation to disclose or
discuss with any Guarantor its assessment, or any Guarantor's assessment, of the
financial condition of Company. Each Guarantor has adequate means to obtain
information from Company on a continuing basis concerning the financial
condition of Company and its ability to perform its obligations under the Loan
Documents and the Lender Interest Rate Agreements, and each Guarantor assumes
the responsibility for being and keeping informed of the financial condition of
Company and of all circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations. Each Guarantor hereby waives and relinquishes any duty
on the part of any Beneficiary to disclose any matter, fact or thing relating to
the business, operations or conditions of Company now known or hereafter known
by any Beneficiary.
2.12 Rights Cumulative.
The rights, powers and remedies given to Beneficiaries by this Guaranty
are cumulative and shall be in addition to and independent of all rights, powers
and remedies given to Beneficiaries by virtue of any statute or rule of law or
in any of the other Loan Documents, any of the Lender Interest Rate Agreements
or any agreement between any Guarantor and any Beneficiary or Beneficiaries or
between Company and any Beneficiary or Beneficiaries. Any forbearance or failure
to exercise, and any delay by any Beneficiary in exercising, any right, power or
remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of
any such right, power or remedy.
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2.13 Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty.
(a) So long as any Guarantied Obligations remain outstanding, no Guarantor
shall, without the prior written consent of Guarantied Party acting pursuant to
the instructions of Requisite Obligees (as defined in subsection 3.14), commence
or join with any other Person in commencing any bankruptcy, reorganization or
insolvency proceedings of or against Company. The obligations of Guarantors
under this Guaranty shall not be reduced, limited, impaired, discharged,
deferred, suspended or terminated by any proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership, reorganization, liquidation
or arrangement of Company or by any defense which Company may have by reason of
the order, decree or decision of any court or administrative body resulting from
any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any
portion of the Guarantied Obligations which accrues after the commencement of
any proceeding referred to in clause (a) above (or, if interest on any portion
of the Guarantied Obligations ceases to accrue by operation of law by reason of
the commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of Guarantors and Beneficiaries that the Guarantied Obligations which
are guarantied by Guarantors pursuant to this Guaranty should be determined
without regard to any rule of law or order which may relieve Company of any
portion of such Guarantied Obligations. Guarantors will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay Guarantied Party, or allow the claim of
Guarantied Party in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations are
paid by Company, the obligations of Guarantors hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from any Beneficiary as a preference, fraudulent transfer
or otherwise, and any such payments which are so rescinded or recovered shall
constitute Guarantied Obligations for all purposes under this Guaranty.
2.14 Notice of Events.
As soon as any Guarantor obtains knowledge thereof, such Guarantor shall
give Guarantied Party written notice of any condition or event which has
resulted in a breach of or noncompliance with any term, condition or covenant
contained herein.
2.15 Set Off.
In addition to any other rights any Beneficiary may have under law or in
equity, if any amount shall at any time be due and owing by any Guarantor to any
Beneficiary under this Guaranty, such Beneficiary is authorized at any time or
from time to time upon the occurrence and during the continuation of any Event
of Default, without notice (any such notice being hereby expressly waived), to
set off and to appropriate and to apply any and all deposits (general
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or special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness of such Beneficiary owing to such Guarantor and any other property
of such Guarantor held by any Beneficiary to or for the credit or the account of
such Guarantor against and on account of the Guarantied Obligations and
liabilities of such Guarantor to any Beneficiary under this Guaranty.
2.16 Discharge of Guaranty Upon Sale of Guarantor.
If all of the stock of any Guarantor or any of its successors in interest
under this Guaranty shall be sold or otherwise disposed of (including by merger
or consolidation) in an Asset Sale not prohibited by subsection 7.7 of the
Credit Agreement or otherwise consented to by Requisite Lenders, the Guaranty of
such Guarantor or such successor in interest, as the case may be, hereunder
shall automatically be discharged and released without any further action by any
Beneficiary or any other Person effective as of the time of such Asset Sale;
provided that, as a condition precedent to such discharge and release,
Guarantied Party shall have received evidence satisfactory to it that
arrangements satisfactory to it have been made for delivery to Guarantied Party
of the applicable Net Cash Proceeds.
SECTION 3.
MISCELLANEOUS
3.1 Survival of Warranties.
All agreements, representations and warranties made herein shall survive
the execution and delivery of this Guaranty and the other Loan Documents and the
Lender Interest Rate Agreements and any increase in the Commitments under the
Credit Agreement.
3.2 Notices.
Any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier and shall be deemed to have been
given when delivered in person or by courier service, or upon receipt of
telefacsimile or telex (with received answerback) or three Business Days after
depositing it in the United States mail with postage pre-paid and properly
addressed; provided, notices to Guarantied Party shall not be effective until
received. For purposes hereof, the address of each party hereto shall be as set
forth under such party's name on the signature pages hereof or, as to any party,
such other address as shall be designated by such party in a written notice
delivered to the other parties hereto.
3.3 Severability.
In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
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3.4 Amendments and Waivers.
No amendment, modification, termination or waiver of any provision of this
Guaranty, and no consent to any departure by any Guarantor therefrom, shall in
any event be effective without the written concurrence of Guarantied Party and,
in the case of any such amendment or modification, each Guarantor against whom
enforcement of such amendment or modification is sought. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
3.5 Headings.
Section and subsection headings in this Guaranty are included herein for
convenience of reference only and shall not constitute a part of this Guaranty
for any other purpose or be given any substantive effect.
3.6 Applicable Law; Rules of Construction.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTORS AND
BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The
rules of construction set forth in subsection 1.3 of the Credit Agreement shall
be applicable to this Guaranty mutatis mutandis.
3.7 Successors and Assigns.
This Guaranty is a continuing guaranty and shall be binding upon each
Guarantor and its respective successors and assigns. This Guaranty shall inure
to the benefit of Beneficiaries and their respective successors and assigns. No
Guarantor shall assign this Guaranty or any of the rights or obligations of such
Guarantor hereunder without the prior written consent of all Lenders. Any
Beneficiary may, without notice or consent, assign its interest in this Guaranty
in whole or in part. The terms and provisions of this Guaranty shall inure to
the benefit of any transferee or assignee of any Loan, and in the event of such
transfer or assignment the rights and privileges herein conferred upon such
Beneficiary shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof.
3.8 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR
RELATING TO THIS GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY
OF NEW YORK. BY EXECUTING AND DELIVERING THIS GUARANTY, EACH GUARANTOR, FOR
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<PAGE>
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GUARANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SUBSECTION 3.2; (IV) AGREES THAT SERVICE AS PROVIDED
IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
GUARANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT BENEFICIARIES
RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST SUCH GUARANTOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 3.8
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.
3.9 Waiver of Trial by Jury.
EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, EACH
BENEFICIARY HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope
of this waiver is intended to be all encompassing of any and all disputes that
may be filed in any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. Each Guarantor
and, by its acceptance of the benefits hereof, each Beneficiary (i) acknowledges
that this waiver is a material inducement for such Guarantor and Beneficiaries
to enter into a business relationship, that such Guarantor and Beneficiaries
have already relied on this waiver in entering into this Guaranty or accepting
the benefits thereof, as the case may be, and that each will continue to rely on
this waiver in their related future dealings and (ii) further warrants and
represents that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 3.9 AND EXECUTED BY GUARANTIED
PARTY AND EACH GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY. In the
event of litigation, this Guaranty may be filed as a written consent to a trial
by the court.
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<PAGE>
3.10 No Other Writing.
This writing is intended by Guarantors and Beneficiaries as the final
expression of this Guaranty and is also intended as a complete and exclusive
statement of the terms of their agreement with respect to the matters covered
hereby. No course of dealing, course of performance or trade usage, and no parol
evidence of any nature, shall be used to supplement or modify any terms of this
Guaranty. There are no conditions to the full effectiveness of this Guaranty.
3.11 Further Assurances.
At any time or from time to time, upon the request of Guarantied Party,
Guarantors shall execute and deliver such further documents and do such other
acts and things as Guarantied Party may reasonably request in order to effect
fully the purposes of this Guaranty.
3.12 Additional Guarantors.
The initial Guarantors hereunder shall be such of the Subsidiaries of
Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
parties hereto, as additional Guarantors (each an "Additional Guarantor") by
executing a counterpart of this Guaranty. Upon delivery of any such counterpart
to Administrative Agent, notice of which is hereby waived by Guarantors, each
such Additional Guarantor shall be a Guarantor and shall be as fully a party
hereto as if such Additional Guarantor were an original signatory hereof. Each
Guarantor expressly agrees that its obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Guarantor
hereunder, nor by any election of Administrative Agent not to cause any
Subsidiary of Company to become an Additional Guarantor hereunder. This Guaranty
shall be fully effective as to any Guarantor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Guarantor hereunder.
3.13 Counterparts; Effectiveness.
This Guaranty may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original for all purposes; but
all such counterparts together shall constitute but one and the same instrument.
This Guaranty shall become effective as to each Guarantor upon the execution of
a counterpart hereof by such Guarantor (whether or not a counterpart hereof
shall have been executed by any other Guarantor) and receipt by Guarantied Party
of written or telephonic notification of such execution and authorization of
delivery thereof.
3.14 Guarantied Party as Administrative Agent.
(a) Guarantied Party has been appointed to act as Guarantied Party
hereunder by Lenders and, by their acceptance of the benefits hereof, Interest
Rate Exchangers. Guarantied Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices,
VII-15
<PAGE>
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action, solely in accordance with this Guaranty and the Credit
Agreement; provided that Guarantied Party shall exercise, or refrain from
exercising, any remedies hereunder in accordance with the instructions of (i)
Requisite Lenders or (ii) after payment in full of all Obligations under the
Credit Agreement and the other Loan Documents, the holders of a majority of the
aggregate notional amount (or, with respect to any Lender Interest Rate
Agreement that has been terminated in accordance with its terms, the amount then
due and payable (exclusive of expenses and similar payments but including any
early termination payments then due) under such Lender Interest Rate Agreement)
under all Lender Interest Rate Agreements (Requisite Lenders or, if applicable,
such holders being referred to herein as "Requisite Obligees"). In furtherance
of the foregoing provisions of this subsection 3.14, each Interest Rate
Exchanger, by its acceptance of the benefits hereof, agrees that it shall have
no right individually to enforce this Guaranty, it being understood and agreed
by such Interest Rate Exchanger that all rights and remedies hereunder may be
exercised solely by Guarantied Party for the benefit of Beneficiaries in
accordance with the terms of this subsection 3.14.
(b) Guarantied Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Guarantied Party under this Guaranty;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Guarantied Party under this Guaranty;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor
Guarantied Party under this Guaranty. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Guarantied Party under this Guaranty, and the
retiring or removed Guarantied Party under this Guaranty shall promptly (i)
transfer to such successor Guarantied Party all sums held hereunder, together
with all records and other documents necessary or appropriate in connection with
the performance of the duties of the successor Guarantied Party under this
Guaranty, and (ii) take such other actions as may be necessary or appropriate in
connection with the assignment to such successor Guarantied Party of the rights
created hereunder, whereupon such retiring or removed Guarantied Party shall be
discharged from its duties and obligations under this Guaranty. After any
retiring or removed Guarantied Party's resignation or removal hereunder as
Guarantied Party, the provisions of this Guaranty shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Guarantied Party hereunder.
[Remainder of page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.
[GUARANTOR]
By: ______________________________________
Name:
Title:
Notice Address for the foregoing Guarantors:
___________________________
___________________________
___________________________
Attention: ______________
Facsimile: ______________
with a copy to:
McCown De Leeuw & Co.
101 East 52nd Street
31st Floor
New York, New York 10022
Attention: Tyler T. Zachem
Facsimile: (212) 355-6283
(212) 355-6945
and a copy to:
Dartford Partnership L.L.C.
801 Montgomery Street, Suite 400
San Francisco, California 94133
Attention: James B. Ardrey
Facsimile: (415) 982-3023
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<PAGE>
and a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Frank L. Schiff, Esq.
Facsimile: (212) 819-7817
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<PAGE>
IN WITNESS WHEREOF, the undersigned Additional Guarantor has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of ______________, [199_] [200_].
[NAME OF ADDITIONAL GUARANTOR]
By: ______________________________________
Name:
Title:
Notice Address:
___________________________
___________________________
___________________________
___________________________
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<PAGE>
EXHIBIT VIII
[FORM OF HOLDINGS GUARANTY]
HOLDINGS GUARANTY
This HOLDINGS GUARANTY is entered into as of December __, 1996 by
MBW HOLDINGS INC., a Delaware corporation ("Guarantor"), in favor of and for the
benefit of THE CHASE MANHATTAN BANK, as agent for and representative of (in such
capacity herein called "Guarantied Party") the financial institutions
("Lenders") party to the Credit Agreement referred to below and any Interest
Rate Exchangers (as hereinafter defined).
RECITALS
A. MBW Foods Inc., a Delaware corporation and a wholly-owned
subsidiary of Guarantor ("Company"), and Guarantor have entered into that
certain Credit Agreement dated as of December __, 1996 (said Credit Agreement,
as it may hereafter be amended, supplemented or otherwise modified from time to
time, being the "Credit Agreement"; capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined) with Lenders, The
Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as
Arranging Agent.
B. Company may from time to time enter into one or more Interest
Rate Agreements (collectively, the "Lender Interest Rate Agreements") with or
one or more Lenders or their Affiliates (in such capacity, collectively,
"Interest Rate Exchangers") in accordance with the terms of the Credit
Agreement, and it is desired that the obligations of Company under the Lender
Interest Rate Agreements, including without limitation the obligation of Company
to make payments thereunder in the event of early termination thereof (all such
obligations being the "Interest Rate Obligations"), together with all
obligations of Company under the Credit Agreement and the other Loan Documents,
be guarantied hereunder.
C. It is a condition precedent to the making of the initial Loans
under the Credit Agreement that Company's obligations thereunder be guarantied
by Guarantor.
D. Guarantor is willing irrevocably and unconditionally to guaranty
such obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Lenders and Guarantied Party to enter into the Credit
Agreement and to make Loans and other extensions of credit thereunder and to
induce Interest Rate Exchangers to enter into the Lender Interest Rate
Agreements, Guarantor hereby agrees as follows:
VIII-1
<PAGE>
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms.
As used in this Guaranty, the following terms shall have the following
meanings unless the context otherwise requires:
"Beneficiaries" means Guarantied Party, Lenders and any Interest
Rate Exchangers.
"Guarantied Obligations" has the meaning assigned to that term in
subsection 2.1.
"Guaranty" means this Holdings Guaranty dated as of December __,
1996, as it may be amended, restated, supplemented or otherwise modified
from time to time.
"payment in full", "paid in full" or any similar term means payment
in full of the Guarantied Obligations, including without limitation all
principal, interest, costs, fees and expenses (including without
limitation legal fees and expenses) of Beneficiaries as required under the
Loan Documents and the Lender Interest Rate Agreements.
1.2 Interpretation.
(a) References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Guaranty unless otherwise
specifically provided.
(b) In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Guaranty and the terms, conditions and
provisions of the Credit Agreement, the terms, conditions and provisions
of this Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 Guaranty of the Guarantied Obligations.
Guarantor hereby irrevocably and unconditionally guaranties the due and
punctual payment in full of all Guarantied Obligations when the same shall
become due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. ss. 362(a)). The term "Guarantied Obligations" is used herein in
its most comprehensive sense and includes:
(a) any and all Obligations of Company and any and all Interest Rate
Obligations, in each case now or hereafter made, incurred or created,
whether absolute or contingent, liquidated or unliquidated, whether due or
not due, and however arising under or in connection with the Credit
Agreement and the other Loan Documents and the
VIII-2
<PAGE>
Lender Interest Rate Agreements, including those arising under successive
borrowing transactions under the Credit Agreement which shall either
continue the Obligations of Company or from time to time renew them after
they have been satisfied and including interest which, but for the filing
of a petition in bankruptcy with respect to Company, would have accrued on
any Guarantied Obligations, whether or not a claim is allowed against
Company for such interest in the related bankruptcy proceeding; and
(b) those expenses set forth in subsection 2.8 hereof.
2.2 Contribution by Guarantor.
Guarantor under this Guaranty and each Subsidiary Guarantor under the
Subsidiary Guaranty, together desire to allocate among themselves (collectively,
the "Contributing Guarantors"), in a fair and equitable manner, their
obligations arising under this Guaranty and the Subsidiary Guaranty.
Accordingly, in the event any payment or distribution is made on any date by
Guarantor under this Guaranty or a Subsidiary Guarantor under the Subsidiary
Guaranty (a "Funding Guarantor") that exceeds its Fair Share (as defined below)
as of such date, that Funding Guarantor shall be entitled to a contribution from
each of the other Contributing Guarantors in the amount of such other
Contributing Guarantor's Fair Share Shortfall (as defined below) as of such
date, with the result that all such contributions will cause each Contributing
Guarantor's Aggregate Payments (as defined below) to equal its Fair Share as of
such date. "Fair Share" means, with respect to a Contributing Guarantor as of
any date of determination, an amount equal to (i) the ratio of (x) the Fair
Share Contribution Amount (as defined below) with respect to such Contributing
Guarantor to (y) the aggregate of the Fair Share Contribution Amounts with
respect to all Contributing Guarantors multiplied by (ii) the aggregate amount
paid or distributed on or before such date by all Funding Guarantors under this
Guaranty and the Subsidiary Guaranty in respect of the obligations guarantied.
"Fair Share Shortfall" means, with respect to a Contributing Guarantor as of any
date of determination, the excess, if any, of the Fair Share of such
Contributing Guarantor over the Aggregate Payments of such Contributing
Guarantor. "Fair Share Contribution Amount" means, with respect to a
Contributing Guarantor as of any date of determination, the maximum aggregate
amount of the obligations of such Contributing Guarantor under this Guaranty or
the Subsidiary Guaranty, as applicable, that would not render its obligations
hereunder or thereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law; provided that, solely for
purposes of calculating the "Fair Share Contribution Amount" with respect to any
Contributing Guarantor for purposes of this subsection 2.2, any assets or
liabilities of such Contributing Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder or under subsection 2.2(b) of the Subsidiary Guaranty
shall not be considered as assets or liabilities of such Contributing Guarantor.
"Aggregate Payments" means, with respect to a Contributing Guarantor as of any
date of determination, an amount equal to (i) the aggregate amount of all
payments and distributions made on or before such date by such Contributing
Guarantor in respect of this Guaranty or the Subsidiary Guaranty, as applicable
(including in respect of this subsection 2.2 or subsection 2.2(b) of the
Subsidiary Guaranty), minus (ii) the aggregate amount of all payments received
on or before
VIII-3
<PAGE>
such date by such Contributing Guarantor from the other Contributing Guarantors
as contributions under this subsection 2.2 or subsection 2.2(b) of the
Subsidiary Guaranty. The amounts payable as contributions hereunder and under
subsection 2.2(b) of the Subsidiary Guaranty shall be determined as of the date
on which the related payment or distribution is made by the applicable Funding
Guarantor. The allocation among Contributing Guarantors of their obligations as
set forth in this subsection 2.2 and subsection 2.2(b) of the Subsidiary
Guaranty shall not be construed in any way to limit the liability of any
Contributing Guarantor hereunder or under the Subsidiary Guaranty. Each
Subsidiary Guarantor is a third party beneficiary to the contribution agreement
set forth in this subsection 2.2.
2.3 Payment by Guarantor; Application of Payments.
Guarantor hereby agrees, in furtherance of the foregoing and not in
limitation of any other right which any Beneficiary may have at law or in equity
against Guarantor by virtue hereof, that upon the failure of Company to pay any
of the Guarantied Obligations when and as the same shall become due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.
362(a)), Guarantor will upon demand pay, or cause to be paid, in cash, to
Guarantied Party for the ratable benefit of Beneficiaries, an amount equal to
the sum of the unpaid principal amount of all Guarantied Obligations then due as
aforesaid, accrued and unpaid interest on such Guarantied Obligations (including
without limitation interest which, but for the filing of a petition in
bankruptcy with respect to Company, would have accrued on such Guarantied
Obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding) and all other Guarantied Obligations then
owed to Beneficiaries as aforesaid. All such payments shall be applied promptly
from time to time by Guarantied Party as provided in subsection 2.4D of the
Credit Agreement.
2.4 Liability of Guarantor Absolute.
Guarantor agrees that its obligations hereunder are irrevocable, absolute,
independent and unconditional and shall not be affected by any circumstance
which constitutes a legal or equitable discharge of a guarantor or surety other
than payment in full of the Guarantied Obligations. In furtherance of the
foregoing and without limiting the generality thereof, Guarantor agrees as
follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Guarantied Party may enforce this Guaranty upon the occurrence
of an Event of Default under the Credit Agreement or the occurrence of an
Early Termination Date (as defined in a Master Agreement or an Interest
Rate Swap Agreement or Interest Rate and Currency Exchange Agreement in
the form prepared by the International Swap and Derivatives Association
Inc. or a similar event under any similar swap agreement) under any Lender
Interest Rate Agreement (either such occurrence being an "Event of
VIII-4
<PAGE>
Default" for purposes of this Agreement) notwithstanding the existence of
any dispute between Company and any Beneficiary with respect to the
existence of such Event of Default.
(c) The obligations of Guarantor hereunder are independent of the
obligations of Company under the Loan Documents or the Lender Interest
Rate Agreements and the obligations of any other guarantor (including any
Subsidiary Guarantor) of the obligations of Company under the Loan
Documents or the Lender Interest Rate Agreements, and a separate action or
actions may be brought and prosecuted against Guarantor whether or not any
action is brought against Company or any of such other guarantors and
whether or not Company is joined in any such action or actions.
(d) Guarantor's payment of a portion, but not all, of the Guarantied
Obligations shall in no way limit, affect, modify or abridge Guarantor's
liability for any portion of the Guarantied Obligations which has not been
paid. Without limiting the generality of the foregoing, if Guarantied
Party is awarded a judgment in any suit brought to enforce Guarantor's
covenant to pay a portion of the Guarantied Obligations, such judgment
shall not be deemed to release Guarantor from its covenant to pay the
portion of the Guarantied Obligations that is not the subject of such
suit.
(e) Any Beneficiary, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or
enforceability of this Guaranty or giving rise to any reduction,
limitation, impairment, discharge or termination of Guarantor's liability
hereunder, from time to time may (i) renew, extend, accelerate, increase
the rate of interest on, or otherwise change the time, place, manner or
terms of payment of the Guarantied Obligations, (ii) settle, compromise,
release or discharge, or accept or refuse any offer of performance with
respect to, or substitutions for, the Guarantied Obligations or any
agreement relating thereto and/or subordinate the payment of the same to
the payment of any other obligations; (iii) request and accept other
guaranties of the Guarantied Obligations and take and hold security for
the payment of this Guaranty or the Guarantied Obligations; (iv) release,
surrender, exchange, substitute, compromise, settle, rescind, waive,
alter, subordinate or modify, with or without consideration, any security
for payment of the Guarantied Obligations, any other guaranties (including
the Subsidiary Guaranty) of the Guarantied Obligations, or any other
obligation of any Person with respect to the Guarantied Obligations; (v)
enforce and apply any security now or hereafter held by or for the benefit
of such Beneficiary in respect of this Guaranty or the Guarantied
Obligations and direct the order or manner of sale thereof, or exercise
any other right or remedy that such Beneficiary may have against any such
security, in each case as such Beneficiary in its discretion may determine
consistent with the Credit Agreement or the applicable Lender Interest
Rate Agreement and any applicable security agreement, including
foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or
remedy of Guarantor against
VIII-5
<PAGE>
Company or any security for the Guarantied Obligations; and (vi) exercise
any other rights available to it under the Loan Documents or the Lender
Interest Rate Agreements.
(f) This Guaranty and the obligations of Guarantor hereunder shall
be valid and enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other
than payment in full of the Guarantied Obligations), including without
limitation the occurrence of any of the following, whether or not
Guarantor shall have had notice or knowledge of any of them: (i) any
failure or omission to assert or enforce or agreement or election not to
assert or enforce, or the stay or enjoining, by order of court, by
operation of law or otherwise, of the exercise or enforcement of, any
claim or demand or any right, power or remedy (whether arising under the
Loan Documents or the Lender Interest Rate Agreements, at law, in equity
or otherwise) with respect to the Guarantied Obligations or any agreement
relating thereto, or with respect to the Subsidiary Guaranty or any other
guaranty of or security for the payment of the Guarantied Obligations;
(ii) any rescission, waiver, amendment or modification of, or any consent
to departure from, any of the terms or provisions (including without
limitation provisions relating to events of default) of the Credit
Agreement, any of the other Loan Documents, any of the Lender Interest
Rate Agreements or any agreement or instrument executed pursuant thereto,
or of the Subsidiary Guaranty or any other guaranty or security for the
Guarantied Obligations, in each case whether or not in accordance with the
terms of the Credit Agreement or such Loan Document, such Lender Interest
Rate Agreement or any agreement relating to the Subsidiary Guaranty or
such other guaranty or security; (iii) the Guarantied Obligations, or any
agreement relating thereto, at any time being found to be illegal, invalid
or unenforceable in any respect; (iv) the application of payments received
from any source (other than payments received pursuant to the other Loan
Documents or any of the Lender Interest Rate Agreements or from the
proceeds of any security for the Guarantied Obligations, except to the
extent such security also serves as collateral for indebtedness other than
the Guarantied Obligations) to the payment of indebtedness other than the
Guarantied Obligations, even though any Beneficiary might have elected to
apply such payment to any part or all of the Guarantied Obligations; (v)
any Beneficiary's consent to the change, reorganization or termination of
the corporate structure or existence of Company or any of its Subsidiaries
and to any corresponding restructuring of the Guarantied Obligations; (vi)
any failure to perfect or continue perfection of a security interest in
any collateral which secures any of the Guarantied Obligations; (vii) any
defenses, set-offs or counterclaims which Company may allege or assert
against any Beneficiary in respect of the Guarantied Obligations,
including, but not limited to, failure of consideration, breach of
warranty, payment, statute of frauds, statute of limitations, accord and
satisfaction and usury; and (viii) 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 Guarantor as an obligor in respect of the
Guarantied Obligations.
VIII-6
<PAGE>
2.5 Waivers by Guarantor.
Guarantor hereby waives, for the benefit of Beneficiaries:
(a) any right to require any Beneficiary, as a condition of payment
or performance by Guarantor, to (i) proceed against Company, any other
guarantor (including any Subsidiary Guarantor) of the Guarantied
Obligations or any other Person, (ii) proceed against or exhaust any
security held from Company, any such other guarantor or any other Person,
(iii) proceed against or have resort to any balance of any deposit account
or credit on the books of any Beneficiary in favor of Company or any other
Person, or (iv) pursue any other remedy in the power of any Beneficiary
whatsoever;
(b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of Company including without
limitation any defense based on or arising out of the lack of validity or
the unenforceability of the Guarantied Obligations or any agreement or
instrument relating thereto or by reason of the cessation of the liability
of Company from any cause other than payment in full of the Guarantied
Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(d) any defense based upon any Beneficiary's errors or omissions in
the administration of the Guarantied Obligations, except behavior which
amounts to bad faith;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Guaranty and any
legal or equitable discharge of Guarantor's obligations hereunder, (ii)
the benefit of any statute of limitations affecting Guarantor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs,
recoupments and counterclaims, and (iv) promptness, diligence and any
requirement that any Beneficiary protect, secure, perfect or insure any
security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default under the Credit
Agreement, the Lender Interest Rate Agreements or any agreement or
instrument related thereto, notices of any renewal, extension or
modification of the Guarantied Obligations or any agreement related
thereto, notices of any extension of credit to Company and notices of any
of the matters referred to in subsection 2.4 and any right to consent to
any thereof; and
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(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or
which may conflict with the terms of this Guaranty.
2.6 Guarantor's Rights of Subrogation, Contribution, Etc.
Until the Guarantied Obligations have been paid in full and the
Commitments terminated, Guarantor hereby waives any claim, right or remedy,
direct or indirect, that Guarantor now has or may hereafter have against Company
or any of its assets in connection with this Guaranty or the performance by
Guarantor of its obligations hereunder, in each case whether such claim, right
or remedy arises in equity, under contract, by statute, under common law or
otherwise and including, without limitation, (a) any right of subrogation,
reimbursement or indemnification that Guarantor now has or may hereafter have
against Company, (b) any right to enforce, or to participate in, any claim,
right or remedy that any Beneficiary now has or may hereafter have against
Company, and (c) any benefit of, and any right to participate in, any collateral
or security now or hereafter held by any Beneficiary. In addition, until the
Guarantied Obligations shall have been paid in full and the Commitments shall
have terminated and all Letters of Credit shall have expired or been cancelled,
Guarantor shall withhold exercise of any right of contribution Guarantor may
have against any other guarantor of the Guarantied Obligations (including
without limitation any such right of contribution under the Subsidiary Guaranty
as contemplated by subsection 2.2). Guarantor further agrees that, to the extent
the waiver or agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification Guarantor may have
against Company or against any collateral or security, and any rights of
contribution Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights any Beneficiary may have against Company,
to all right, title and interest any Beneficiary may have in any such collateral
or security, and to any right any Beneficiary may have against such other
guarantor. If any amount shall be paid to Guarantor on account of any such
subrogation, reimbursement, indemnification or contribution rights at any time
when all Guarantied Obligations shall not have been paid in full, such amount
shall be held in trust for Guarantied Party on behalf of Beneficiaries and shall
forthwith be paid over to Guarantied Party for the benefit of Beneficiaries to
be credited and applied against the Guarantied Obligations, whether matured or
unmatured, in accordance with the terms hereof.
2.7 Subordination of Other Obligations.
Any indebtedness of Company or any Subsidiary Guarantor now or hereafter
held by Guarantor is hereby subordinated in right of payment to the Guarantied
Obligations, and any such indebtedness collected or received by Guarantor after
an Event of Default has occurred and is continuing shall be held in trust for
Guarantied Party on behalf of Beneficiaries and shall forthwith be paid over to
Guarantied Party for the benefit of Beneficiaries to be credited and applied
against the Guarantied Obligations but without affecting, impairing or limiting
in any manner the liability of Guarantor under any other provision of this
Guaranty.
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2.8 Expenses.
Guarantor agrees to pay, or cause to be paid, on demand, and to save
Beneficiaries harmless against liability for, any and all costs and expenses
(including fees and disbursements of counsel and allocated costs of internal
counsel) incurred or expended by any Beneficiary in connection with the
enforcement of or preservation of any rights under this Guaranty.
2.9 Continuing Guaranty.
This Guaranty is a continuing guaranty and shall remain in effect until
all of the Guarantied Obligations shall have been paid in full and the
Commitments shall have terminated and all Letters of Credit shall have expired
or been cancelled. Guarantor hereby irrevocably waives any right to revoke this
Guaranty as to future transactions giving rise to any Guarantied Obligations.
2.10 Authority of Guarantor or Company.
It is not necessary for any Beneficiary to inquire into the capacity or
powers of Guarantor or Company or the officers, directors or any agents acting
or purporting to act on behalf of any of them.
2.11 Financial Condition of Company.
Any Loans may be granted to Company or continued from time to time, and
any Lender Interest Rate Agreement may be entered into from time to time, in
each case without notice to or authorization from Guarantor regardless of the
financial or other condition of Company at the time of any such grant or
continuation or at the time such Lender Interest Rate Agreement is entered into,
as the case may be. No Beneficiary shall have any obligation to disclose or
discuss with Guarantor its assessment, or Guarantor's assessment, of the
financial condition of Company. Guarantor has adequate means to obtain
information from Company on a continuing basis concerning the financial
condition of Company and its ability to perform its obligations under the Loan
Documents and the Lender Interest Rate Agreements, and Guarantor assumes the
responsibility for being and keeping informed of the financial condition of
Company and of all circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations. Guarantor hereby waives and relinquishes any duty on the
part of any Beneficiary to disclose any matter, fact or thing relating to the
business, operations or conditions of Company now known or hereafter known by
any Beneficiary.
2.12 Rights Cumulative.
The rights, powers and remedies given to Beneficiaries by this Guaranty
are cumulative and shall be in addition to and independent of all rights, powers
and remedies given to Beneficiaries by virtue of any statute or rule of law or
in any of the other Loan Documents, any of the Lender Interest Rate Agreements
or any agreement between Guarantor and any Beneficiary or Beneficiaries or
between Company and any Beneficiary or Beneficiaries. Any
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forbearance or failure to exercise, and any delay by any Beneficiary in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
2.13 Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty.
(a) So long as any Guarantied Obligations remain outstanding, Guarantor
shall not, without the prior written consent of Guarantied Party acting pursuant
to the instructions of Requisite Obligees (as defined in subsection 3.12),
commence or join with any other Person in commencing any bankruptcy,
reorganization or insolvency proceedings of or against Company. The obligations
of Guarantor under this Guaranty shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any proceeding, voluntary or
involuntary, involving the bankruptcy, insolvency, receivership, reorganization,
liquidation or arrangement of Company or by any defense which Company may have
by reason of the order, decree or decision of any court or administrative body
resulting from any such proceeding.
(b) Guarantor acknowledges and agrees that any interest on any portion of
the Guarantied Obligations which accrues after the commencement of any
proceeding referred to in clause (a) above (or, if interest on any portion of
the Guarantied Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of Guarantor and Beneficiaries that the Guarantied Obligations which
are guarantied by Guarantor pursuant to this Guaranty should be determined
without regard to any rule of law or order which may relieve Company of any
portion of such Guarantied Obligations. Guarantor will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay Guarantied Party, or allow the claim of
Guarantied Party in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations are
paid by Company, the obligations of Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from any Beneficiary as a preference, fraudulent transfer
or otherwise, and any such payments which are so rescinded or recovered shall
constitute Guarantied Obligations for all purposes under this Guaranty.
2.14 Notice of Events.
As soon as Guarantor obtains knowledge thereof, Guarantor shall give
Guarantied Party written notice of any condition or event which has resulted in
a breach of or noncompliance with any term, condition or covenant contained
herein.
2.15 Set Off.
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In addition to any other rights any Beneficiary may have under law or in
equity, if any amount shall at any time be due and owing by Guarantor to any
Beneficiary under this Guaranty, such Beneficiary is authorized at any time or
from time to time upon the occurrence and during the continuation of any Event
of Default, without notice (any such notice being hereby expressly waived), to
set off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured) and any other indebtedness of such
Beneficiary owing to Guarantor and any other property of Guarantor held by any
Beneficiary to or for the credit or the account of Guarantor against and on
account of the Guarantied Obligations and liabilities of Guarantor to any
Beneficiary under this Guaranty.
SECTION 3. MISCELLANEOUS
3.1 Survival of Warranties.
All agreements, representations and warranties made herein shall survive
the execution and delivery of this Guaranty and the other Loan Documents and the
Lender Interest Rate Agreements and any increase in the Commitments under the
Credit Agreement.
3.2 Notices.
Any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier and shall be deemed to have been
given when delivered in person or by courier service, or upon receipt of
telefacsimile or telex (with received answerback) or three Business Days after
depositing it in the United States mail with postage pre-paid and properly
addressed; provided, notices to Guarantied Party shall not be effective until
received. For purposes hereof, the address of each party hereto shall be as
provided in subsection 10.8 of the Credit Agreement or as set forth under such
party's name on the signature pages hereof or, as to any party, such other
address as shall be designated by such party in a written notice delivered to
the other parties hereto.
3.3 Severability.
In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
3.4 Amendments and Waivers.
No amendment, modification, termination or waiver of any provision of this
Guaranty, and no consent to any departure by Guarantor therefrom, shall in any
event be effective without the written concurrence of Guarantied Party and, in
the case of any such amendment or
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modification, Guarantor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
3.5 Headings.
Section and subsection headings in this Guaranty are included herein for
convenience of reference only and shall not constitute a part of this Guaranty
for any other purpose or be given any substantive effect.
3.6 Applicable Law; Rules of Construction.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTOR AND
BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The
rules of construction set forth in subsection 1.3 of the Credit Agreement shall
be applicable to this Guaranty mutatis mutandis.
3.7 Successors and Assigns.
This Guaranty is a continuing guaranty and shall be binding upon Guarantor
and its successors and assigns. This Guaranty shall inure to the benefit of
Beneficiaries and their respective successors and assigns. Guarantor shall not
assign this Guaranty or any of the rights or obligations of Guarantor hereunder
without the prior written consent of all Lenders. Any Beneficiary may, without
notice or consent, assign its interest in this Guaranty in whole or in part. The
terms and provisions of this Guaranty shall inure to the benefit of any
transferee or assignee of any Loan, and in the event of such transfer or
assignment the rights and privileges herein conferred upon such Beneficiary
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.
3.8 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST GUARANTOR ARISING OUT OF OR
RELATING TO THIS GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY
OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, GUARANTOR, FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO GUARANTOR AT ITS ADDRESS PROVIDED
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IN ACCORDANCE WITH SUBSECTION 3.2; (IV) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER GUARANTOR
IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT BENEFICIARIES RETAIN THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI)
AGREES THAT THE PROVISIONS OF THIS SUBSECTION 3.8 RELATING TO JURISDICTION AND
VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER
NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
3.9 Waiver of Trial by Jury.
GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, EACH BENEFICIARY
EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Guarantor and, by its acceptance
of the benefits hereof, each Beneficiary each (i) acknowledges that this waiver
is a material inducement for Guarantor and Beneficiaries to enter into a
business relationship, that Guarantor and Beneficiaries have already relied on
this waiver in entering into this Guaranty or accepting the benefits thereof, as
the case may be, and that each will continue to rely on this waiver in their
related future dealings and (ii) further warrants and represents that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SUBSECTION 3.9 AND EXECUTED BY GUARANTIED PARTY AND
GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY. In the event of litigation, this
Guaranty may be filed as a written consent to a trial by the court.
3.10 No Other Writing.
This writing is intended by Guarantor and Beneficiaries as the final
expression of this Guaranty and is also intended as a complete and exclusive
statement of the terms of their agreement with respect to the matters covered
hereby. No course of dealing, course of performance or trade usage, and no parol
evidence of any nature, shall be used to supplement or modify any terms of this
Guaranty. There are no conditions to the full effectiveness of this Guaranty.
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3.11 Further Assurances.
At any time or from time to time, upon the request of Guarantied Party,
Guarantor shall execute and deliver such further documents and do such other
acts and things as Guarantied Party may reasonably request in order to effect
fully the purposes of this Guaranty.
3.12 Guarantied Party as Administrative Agent.
(a) Guarantied Party has been appointed to act as Guarantied Party
hereunder by Lenders and, by their acceptance of the benefits hereof, Interest
Rate Exchangers. Guarantied Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action, solely in
accordance with this Guaranty and the Credit Agreement; provided that Guarantied
Party shall exercise, or refrain from exercising, any remedies hereunder in
accordance with the instructions of (i) Requisite Lenders or (ii) after payment
in full of all Obligations under the Credit Agreement and the other Loan
Documents, the holders of a majority of the aggregate notional amount (or, with
respect to any Lender Interest Rate Agreement that has been terminated in
accordance with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early termination payments then
due) under such Lender Interest Rate Agreement) under all Lender Interest Rate
Agreements (Requisite Lenders or, if applicable, such holders being referred to
herein as "Requisite Obligees"). In furtherance of the foregoing provisions of
this subsection 3.12, each Interest Rate Exchanger, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to enforce this
Guaranty, it being understood and agreed by such Interest Rate Exchanger that
all rights and remedies hereunder may be exercised solely by Guarantied Party
for the benefit of Beneficiaries in accordance with the terms of this subsection
3.12.
(b) Guarantied Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Guarantied Party under this Guaranty;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Guarantied Party under this Guaranty;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor
Guarantied Party under this Guaranty. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Guarantied Party under this Guaranty, and the
retiring or removed Guarantied Party under this Guaranty shall promptly (i)
transfer to such successor Guarantied Party all sums held hereunder, together
with all records and other documents necessary or appropriate in connection with
the performance of the duties of the successor Guarantied Party under this
Guaranty, and (ii) take such other actions as may be necessary or appropriate in
connection with the assignment to such successor Guarantied Party of the rights
created hereunder, whereupon such retiring or removed Guarantied Party shall be
discharged from its duties and obligations under this Guaranty. After any
retiring or removed
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Guarantied Party's resignation or removal hereunder as Guarantied Party, the
provisions of this Guaranty shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Guaranty while it was Guarantied Party
hereunder.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first written above.
MBW HOLDINGS INC.
By: ___________________________________
Name:
Title:
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EXHIBIT IX
[FORM OF PLEDGE AGREEMENT]
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Agreement") is dated as of December __, 1996
and entered into by and among MBW FOODS INC., a Delaware corporation
("Company"), MBW HOLDINGS INC., a Delaware corporation ("Holdings") (each of
Company and Holdings being a "Pledgor" and collectively "Pledgors"; provided
that after the Closing Date, "Pledgors" shall mean and include Company, Holdings
and any Additional Pledgors (as hereinafter defined)), and THE CHASE MANHATTAN
BANK, as administrative agent for and representative of (in such capacity herein
called "Secured Party") the financial institutions ("Lenders") party to the
Credit Agreement referred to below and any Interest Rate Exchangers (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgors are the legal and beneficial owners of (i) the shares of stock
(the "Pledged Shares") described in Part A of Schedule I annexed hereto and
issued by the corporations named therein and (ii) the indebtedness (the "Pledged
Debt") described in Part B of said Schedule I and issued by the obligors named
therein.
B. Pursuant to that certain Credit Agreement dated as of December __, 1996
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined), by and among Company, Holdings, Lenders, Secured Party, as
Administrative Agent, and Chase Securities Inc., as Arranging Agent, Lenders
have made certain commitments, subject to the terms and conditions set forth in
the Credit Agreement, to extend certain credit facilities to Company.
C. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreement (collectively, the "Lender
Interest Rate Agreements") with one or more Lenders or their Affiliates (in such
capacity, collectively, "Interest Rate Exchangers") in accordance with the terms
of the Credit Agreement, and it is desired that the obligations of Company under
the Lender Interest Rate Agreements, including without limitation the obligation
of Company to make payments thereunder in the event of early termination thereof
(all such obligations being the "Interest Rate Obligations"), together with all
obligations of Company under the Credit Agreement and the other Loan Documents,
be secured hereunder.
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D. Holdings has executed and delivered that certain Holdings Guaranty
dated as of December __, 1996 (said Holdings Guaranty, as it may hereafter be
amended, restated, supplemented or otherwise modified from time to time, being
the "Holdings Guaranty") in favor of Secured Party for the benefit of Lenders
and any Interest Rate Exchangers, pursuant to which Holdings has guarantied the
prompt payment and performance when due of all obligations of Company under the
Credit Agreement and the other Loan Documents and all obligations of Company
under the Lender Interest Rate Agreements, including without limitation the
obligation of Company to make payments thereunder in the event of early
termination thereof.
E. Additional Pledgors shall execute and deliver counterparts to that
certain Subsidiary Guaranty (said Subsidiary Guaranty, as it may be amended,
restated, supplemented or otherwise modified from time to time, being the
"Subsidiary Guaranty" and together with the Holdings Guaranty, the "Guaranties")
in favor of Secured Party for the benefit of Lenders and any Interest Rate
Exchangers, pursuant to which each Additional Pledgor shall guaranty the prompt
payment and performance when due of all obligations of Company under the Credit
Agreement and all obligations of Company under the Lender Interest Rate
Agreements, including without limitation the obligation of Company to make
payments thereunder in the event of early termination thereof.
F. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that each Pledgor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement
and to induce Interest Rate Exchangers to enter into Lender Interest Rate
Agreements, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Pledgor hereby agrees with
Secured Party as follows:
SECTION 1. Pledge of Security.
Each Pledgor hereby pledges and assigns to Secured Party, and hereby
grants to Secured Party a security interest in, all of Pledgor's right, title
and interest in and to the following (the "Pledged Collateral"):
(a) the Pledged Shares owned by such Pledgor and the certificates
representing such Pledged Shares and any interest of such Pledgor in the
entries on the books of any financial intermediary pertaining to such
Pledged Shares, and all dividends, cash, warrants, rights, instruments and
other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Pledged Shares; provided, however, that to the extent the issuer of any of
the Pledged Shares is a controlled foreign corporation (used hereinafter
as such term is defined in Section 957(a) or a successor provision of the
Internal Revenue Code of 1986, as
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amended from time to time), such Pledgor shall only be required to pledge
Pledged Shares of, certificates representing Pledged Shares of, and such
interests pertaining to Pledged Shares of such issuer possessing up to but
not exceeding 65% of the voting power of all classes of capital stock
entitled to vote of such issuer, and all dividends, cash, warrants,
rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such Pledged Shares;
(b) the Pledged Debt owned by such Pledgor and the instruments
evidencing such Pledged Debt, and all interest, cash, instruments and
other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Pledged Debt;
(c) all additional shares of, and all securities convertible into
and warrants, options and other rights to purchase or otherwise acquire,
stock of any issuer of any Pledged Shares from time to time acquired by
such Pledgor in any manner (which shares shall be deemed to be part of the
Pledged Shares), the certificates or other instruments representing such
additional shares, securities, warrants, options or other rights and any
interest of such Pledgor in the entries on the books of any financial
intermediary pertaining to such additional shares (all such shares,
securities, warrants, options, rights, certificates, instruments and
interests collectively being "Additional Pledged Shares"), and all
dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such Additional Pledged
Shares; provided, however, that to the extent that the issuer of any
Additional Pledged Shares is a controlled foreign corporation, such
Pledgor shall only be required to pledge Additional Pledged Shares of such
issuer possessing up to but not exceeding 65% of the voting power of all
classes of capital stock entitled to vote of such issuer, and all
dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such Additional Pledged
Shares;
(d) all additional indebtedness from time to time owed to such
Pledgor by any obligor on any Pledged Debt and the instruments evidencing
such indebtedness, and all interest, cash, instruments and other property
or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
indebtedness;
(e) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any
Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct Subsidiary of such Pledgor (which shares shall be
deemed to be part of the Pledged Shares), the certificates or other
instruments representing such shares, securities, warrants, options or
other rights and any interest of such Pledgor in the entries on the books
of any financial intermediary pertaining to such shares (all such shares,
securities, warrants, options, rights,
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certificates, instruments and interests collectively being "New Pledged
Shares"), and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares,
securities, warrants, options or other rights; provided, however, that in
the event that any such direct Subsidiary is a controlled foreign
corporation, such Pledgor shall only be required to pledge New Pledged
Shares of such Subsidiary possessing up to but not exceeding 65% of the
voting power of all classes of capital stock entitled to vote of such
Subsidiary, and all dividends, cash, warrants, rights, instruments and
other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
New Pledged Shares;
(f) all indebtedness from time to time owed to such Pledgor by any
Person that, after the date of this Agreement, becomes, as a result of
such any occurrence, a direct or indirect Subsidiary of such Pledgor, and
all interest, cash, instruments and other property or proceeds from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness; and
(g) to the extent not covered by clauses (a) through (f) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes
of this Agreement, the term "proceeds" includes whatever is receivable or
received when Pledged Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary
or involuntary, and includes, without limitation, proceeds of any
indemnity or guaranty payable to such Pledgor or Secured Party from time
to time with respect to any of the Pledged Collateral.
SECTION 2. Security for Obligations.
This Agreement secures, and the Pledged Collateral pledged and assigned by
each Pledgor is collateral security for, the prompt payment or performance in
full when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including without limitation the payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured
Obligations with respect to such Pledgor. "Secured Obligations" means
(a) with respect to Company, all obligations and liabilities of
every nature of Company now or hereafter existing under or arising out of
or in connection with the Credit Agreement and the other Loan Documents
and any Lender Interest Rate Agreements,
(b) with respect to Holdings, all obligations and liabilities of
every nature of Holdings now or hereafter existing under or arising out of
or in connection with the Credit Agreement and the Holdings Guaranty, and
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<PAGE>
(c) with respect to each Additional Pledgor, all obligations and
liabilities of every nature of Additional Pledgors now or hereafter
existing under or arising out of or in connection with the Subsidiary
Guaranty,
in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender or Interest Rate Exchanger as a
preference, fraudulent transfer or otherwise, and all obligations of every
nature of Pledgors now or hereafter existing under this Agreement.
SECTION 3. Delivery of Pledged Collateral.
All certificates or instruments representing or evidencing the Pledged
Collateral shall be delivered to and held by or on behalf of Secured Party
pursuant hereto and shall be in suitable form for transfer by delivery or, as
applicable, shall be accompanied by the appropriate Pledgor's endorsement, where
necessary, or duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to Secured Party. Upon the occurrence and
during the continuation of an Event of Default (as defined in the Credit
Agreement) or the occurrence of an Early Termination Date (as defined in a
Master Agreement or an Interest Rate Swap Agreement or Interest Rate and
Currency Exchange Agreement in the form prepared by the International Swap and
Derivatives Association Inc. or a similar event under any similar swap
agreement) under any Lender Interest Rate Agreement (either such occurrence
being an "Event of Default" for purposes of this Agreement), Secured Party shall
have the right, without notice to any Pledgor, to transfer to or to register in
the name of Secured Party or any of its nominees any or all of the Pledged
Collateral, subject only to the revocable rights specified in Section 7(a). In
addition, Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties.
Each Pledgor represents and warrants as of the date it becomes a party
hereto as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the
Pledged Shares owned by such Pledgor have been duly authorized and validly
issued and are fully
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<PAGE>
paid and non-assessable. All of the Pledged Debt owned by such Pledgor has
been duly authorized, authenticated or issued, and delivered and is the
legal, valid and binding obligation of the issuers thereof and is not in
default.
(b) Description of Pledged Collateral. The Pledged Shares owned by
such Pledgor constitute the percentage of the issued and outstanding
shares of stock of each issuer thereof set forth on Schedule I annexed
hereto, and there are no outstanding warrants, options or other rights to
purchase, or other agreements outstanding with respect to, or property
that is now or hereafter convertible into, or that requires the issuance
or sale of, any Pledged Shares. The Pledged Debt owned by such Pledgor
constitutes all of the issued and outstanding intercompany indebtedness
evidenced by a promissory note of the respective issuers thereof owing to
such Pledgor.
(c) Ownership of Pledged Collateral. Such Pledgor is the legal,
record and beneficial owner of the Pledged Collateral owned by such
Pledgor free and clear of any Lien except for the security interest
created by this Agreement.
(d) Perfection. The pledge of the Pledged Collateral pursuant to
this Agreement creates a valid and perfected first priority security
interest in the Pledged Collateral, securing the payment of the Secured
Obligations.
SECTION 5. Transfers and Other Liens; Additional Pledged Collateral; etc.
Each Pledgor shall:
(a) not, except as expressly permitted by the Credit Agreement, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of,
or grant any option with respect to, any of the Pledged Collateral, (ii)
create or suffer to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under this Agreement,
or (iii) permit any issuer of Pledged Shares to merge or consolidate
unless all the outstanding capital stock of the surviving or resulting
corporation is, upon such merger or consolidation, pledged hereunder and
no cash, securities or other property is distributed in respect of the
outstanding shares of any other constituent corporation; provided that if
the surviving or resulting corporation upon any such merger or
consolidation involving an issuer of Pledged Shares which is a controlled
foreign corporation is a controlled foreign corporation, then such Pledgor
shall only be required to pledge outstanding capital stock of such
surviving or resulting corporation possessing up to but not exceeding 65%
of the voting power of all classes of capital stock of such issuer
entitled to vote; provided further that in the event any Pledgor makes an
Asset Sale permitted by the Credit Agreement and the assets subject to
such Asset Sale are Pledged Shares, Secured Party shall release the
Pledged Shares that are the subject of such Asset Sale to such Pledgor
free and clear of the lien and security interest under this Agreement
concurrently with the consummation of such Asset Sale; and provided
further, that as a condition precedent to such release, Secured Party
shall have received evidence
IX-6
<PAGE>
satisfactory to it that arrangements satisfactory to it have been made for
delivery to Secured Party of the Net Cash Proceeds of such Asset Sale in
the event and to the extent that all or any portion of such Net Cash
Proceeds are required to be applied to prepay the Loans under the Credit
Agreement.
(b) (i) cause each issuer of Pledged Shares not to issue any stock
or other securities in addition to or in substitution for the Pledged
Shares issued by such issuer, except to a Pledgor, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and
all additional shares of stock or other securities of each issuer of
Pledged Shares, and (iii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all shares of stock
of any Person that, after the date of this Agreement, becomes, as a result
of any occurrence, a direct Subsidiary of any Pledgor; provided, that
notwithstanding anything contained in this clause (b) to the contrary,
such Pledgor shall only be required to pledge the outstanding capital
stock of a controlled foreign corporation possessing up to but not
exceeding 65% of the voting power of all classes of capital stock of such
controlled foreign corporation entitled to vote;
(c) (i) pledge hereunder, immediately upon their issuance, any and
all instruments or other evidences of additional indebtedness from time to
time owed to such Pledgor by any obligor on the Pledged Debt, and (ii)
pledge hereunder, immediately upon their issuance, any and all instruments
or other evidences of indebtedness from time to time owed to such Pledgor
by any Person that after the date of this Agreement becomes, as a result
of any occurrence, a direct or indirect Subsidiary of any Pledgor;
(d) promptly deliver to Secured Party all written notices received
by it with respect to the Pledged Collateral; and
(e) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged
Collateral, except to the extent the validity thereof is being contested
in good faith; provided that such Pledgor shall in any event pay such
taxes, assessments, charges, levies or claims not later than five days
prior to the date of any proposed sale under any judgement, writ or
warrant of attachment entered or filed against Pledgor or any of the
Pledged Collateral as a result of the failure to make such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Each Pledgor agrees that from time to time, at the expense of
Pledgors, such Pledgor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the foregoing, such
Pledgor will: (i) execute and file such financing or continuation statements, or
amendments thereto, and such
IX-7
<PAGE>
other instruments or notices, as may be necessary or desirable, or as Secured
Party may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby and (ii) at Secured Party's request,
appear in and defend any action or proceeding that may affect such Pledgor's
title to or Secured Party's security interest in all or any part of the Pledged
Collateral.
(b) Each Pledgor further agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged hereunder
as provided in Section 5(b) or (c), promptly (and in any event within five
Business Days) deliver to Secured Party a Pledge Amendment, duly executed by
such Pledgor, in substantially the form of Schedule II annexed hereto (a "Pledge
Amendment"), in respect of the additional Pledged Shares or Pledged Debt to be
pledged pursuant to this Agreement. Each Pledgor hereby authorizes Secured Party
to attach each Pledge Amendment to this Agreement and agrees that all Pledged
Shares or Pledged Debt listed on any such Pledge Amendment delivered to Secured
Party shall for all purposes hereunder be considered Pledged Collateral;
provided that the failure of a Pledgor to execute a Pledge Amendment with
respect to any additional Pledged Shares or Pledged Debt pledged pursuant to
this Agreement shall not impair the security interest of Secured Party therein
or otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
SECTION 7. Voting Rights; Dividends; Etc.
(a) Pledgors' Rights. So long as no Event of Default shall have occurred
and be continuing:
(i) Pledgors shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement
or the Credit Agreement;
(ii) Pledgors shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all
dividends and interest paid in respect of the Pledged Collateral;
provided, however, that any and all
(1) dividends and interest paid or payable other than in cash
in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange
for, any Pledged Collateral,
(2) dividends and other distributions paid or payable in cash
in respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in-surplus, and
(3) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged
Collateral,
IX-8
<PAGE>
shall be, and shall forthwith be delivered to Secured Party to hold as,
Pledged Collateral and shall, if received by a Pledgor, be received in
trust for the benefit of Secured Party, be segregated from the other
property or funds of such Pledgor and be forthwith delivered to Secured
Party as Pledged Collateral in the same form as so received (with all
necessary endorsements); and
(iii) Secured Party shall promptly execute and deliver (or cause to
be executed and delivered) to Pledgors all such proxies, dividend payment
orders and other instruments as Pledgors may from time to time reasonably
request for the purpose of enabling Pledgors to exercise the voting and
other consensual rights which they are entitled to exercise pursuant to
paragraph (i) above and to receive the dividends, principal or interest
payments which they are authorized to receive and retain pursuant to
paragraph (ii) above.
(b) Secured Party's Rights. Upon acceleration of the maturity of the Loans
in accordance with Section 8 of the Credit Agreement and upon the occurrence and
during the continuation of an Event of Default:
(i) upon written notice from Secured Party to a Pledgor, all rights
of such Pledgor to exercise the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant to Section 7(a)(i)
shall cease, and all such rights shall thereupon become vested in Secured
Party who shall thereupon have the sole right to exercise such voting and
other consensual rights;
(ii) all rights of Pledgors to receive the dividends and interest
payments which they would otherwise be authorized to receive and retain
pursuant to Section 7(a)(ii) shall cease, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the sole
right to receive and hold as Pledged Collateral such dividends and
interest payments; and
(iii) all dividends, principal and interest payments which are
received by a Pledgor contrary to the provisions of paragraph (ii) of this
Section 7(b) shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of such Pledgor and shall forthwith
be paid over to Secured Party as Pledged Collateral in the same form as so
received (with any necessary endorsements).
(c) Irrevocable Proxy. In order to permit Secured Party to exercise the
voting and other consensual rights which it may be entitled to exercise pursuant
to Section 7(b)(i) and to receive all dividends and other distributions which it
may be entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) each
Pledgor shall promptly execute and deliver (or cause to be executed and
delivered) to Secured Party all such proxies, dividend payment orders and other
instruments as Secured Party may from time to time reasonably request and (ii)
without limiting the effect of the immediately preceding clause (i), each
Pledgor hereby grants to Secured Party an IRREVOCABLE PROXY to vote the Pledged
Shares owned by such Pledgor and to exercise all other rights, powers,
privileges and remedies to which a holder of the Pledged Shares would
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<PAGE>
be entitled (including without limitation giving or withholding written consents
of shareholders, calling special meetings of shareholders and voting at such
meetings), which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Shares on the
record books of the issuer thereof) by any other Person (including the issuer of
the Pledged Shares or any officer or agent thereof), upon the occurrence of an
Event of Default and which proxy shall only terminate upon the payment in full
of the Secured Obligations.
SECTION 8. Secured Party Appointed Attorney-in-Fact.
Each Pledgor hereby irrevocably appoints Secured Party as such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Pledged Collateral
without the signature of such Pledgor;
(b) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Pledged Collateral;
(c) to receive, endorse and collect any instruments made payable to
such Pledgor representing any dividend, principal or interest payment or
other distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same; and
(d) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Pledged Collateral or otherwise to enforce the
rights of Secured Party with respect to any of the Pledged Collateral.
SECTION 9. Secured Party May Perform.
If any Pledgor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Pledgors under Section 13(b).
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<PAGE>
SECTION 10. Standard of Care.
The powers conferred on Secured Party hereunder are solely to protect its
interest in the Pledged Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, Secured Party shall have no duty as to
any Pledged Collateral, it being understood that Secured Party shall have no
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Pledged Collateral, whether or not Secured Party has or is deemed to have
knowledge of such matters, (b) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Pledged Collateral) to preserve rights against any parties
with respect to any Pledged Collateral, (c) taking any necessary steps to
collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property consisting of negotiable securities.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be continuing, Secured
Party may exercise in respect of the Pledged Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether
or not the Code applies to the affected Pledged Collateral), and Secured Party
may also in its sole discretion, without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or at any of Secured Party's
offices or elsewhere, for cash, on credit or for future delivery, at such time
or times and at such price or prices and upon such other terms as Secured Party
may deem commercially reasonable, irrespective of the impact of any such sales
on the market price of the Pledged Collateral. Secured Party or any Lender or
Interest Rate Exchanger may be the purchaser of any or all of the Pledged
Collateral at any such sale and Secured Party, as agent for and representative
of Lenders and Interest Rate Exchangers (but not any Lender or Lenders or
Interest Rate Exchanger or Interest Rate Exchangers in its or their respective
individual capacities unless Requisite Obligees (as defined in Section 15(a))
shall otherwise agree in writing), shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
the Pledged Collateral sold at any such public sale, to use and apply any of the
Secured Obligations as a credit on account of the purchase price for any Pledged
Collateral payable by Secured Party at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of any Pledgor, and each Pledgor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Each
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<PAGE>
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to such Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Secured Party shall not be obligated to make any sale
of Pledged Collateral regardless of notice of sale having been given. Secured
Party may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Each Pledgor hereby
waives any claims against Secured Party arising by reason of the fact that the
price at which any Pledged Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale, even if
Secured Party accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Pledged Collateral are insufficient to pay all the Secured
Obligations, Pledgors shall be jointly and severally liable for the deficiency
and the fees of any attorneys employed by Secured Party to collect such
deficiency.
(b) Each Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or qualification of such
Pledged Collateral under the Securities Act and/or such state securities laws,
to limit purchasers to those who will agree, among other things, to acquire the
Pledged Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Each Pledgor acknowledges that any such
private sales may be at prices and on terms less favorable than those obtainable
through a public sale without such restrictions and, notwithstanding such
circumstances, such Pledgor agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that Secured Party shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Pledged Collateral for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it.
(c) If Secured Party determines to exercise its right to sell any or all
of the Pledged Collateral, upon written request, each Pledgor shall and shall
cause each issuer of any Pledged Shares owned by such Pledgor to be sold
hereunder from time to time to furnish to Secured Party all such information as
Secured Party may request in order to determine the number of shares and other
instruments included in the Pledged Collateral which may be sold by Secured
Party in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same
are from time to time in effect.
SECTION 12. Application of Proceeds.
All proceeds received by Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral shall be applied as provided in subsection 2.4D of the Credit
Agreement.
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<PAGE>
SECTION 13. Indemnity and Expenses.
(a) Pledgors jointly and severally agree to indemnify Secured Party, each
Lender and each Interest Rate Exchanger from and against any and all claims,
losses and liabilities in any way relating to, growing out of or resulting from
this Agreement and the transactions contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from Secured Party's or such Lender's or
Interest Rate Exchanger's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Pledgors jointly and severally agree to pay to Secured Party upon
demand the amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that Secured
Party may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the failure
by any Pledgor to perform or observe any of the provisions hereof.
(c) The obligations of Pledgors in this Section 13 shall survive the
termination of this Agreement and the discharge of Pledgors' other obligations
under this Agreement, the Lender Interest Rate Agreements, the Credit Agreement
and the other Loan Documents.
SECTION 14. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (a) remain in full force and effect until the payment in
full of all Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Pledgors and their respective successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Pledged Collateral
shall revert to the applicable Pledgors. Upon any such termination Secured Party
will, at Pledgors' expense, execute and deliver to Pledgors such documents as
Pledgors shall reasonably request to evidence such termination and Pledgors
shall be entitled to the return, upon their request and at their expense,
against receipt and without recourse to Secured Party, of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
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<PAGE>
SECTION 15. Secured Party as Administrative Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
without limitation the release or substitution of Pledged Collateral), solely in
accordance with this Agreement and the Credit Agreement; provided that Secured
Party shall exercise, or refrain from exercising, any remedies provided for in
Section 11 in accordance with the instructions of (i) Requisite Lenders or (ii)
after payment in full of all Obligations under the Credit Agreement and the
other Loan Documents, the holders of a majority of the aggregate notional amount
(or, with respect to any Lender Interest Rate Agreement that has been terminated
in accordance with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early termination payments then
due) under such Lender Interest Rate Agreement) under all Lender Interest Rate
Agreements (Requisite Lenders or, if applicable, such holders being referred to
herein as "Requisite Obligees"). In furtherance of the foregoing provisions of
this Section 15(a), each Interest Rate Exchanger, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to realize upon
any of the Pledged Collateral hereunder, it being understood and agreed by such
Interest Rate Exchanger that all rights and remedies hereunder may be exercised
solely by Secured Party for the benefit of Lenders and Interest Rate Exchangers
in accordance with the terms of this Section 15(a).
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Administrative Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.
IX-14
<PAGE>
SECTION 16. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by any Pledgor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Pledgors;
provided that any Pledge Amendment in the form of Schedule II annexed hereto or
any amendment hereto pursuant to Section 19 shall be effective upon execution by
any Pledgor and Pledgors hereby waive any requirement of notice of or consent to
any such Pledge Amendment or amendment. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 17. Notices.
Any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex (with received answerback), or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Secured Party shall not be effective until
received. For the purposes hereof, the address of each party hereto shall be as
provided in subsection 10.8 of the Credit Agreement or as set forth under such
party's name on the signature pages hereof or such other address as shall be
designated by such party in a written notice delivered to the other parties
hereto.
SECTION 18. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 19. Additional Pledgors.
From time to time subsequent to the date hereof, Subsidiaries of Company
may become parties hereto, as additional Pledgors (each an "Additional
Pledgor"), by executing an acknowledgement to this Agreement substantially in
the form of Schedule III annexed hereto. Upon delivery of any such counterpart
to Administrative Agent and Secured Party, notice of which is hereby waived by
Pledgors, each such Additional Pledgor shall be a Pledgor and shall be as fully
a party hereto as if such Additional Pledgor were an original signatory hereto.
Each Pledgor expressly agrees that its obligations arising hereunder shall not
be affected or diminished
IX-15
<PAGE>
by the addition or release of any other Pledgor hereunder, nor by any election
of Administrative Agent not to cause any Subsidiary of Company to become an
Additional Pledgor hereunder. This Agreement shall be fully effective as to any
Pledgor that is or becomes a party hereto regardless of whether any other Person
becomes or fails to become or ceases to be a Pledgor hereunder.
SECTION 20. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 21. Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 22. Governing Law; Terms; Rules of Construction.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES
THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform
Commercial Code in the State of New York are used herein as therein defined. The
rules of construction set forth in subsection 1.3 of the Credit Agreement shall
be applicable to this Agreement mutatis mutandis.
SECTION 23. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY
OF NEW YORK.
IX-16
<PAGE>
BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PLEDGOR, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH PLEDGOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 17; (IV) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
PLEDGOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST SUCH PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION;
AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 23 RELATING TO JURISDICTION
AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE
UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
SECTION 24. Waiver of Jury Trial.
PLEDGORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Each Pledgor and Secured Party acknowledge that this waiver is
a material inducement for Pledgors and Secured Party to enter into a business
relationship, that Pledgors and Secured Party have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Each Pledgor and Secured Party further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 24 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
IX-17
<PAGE>
SECTION 25. Counterparts.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
IX-18
<PAGE>
IN WITNESS WHEREOF, Pledgors and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
MBW FOODS INC.
By:______________________________________
Name:
Title:
MBW HOLDINGS INC.
By:______________________________________
Name:
Title:
IX-19
<PAGE>
THE CHASE MANHATTAN BANK,
as Secured Party
By:______________________________________
Name: Karen Sharf
Title: Vice President
IX-20
<PAGE>
SCHEDULE I
TO PLEDGE AGREEMENT
Attached to and forming a part of the Pledge Agreement dated as of
December __, 1996, by and among the Pledgors referred to therein and The Chase
Manhattan Bank, as Secured Party.
Part A
================================================================================
Percentage
of
Stock Number Outstanding
Class of Certificate Par of Shares
Pledgor Stock Issuer Stock Nos. Value Shares Pledged
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Part B
================================================================================
Pledgor Debt Issuer Amount of
Indebtedness
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
IX-I-I
<PAGE>
SCHEDULE II
TO PLEDGE AGREEMENT
[FORM OF PLEDGE AMENDMENT]
This Pledge Amendment, dated _______________, [199_] [200_] is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated as of December __, 1996, by and among the Pledgors
referred to therein and The Chase Manhattan Bank, as Secured Party (the "Pledge
Agreement", capitalized terms defined therein being used herein as therein
defined), and that the [Pledged Shares] [Pledged Debt] listed on this Pledge
Amendment shall be deemed to be part of the [Pledged Shares] [Pledged Debt] and
shall become part of the Pledged Collateral and shall secure all Secured
Obligations.
[NAME OF PLEDGOR]
By: ______________________________________
Name:
Title:
================================================================================
Percentage of
Class of Stock Par Number of Outstanding
Stock Issuer Stock Certificate Nos. Value Shares Shares Pledged
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
=====================================================
Amount of
Debt Issuer Indebtedness
=====================================================
-----------------------------------------------------
-----------------------------------------------------
=====================================================
IX-II-1
<PAGE>
SCHEDULE III
TO PLEDGE AGREEMENT
[FORM OF PLEDGE ACKNOWLEDGEMENT]
This Pledge Acknowledgement, dated _______________, [199_] [200_], is
delivered pursuant to Section 19 of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Acknowledgement may be attached to
the Pledge Agreement dated December __, 1996, by and among the Pledgors referred
to therein and The Chase Manhattan Bank, as Secured Party (the "Pledge
Agreement", capitalized terms defined therein being used herein as therein
defined), that the undersigned by executing and delivering this Acknowledgement
hereby becomes a Pledgor under the Pledge Agreement in accordance with Section
19 thereof and agrees to be bound by all of the terms thereof, and that the
[Pledged Shares] [Pledged Debt] listed on this Pledge Acknowledgement shall be
deemed to be part of the [Pledged Shares] [Pledged Debt] and shall become part
of the Pledged Collateral and shall secure all Secured Obligations.
[NAME OF ADDITIONAL PLEDGOR]
By: ______________________________________
Name:
Title:
Notice Address:
_______________________________
_______________________________
_______________________________
_______________________________
IX-III-1
<PAGE>
================================================================================
Percentage of
Class of Stock Par Number of Outstanding
Stock Issuer Stock Certificate Nos. Value Shares Shares Pledged
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
=====================================================
Amount of
Debt Issuer Indebtedness
=====================================================
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
=====================================================
IX-III-2
<PAGE>
EXHIBIT X
[FORM OF SECURITY AGREEMENT]
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is dated as of December __,
1996 and entered into by and among MBW FOODS INC., a Delaware corporation
("Company"), MBW HOLDINGS INC., a Delaware corporation ("Holdings") (each of
Company and Holdings being a "Grantor" and collectively "Grantors"; provided
that after the Closing Date, "Grantors" shall mean and include Company, Holdings
and any Additional Grantors (as hereinafter defined)) and THE CHASE MANHATTAN
BANK, as administrative agent for and representative of (in such capacity herein
called "Secured Party") the financial institutions ("Lenders") party to the
Credit Agreement referred to below and any Interest Rate Exchangers (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Pursuant to that certain Credit Agreement dated as of December __, 1996
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined) by and among Company, MBW Holdings Inc., a Delaware corporation,
Lenders, Secured Party, as Administrative Agent, and Chase Securities Inc., as
Arranging Agent, Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company.
B. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreement (collectively, the "Lender
Interest Rate Agreements") with one or more Lenders or their Affiliates (in such
capacity, collectively, "Interest Rate Exchangers") in accordance with the terms
of the Credit Agreement, and it is desired that the obligations of Company under
the Lender Interest Rate Agreements, including without limitation the obligation
of Company to make payments thereunder in the event of early termination thereof
(all such obligations being the "Interest Rate Obligations"), together with all
obligations of Company under the Credit Agreement and the other Loan Documents,
be secured hereunder.
C. Holdings has executed and delivered that certain Holdings Guaranty
dated as of December __, 1996 (said Holdings Guaranty, as it may hereafter be
amended, restated, supplemented or otherwise modified from time to time, being
the "Holdings Guaranty") in favor of Secured Party for the benefit of Lenders
and any Interest Rate Exchangers, pursuant to which Holdings has guarantied the
prompt payment and performance when due of all
X-1
<PAGE>
obligations of Company under the Credit Agreement and the other Loan Documents
and all obligations of Company under the Lender Interest Rate Agreements,
including without limitation the obligation of Company to make payments
thereunder in the event of early termination thereof.
D. Additional Grantors shall execute and deliver counterparts to that
certain Subsidiary Guaranty (said Subsidiary Guaranty, as it may be amended,
restated, supplemented or otherwise modified from time to time, being the
"Subsidiary Guaranty") in favor of Secured Party for the benefit of Lenders and
any Interest Rate Exchangers, pursuant to which each Additional Grantor shall
guaranty the prompt payment and performance when due of all obligations of
Company under the Credit Agreement and the other Loan Documents and all
obligations of Company under the Lender Interest Rate Agreements, including
without limitation the obligation of Company to make payments thereunder in the
event of early termination thereof.
E. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Grantors shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement
and to induce Interest Rate Exchangers to enter into the Lender Interest Rate
Agreements, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Grantor hereby agrees with
Secured Party as follows:
SECTION 1. Grant of Security.
Each Grantor hereby assigns to Secured Party, and hereby grants to Secured
Party a security interest in, all of such Grantor's right, title and interest in
and to the following, in each case whether now or hereafter existing or in which
Grantor now has or hereafter acquires an interest and wherever the same may be
located (the "Collateral"):
(a) all equipment in all of its forms (including, but not limited
to, all machinery, all computers, all data processing, computer or office
equipment, all furniture and all trucks and other vehicles), all parts
thereof and all accessions thereto (any and all such equipment, parts and
accessions being the "Equipment");
(b) all inventory in all of its forms (including, but not limited
to, (i) all goods held by such Grantor for sale or lease or to be
furnished under contracts of service or so leased or furnished, (ii) all
raw materials, work in process, finished goods, samples, and materials
used or consumed in the manufacture, packing, shipping, advertising,
selling, leasing, furnishing or production of such inventory or otherwise
used or consumed in such Grantor's business, (iii) all goods in which such
Grantor has an interest in mass or a joint or other interest or right of
any kind, and (iv) all goods which
X-2
<PAGE>
are returned to or repossessed by such Grantor) and all accessions thereto
and products thereof (all such inventory, accessions and products being
the "Inventory") and all negotiable and non-negotiable documents of title
(including without limitation warehouse receipts, dock receipts and bills
of lading) issued by any Person covering any Inventory (any such
negotiable document of title being a "Negotiable Document of Title");
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any
kind owned by or owing to such Grantor and all rights in, to and under all
security agreements, leases and other contracts securing or otherwise
relating to any such accounts, contract rights, chattel paper, documents,
instruments, general intangibles or other obligations (any and all such
accounts, contract rights, chattel paper, documents, instruments, general
intangibles and other obligations being the "Accounts", and any and all
such security agreements, leases and other contracts being the "Related
Contracts");
(d) all agreements to which such Grantor is a party, including
without limitation those listed in Schedule 1(d) annexed hereto, as each
such agreement may be amended, restated, supplemented or otherwise
modified from time to time (said agreements, as so amended, restated,
supplemented or otherwise modified, being referred to herein individually
as an "Assigned Agreement" and collectively as the "Assigned Agreements"),
including, without limitation, (i) all rights of such Grantor to receive
moneys due or to become due under or pursuant to the Assigned Agreements,
(ii) all rights of such Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) all claims of such Grantor for damages arising out of any breach of
or default under the Assigned Agreements, and (iv) all rights of such
Grantor to terminate, amend, supplement, modify or exercise rights or
options under the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) all cash, money, currency and deposit accounts, including
without limitation demand, time, savings, passbooks or similar accounts
maintained with Lenders or other banks, savings and loan associations or
other financial institutions;
(f) all trademarks, trademark applications, trade names, trade
secrets, trade dress, service marks, business names, patents, patent
applications, licenses, copyrights and copyright applications owned by
such Grantor, and all goodwill associated with any of the foregoing;
(g) to the extent not included in any other paragraph of this
Section 1, all other general intangibles (including without limitation
unpatented formulas, recipes, manufacturing methods and processes,
inventions, discoveries, tax refunds, rights to payment or performance,
choses in action and judgments taken on any rights or claims included in
the Collateral);
X-3
<PAGE>
(h) all plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all accessions thereto and products
thereof;
(i) all books, records, ledger cards, files, sales records, sales
and promotional data, invoices, product specifications, drawings,
advertising materials, customer lists, cost and pricing information,
supplier lists, business plans, catalogs, quality control manuals,
blueprints, correspondence, computer programs, tapes, disks and related
data processing software that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or helpful in
the collection thereof or realization thereupon; and
(j) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing
Collateral. For purposes of this Agreement, the term "proceeds" includes
whatever is receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
SECTION 2. Security for Obligations.
This Agreement secures, and the Collateral assigned by each Grantor is
collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including without limitation the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured Obligations
with respect to such Grantor. "Secured Obligations" means
(a) with respect to Company, all obligations and liabilities of
every nature of Company now or hereafter existing under or arising out of
or in connection with the Credit Agreement and the other Loan Documents
and any Lender Interest Rate Agreement,
(b) with respect to Holdings, all obligations and liabilities of
every nature of Holdings now or hereafter existing under or arising out of
or in connection with the Credit Agreement and the Holdings Guaranty, and
(c) with respect to each Additional Grantor, all obligations and
liabilities of every nature of Additional Grantors now or hereafter
existing under or arising out of or in connection with the Subsidiary
Guaranty,
X-4
<PAGE>
in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender or Interest Rate Exchanger as a
preference, fraudulent transfer or otherwise, and all obligations of every
nature of Grantors now or hereafter existing under this Agreement.
SECTION 3. Grantors Remain Liable.
Anything contained herein to the contrary notwithstanding, (a) each
Grantor shall remain liable under any contracts and agreements included in the
Collateral, to the extent set forth therein, to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights hereunder shall
not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) Secured Party shall
not have any obligation or liability under any contracts and agreements included
in the Collateral by reason of this Agreement, nor shall Secured Party be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 4. Representations and Warranties.
Each Grantor represents and warrants as of the date it becomes a party
hereto as follows:
(a) Ownership of Collateral. Except as expressly permitted by the
Credit Agreement and for the security interest created by this Agreement,
such Grantor owns the Collateral owned by such Grantor free and clear of
any Lien.
(b) Locations of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date such Grantor has become a party hereto,
located at the places specified in Schedule 4(b) annexed hereto.
(c) Negotiable Documents of Title. No Negotiable Documents of Title
are outstanding with respect to any of the Inventory.
X-5
<PAGE>
(d) Office Locations. The chief place of business, the chief
executive office and the office where such Grantor keeps its records
regarding the Accounts and all originals of all chattel paper that
evidence Accounts are located at the locations set forth on Schedule 4(d)
annexed hereto.
(e) Names. No Grantor has in the past done, and no Grantor now does,
business under any other name (including any trade-name or fictitious
business name) except the names listed in Schedule 4(e) annexed hereto.
(f) Delivery of Certain Collateral. All notes and other instruments
(excluding checks) comprising any and all items of Collateral have been
delivered to Secured Party duly endorsed and accompanied by duly executed
instruments of transfer or assignment in blank.
(g) Perfection. The security interests in the Collateral granted to
Secured Party for the ratable benefit of the Lenders and Interest Rate
Exchangers hereunder constitute valid security interests in the
Collateral. Upon the filing of UCC financing statements naming each
Grantor as "debtor", naming Secured Party as "secured party" and
describing the Collateral in the filing offices set forth on Schedule 4(g)
annexed hereto, the security interests in the Collateral granted to
Secured Party for the ratable benefit of the Lenders and Interest Rate
Exchangers will, to the extent a security interest in the Collateral may
be perfected by filing UCC financing statements, constitute perfected
security interests therein prior to all other Liens.
SECTION 5. Further Assurances.
(a) Each Grantor agrees that from time to time, at the expense of
Grantors, such Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, each Grantor will:
(i) at the request of Secured Party, mark conspicuously each item of chattel
paper included in the Accounts, each Related Contract and, at the request of
Secured Party, each of its records pertaining to the Collateral, with a legend,
in form and substance satisfactory to Secured Party, indicating that such
Collateral is subject to the security interest granted hereby, (ii) at the
request of Secured Party, deliver and pledge to Secured Party hereunder all
promissory notes and other instruments (including checks) and all original
counterparts of chattel paper constituting Collateral, duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Secured Party, (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as Secured Party
may request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, (iv) promptly after the acquisition by such
Grantor of any item of Equipment which is covered by a certificate of
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<PAGE>
title under a statute of any jurisdiction under the law of which indication of a
security interest on such certificate is required as a condition of perfection
thereof, execute and file with the registrar of motor vehicles or other
appropriate authority in such jurisdiction an application or other document
requesting the notation or other indication of the security interest created
hereunder on such certificate of title, (v) within 30 days after the end of each
calendar year and June 30 of each calendar year, deliver to Secured Party copies
of all such applications or other documents filed during such semiannual period
and copies of all such certificates of title issued during such semiannual
period indicating the security interest created hereunder in the items of
Equipment covered thereby, (vi) at any reasonable time, upon request by Secured
Party, exhibit the Collateral to and allow inspection of the Collateral by
Secured Party, or persons designated by Secured Party, and (vii) at Secured
Party's request, appear in and defend any action or proceeding that may affect
such Grantor's title to or Secured Party's security interest in all or any part
of the Collateral.
(b) Each Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of any Grantor. Each Grantor
agrees that a carbon, photographic or other reproduction of this Agreement or of
a financing statement signed by such Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all
jurisdictions.
(c) Each Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
SECTION 6. Certain Covenants of Grantors.
Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the
Collateral;
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any change
in such Grantor's chief place of business, chief executive office or
residence or the office where such Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts;
and
(d) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except
to the extent the validity thereof
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is being contested in good faith; provided that such Grantor shall in any
event pay such taxes, assessments, charges, levies or claims not later
than five days prior to the date of any proposed sale under any judgement,
writ or warrant of attachment entered or filed against such Grantor or any
of the Collateral as a result of the failure to make such payment.
SECTION 7. Special Covenants With Respect to Equipment and Inventory.
Each Grantor shall:
(a) keep the Equipment and Inventory owned by such Grantor at the
places therefor specified on Schedule 4(b) annexed hereto or, upon 30
days' prior written notice to Secured Party, at such other places in
jurisdictions where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby, or to enable Secured
Party to exercise and enforce its rights and remedies hereunder, with
respect to such Equipment and Inventory shall have been taken;
(b) cause the Equipment owned by such Grantor to be maintained and
preserved in the same condition, repair and working order as when new,
ordinary wear and tear excepted, and in accordance with such Grantor's
past practices. Each Grantor shall promptly furnish to Secured Party a
statement respecting any material loss or damage to any of the Equipment
owned by such Grantor;
(c) keep correct and accurate records of Inventory owned by such
Grantor, itemizing and describing the kind, type and quantity of such
Inventory, such Grantor's cost therefor and (where applicable) the current
list prices for such Inventory;
(d) if any Inventory is in possession or control of any of such
Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $300,000, and in any event upon the occurrence of an
Event of Default (as defined in the Credit Agreement) or the occurrence of
an Early Termination Date (as defined in a Master Agreement or an Interest
Rate Swap Agreement or Interest Rate and Currency Exchange Agreement in
the form prepared by the International Swap and Derivatives Association
Inc. or a similar event under any similar swap agreement) under any Lender
Interest Rate Agreement (either such occurrence being an "Event of
Default" for purposes of this Agreement), instruct such agent or processor
to hold all such Inventory for the account of Secured Party and subject to
the instructions of Secured Party.
(e) promptly upon the issuance and delivery to such Grantor of any
Negotiable Document of Title, deliver such Negotiable Document of Title to
Secured Party.
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SECTION 8. Insurance.
Each Grantor shall, at its own expense, maintain insurance with respect to
the Equipment and Inventory in accordance with the terms of the Credit
Agreement.
SECTION 9. Special Covenants with respect to Accounts and Related Contracts.
(a) Each Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, at the location therefor specified in Section 4 or, upon 30
days' prior written notice to Secured Party, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security interest
granted or purported to be granted hereby, or to enable Secured Party to
exercise and enforce its rights and remedies hereunder, with respect to such
Accounts and Related Contracts shall have been taken. Each Grantor will hold and
preserve such records and chattel paper and will permit representatives of
Secured Party at any time during normal business hours to inspect and make
abstracts from such records and chattel paper, and each Grantor agrees to render
to Secured Party, at Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. Promptly upon the
request of Secured Party, each Grantor shall deliver to Secured Party complete
and correct copies of each Related Contract.
(b) Each Grantor shall, for not less than 3 years from the date on which
such Account arose, maintain (i) complete records of each Account of such
Grantor, including records of all payments received, credits granted and
merchandise returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to such Grantor under the Accounts and Related Contracts. In connection with
such collections, each Grantor may take (and, at Secured Party's direction,
shall take) such action as such Grantor or Secured Party may deem necessary or
advisable to enforce collection of amounts due or to become due under the
Accounts; provided, however, that Secured Party shall have the right at any
time, upon the occurrence and during the continuation of an Event of Default or
a Potential Event of Default and upon written notice to such Grantor of its
intention to do so, to notify the account debtors or obligors under any Accounts
of the assignment of such Accounts to Secured Party and to direct such account
debtors or obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to Secured Party, to notify each Person maintaining
a lockbox or similar arrangement to which account debtors or obligors under any
Accounts have been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or
deposited in such lockbox or other arrangement directly to Secured Party and,
upon such notification and at the expense of Grantors, to enforce collection of
any such Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. After
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receipt by such Grantor of the notice from Secured Party referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including
checks and other instruments) received by such Grantor in respect of the
Accounts and the Related Contracts shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 18, and (ii) such Grantor shall not adjust,
settle or compromise the amount or payment of any Account, or release wholly or
partly any account debtor or obligor thereof, or allow any credit or discount
thereon.
SECTION 10. Special Provisions With Respect to the Assigned Agreements.
(a) Each Grantor shall at its expense:
(i) if consistent with sound business practices, perform and observe
all terms and provisions of the Assigned Agreements to be performed or
observed by it, maintain the Assigned Agreements in full force and effect,
enforce the Assigned Agreements in accordance with their terms, and take
all such action to such end as may be from time to time requested by
Secured Party; and
(ii) upon the reasonable request of Secured Party, furnish to
Secured Party, promptly upon receipt thereof, copies of all notices,
requests and other documents received by such Grantor under or pursuant to
the Assigned Agreements, and from time to time (A) furnish to Secured
Party such information and reports regarding the Assigned Agreements as
Secured Party may reasonably request and (B) upon request of Secured Party
make to the parties to such Assigned Agreements such demands and requests
for information and reports or for action as such Grantor is entitled to
make under the Assigned Agreements.
(b) Upon the occurrence and during the continuance of an Event of Default,
no Grantor shall:
(i) cancel or terminate any of the Assigned Agreements or consent to
or accept any cancellation or termination thereof;
(ii) amend or otherwise modify the Assigned Agreements or give any
consent, waiver or approval thereunder;
(iii) waive any default under or breach of the Assigned Agreements;
(iv) consent to or permit or accept any prepayment of amounts to
become due under or in connection with the Assigned Agreements, except as
expressly provided therein; or
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(v) take any other action in connection with the Assigned Agreements
that would materially impair the value of the interest or rights of such
Grantor thereunder or that would materially impair the interest or rights
of Secured Party.
SECTION 11. Deposit Accounts.
Upon the occurrence and during the continuation of an Event of Default,
Secured Party may exercise dominion and control over, and refuse to permit
further withdrawals (whether of money, securities, instruments or other
property) from any deposit accounts maintained with Secured Party constituting
part of the Collateral.
SECTION 12. License of Patents, Trademarks, Copyrights, etc.
Each Grantor hereby assigns, transfers and conveys to Secured Party,
effective upon the occurrence of any Event of Default, the nonexclusive right
and license to use all trademarks, tradenames, copyrights, patents or technical
processes owned or held by such Grantor that are necessary for the use and
enjoyment of the Collateral and any other collateral granted by such Grantor as
security for the Secured Obligations, together with any goodwill associated
therewith, all to the extent necessary to enable Secured Party to use, possess
and realize on the Collateral and to enable any successor or assign to enjoy the
benefits of the Collateral. This right and license shall inure to the benefit of
all successors, assigns and transferees of Secured Party and its successors,
assigns and transferees, whether by voluntary conveyance, operation of law,
assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise.
Such right and license is granted free of charge, without requirement that any
monetary payment whatsoever be made to such Grantor.
SECTION 13. Transfers and Other Liens.
No Grantor shall:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit
Agreement; or
(b) except for the security interest created by this Agreement,
create or suffer to exist any Lien upon or with respect to any of the
Collateral to secure the indebtedness or other obligations of any Person.
SECTION 14. Secured Party Appointed Attorney-in-Fact.
Each Grantor hereby irrevocably appoints Secured Party as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor,
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Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) upon the occurrence and during the continuance of an Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Secured Party pursuant to Section 8;
(b) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) upon the occurrence and during the continuance of an Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) upon the occurrence and during the continuance of an Event of
Default, to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and
the amounts necessary to discharge the same to be determined by Secured
Party in its sole discretion, any such payments made by Secured Party to
become obligations of such Grantor to Secured Party, due and payable
immediately without demand;
(f) upon the occurrence and during the continuance of an Event of
Default, to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and
other documents relating to the Collateral; and
(g) upon the occurrence and during the continuance of an Event of
Default, generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though Secured Party were the absolute owner thereof for all
purposes, and to do, at Secured Party's option and Grantors' expense, at
any time or from time to time, all acts and things that Secured Party
deems necessary to protect, preserve or realize upon the Collateral and
Secured Party's security interest therein in order to effect the intent of
this Agreement, all as fully and effectively as such Grantor might do.
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SECTION 15. Secured Party May Perform.
If any Grantor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
such Grantor under Section 19(b).
SECTION 16. Standard of Care.
The powers conferred on Secured Party hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Secured Party shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property.
SECTION 17. Remedies.
If any Event of Default shall have occurred and be continuing, Secured
Party may exercise in respect of the Collateral, in addition to all other rights
and remedies provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the Uniform Commercial Code as
in effect in any relevant jurisdiction (the "Code") (whether or not the Code
applies to the affected Collateral), and also may (a) require each Grantor to,
and each Grantor hereby agrees that it will at its expense and upon request of
Secured Party forthwith, assemble all or part of the Collateral as directed by
Secured Party and make it available to Secured Party at a place to be designated
by Secured Party that is reasonably convenient to both parties, (b) enter onto
the property where any Collateral is located and take possession thereof with or
without judicial process, (c) prior to the disposition of the Collateral, store,
process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent Secured Party deems
appropriate, (d) take possession of any Grantor's premises or place custodians
in exclusive control thereof, remain on such premises and use the same and any
of such Grantor's equipment for the purpose of completing any work in process,
taking any actions described in the preceding clause (c) and collecting any
Secured Obligation, and (e) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of Secured Party's offices or elsewhere, for cash, on credit or for
future delivery, at such time or times and at such price or prices and upon such
other terms as Secured Party may deem commercially reasonable. Secured Party or
any Lender or Interest Rate Exchanger may be the purchaser of any or all of the
Collateral at any such sale and Secured Party, as agent for and representative
of Lenders and Interest Rate Exchangers (but not any Lender or Lenders or
Interest Rate Exchanger or Interest Rate Exchangers in its or their respective
individual capacities unless Requisite Obligees (as defined in Section 21(a))
shall otherwise agree in writing), shall be entitled, for the purpose of
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bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at any such public sale, to use and apply any of
the Secured Obligations as a credit on account of the purchase price for any
Collateral payable by Secured Party at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of any Grantor, and each Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such Grantor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Secured Party may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Each Grantor hereby waives any claims against Secured Party arising
by reason of the fact that the price at which any Collateral may have been sold
at such a private sale was less than the price which might have been obtained at
a public sale, even if Secured Party accepts the first offer received and does
not offer such Collateral to more than one offeree. If the proceeds of any sale
or other disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantors shall be jointly and severally liable for the deficiency
and the fees of any attorneys employed by Secured Party to collect such
deficiency.
SECTION 18. Application of Proceeds.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied as provided
in subsection 2.4D of the Credit Agreement.
SECTION 19. Indemnity and Expenses.
(a) Grantors jointly and severally agree to indemnify Secured Party, each
Lender and each Interest Rate Exchanger from and against any and all claims,
losses and liabilities in any way relating to, growing out of or resulting from
this Agreement and the transactions contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from Secured Party's or such Lender's or
Interest Rate Exchanger's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantors jointly and severally agree to pay to Secured Party upon
demand the amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that Secured
Party may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
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enforcement of any of the rights of Secured Party hereunder, or (iv) the failure
by any Grantor to perform or observe any of the provisions hereof.
(c) The obligations of Grantors in this Section 19 shall survive the
termination of this Agreement and the discharge of Grantors' other obligations
under this Agreement, the Lender Interest Rate Agreements, the Credit Agreement
and the other Loan Documents.
SECTION 20. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Grantors and their respective successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the applicable Grantors. Upon any such termination Secured Party will,
at Grantors' expense, execute and deliver to Grantors such documents as Grantors
shall reasonably request to evidence such termination.
SECTION 21. Secured Party as Administrative Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
without limitation the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement; provided that Secured
Party shall exercise, or refrain from exercising, any remedies provided for in
Section 17 in accordance with the instructions of (i) Requisite Lenders or (ii)
after payment in full of all Obligations under the Credit Agreement and the
other Loan Documents, the holders of a majority of the aggregate notional amount
(or, with respect to any Lender Interest Rate Agreement that has been terminated
in accordance with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early termination payments then
due) under such Lender Interest Rate Agreement) under all Lender Interest Rate
Agreements (Requisite Lenders or, if applicable, such holders being referred to
herein as "Requisite Obligees"). In furtherance of the foregoing provisions of
this Section 21(a), each Interest Rate Exchanger, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to realize upon
any of the Collateral hereunder, it
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being understood and agreed by such Interest Rate Exchanger that all rights and
remedies hereunder may be exercised solely by Secured Party for the benefit of
Lenders and Interest Rate Exchangers in accordance with the terms of this
Section 21(a).
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Administrative Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.
SECTION 22. Additional Grantors.
From time to time subsequent to the date hereof, Subsidiaries of Company
may become parties hereto as additional Grantors (each an "Additional Grantor")
by executing a counterpart of this Agreement and delivering supplements to
Schedule 4(b), Schedule 4(d), Schedule 4(e) and Schedule 4(g) in substantially
the forms annexed hereto, which supplements shall thereby supplement and amend
such Schedules. Upon delivery of any such counterpart to Administrative Agent
and Secured Party, notice of which is hereby waived by Grantors, each such
Additional Grantor shall be a Grantor and shall be as fully a party hereto as if
such Additional Grantor were an original signatory hereto. Each Grantor
expressly agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Grantor hereunder, nor by any
election of Administrative Agent not to cause any Subsidiary of Company to
become an Additional Grantor hereunder. This Agreement shall be fully effective
as to any Grantor that is or becomes a party hereto regardless of whether any
other Person becomes or fails to become or ceases to be a Grantor hereunder.
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SECTION 23. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by any Grantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Grantors;
provided that any amendment hereto pursuant to Section 22 shall be effective
upon execution by any Additional Grantor and Grantors hereby waive any
requirement of notice of or consent to any such amendment. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 24. Notices.
Any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex (with received answerback), or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Secured Party shall not be effective until
received. For the purposes hereof, the address of each party hereto shall be as
provided in subsection 10.8 of the Credit Agreement or as set forth under such
party's name on the signature pages hereof or such other address as shall be
designated by such party in a written notice delivered to the other parties
hereto.
SECTION 25. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 26. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
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SECTION 27. Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 28. Governing Law; Terms; Rules of Construction.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES
THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform
Commercial Code in the State of New York are used herein as therein defined. The
rules of construction set forth in subsection 1.3 of the Credit Agreement shall
be applicable to this Agreement mutatis mutandis.
SECTION 29. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY
OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 24; (IV) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION;
AND (VI) AGREES
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THAT THE PROVISIONS OF THIS SECTION 29 RELATING TO JURISDICTION AND VENUE SHALL
BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK
GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
SECTION 30. Waiver of Jury Trial.
GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Each Grantor and Secured Party acknowledge that this waiver is
a material inducement for Grantors and Secured Party to enter into a business
relationship, that Grantors and Secured Party have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Each Grantor and Secured Party further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 30 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 31. Counterparts.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
X-19
<PAGE>
IN WITNESS WHEREOF, Grantors and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
MBW FOODS INC.
By:___________________________________
Name:
Title:
MBW HOLDINGS INC.
By:___________________________________
Name:
Title:
X-20
<PAGE>
THE CHASE MANHATTAN BANK,
as Secured Party
By:___________________________________
Name: Karen Sharf
Title: Vice President
X-21
<PAGE>
IN WITNESS WHEREOF, the undersigned Additional Grantor has caused this
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of __________, [199_] [200_].
[NAME OF ADDITIONAL GRANTOR]
By:___________________________________
Name:
Title:
Notice Address:
________________________________
________________________________
________________________________
________________________________
X-22
<PAGE>
SCHEDULE 1(d)
TO
SECURITY AGREEMENT
Assigned Agreements
(1) License Agreement dated as of December __, 1996, by and between
Conopco, Inc. and MBW Foods Inc.
(2) Shared Technology License Agreement dated as of December __, 1996,
by and between Conopco, Inc. and MBW Foods Inc.
(3) Transition Services Agreement dated as of December __, 1996, by and
between Conopco, Inc. and MBW Foods Inc.
(4) Co-Pack Agreement dated as of December __, 1996, by and between
Conopco, Inc. and MBW Foods Inc.
(5) Patent License Agreement dated as of December __, 1996, by and among
Conopco, Inc., Unilever PLC and MBW Foods Inc.
(6) Flavor Supply Agreement dated as of December __, 1996, by and
between MBW Foods Inc. and Quest International Flavors & Food
Ingredients Company.
(7) Escrow Agreement dated as of December __, 1996, by and among MBW
Foods Inc., ______________, as escrow agent, and Quest International
Flavors & Food Ingredients Company.
X-1(d)-1
<PAGE>
SCHEDULE 4(b)
TO
SECURITY AGREEMENT
Locations of Equipment and Inventory
Name of Grantor Locations of Equipment and Inventory
- --------------- ------------------------------------
X-4(b)-1
<PAGE>
SCHEDULE 4(d)
TO
SECURITY AGREEMENT
Office Locations
Name of Grantor Office Locations
- --------------- ----------------
X-4(d)-1
<PAGE>
SCHEDULE 4(e)
TO
SECURITY AGREEMENT
Other Names
Name of Grantor Other Names
- --------------- -----------
X-4(e)-1
<PAGE>
SCHEDULE 4(g)
TO
SECURITY AGREEMENT
Filing Offices
--------------
X-4(g)-1
<PAGE>
EXHIBIT XI
[FORM OF PATENT AND TRADEMARK SECURITY AGREEMENT]
PATENT AND TRADEMARK SECURITY AGREEMENT
This PATENT AND TRADEMARK SECURITY AGREEMENT (this "Agreement") is dated
as of December __, 1996 and entered into by and among MBW FOODS INC., a Delaware
corporation ("Company")(Company being referred to herein as a "Grantor";
provided that after the Closing Date, "Grantors" shall mean and include Company
and any Additional Grantors (as hereinafter defined)), and THE CHASE MANHATTAN
BANK, as administrative agent for and representative of (in such capacity herein
called "Secured Party") the financial institutions ("Lenders") party to the
Credit Agreement referred to below and any Interest Rate Exchangers (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Pursuant to that certain Credit Agreement dated as of December __, 1996
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined) by and among Company, MBW Holdings Inc., a Delaware corporation,
Lenders, Secured Party, as Administrative Agent, and Chase Securities Inc., as
Arranging Agent, Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company.
B. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreement (collectively, the "Lender
Interest Rate Agreements") with one or more Lenders or their Affiliates (in such
capacity, collectively, "Interest Rate Exchangers") in accordance with the terms
of the Credit Agreement, and it is desired that the obligations of Company under
the Lender Interest Rate Agreements, including without limitation the obligation
of Company to make payments thereunder in the event of early termination thereof
(all such obligations being the "Interest Rate Obligations"), together with all
obligations of Company under the Credit Agreement and the other Loan Documents,
be secured hereunder.
C. Additional Grantors shall execute and deliver counterparts to that
certain Subsidiary Guaranty (said Subsidiary Guaranty, as it may be amended,
restated, supplemented or otherwise modified from time to time, being the
"Subsidiary Guaranty") in favor of Secured Party for the benefit of Lenders and
any Interest Rate Exchangers, pursuant to which each Additional Grantor shall
guaranty the prompt payment and performance when due of all obligations of
Company under the Credit Agreement and the other Loan Documents and all
XI-1
<PAGE>
obligations of Company under the Lender Interest Rate Agreements, including
without limitation the obligation of Company to make payments thereunder in the
event of early termination thereof.
D. Grantors own and use in their business, and will in the future adopt
and so use, various intangible assets, including trademarks, service marks,
designs, logos, indicia, tradenames, corporate names, company names, business
names, fictitious business names, trade styles and/or other source and/or
business identifiers and applications pertaining thereto (collectively, the
"Trademarks").
E. Secured Party desires Grantors to assign and grant to it a lien on and
security interest in all of Grantors' existing and future Trademarks, all
registrations that have been or may hereafter be issued or applied for thereon
in the United States and any state thereof and in foreign countries (the
"Registrations"), all common law and other rights in and to the Trademarks in
the United States and any state thereof and in foreign countries (the "Trademark
Rights"), all goodwill of Grantors' business symbolized by the Trademarks and
associated therewith, including without limitation the documents and things
described in Section 1(b) (the "Associated Goodwill"), and all proceeds of the
Trademarks, the Registrations, the Trademark Rights and the Associated Goodwill,
and Grantors agree to assign and grant to Secured Party a secured and protected
interest in the Trademarks, the Registrations, the Trademark Rights, the
Associated Goodwill and all the proceeds thereof as provided herein.
F. Pursuant to the Security Agreement, each Grantor has assigned and
granted to Secured Party a lien on and security interest in, among other assets,
all Grantors' equipment, inventory, accounts and general intangibles relating to
the products and services sold or delivered under or in connection with the
Trademarks such that, upon the occurrence and during the continuation of an
Event of Default (as defined in the Credit Agreement) or the occurrence of an
Early Termination Date (as defined in a Master Agreement or an Interest Rate
Swap Agreement or Interest Rate and Currency Exchange Agreement in the form
prepared by the International Swap and Derivatives Association Inc. or a similar
event under any similar swap agreement) under any Lender Interest Rate Agreement
(either such occurrence being an "Event of Default" for purposes of this
Agreement), Secured Party would be able to exercise its remedies consistent with
the Security Agreement, this Agreement and applicable law to foreclose upon
Grantors' business and use the Trademarks, the Registrations and the Trademark
Rights in conjunction with the continued operation of such business, maintaining
substantially the same product and service specifications and quality as
maintained by Grantors, and benefit from the Associated Goodwill.
G. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Grantors shall have assigned and granted
the security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement
and to induce Interest Rate Exchangers to enter into the Lender Interest Rate
Agreements, and for other good and
XI-2
<PAGE>
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each Grantor hereby agrees with Secured Party as follows:
SECTION 1. Assignment and Grant of Security.
Each Grantor hereby grants to Secured Party a security interest in all of
such Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "Collateral"):
(a) each of the Trademarks and rights and interests in Trademarks
which are presently, or in the future may be, owned or held (whether
pursuant to a license or otherwise) by such Grantor, in whole or in part
(including without limitation the Trademarks specifically identified in
Schedule I annexed hereto, as the same may be amended pursuant hereto from
time to time), and including all Trademark Rights with respect thereto and
all federal, state and foreign Registrations therefor heretofore or
hereafter granted or applied for, the right (but not the obligation) to
register claims under any state or federal trademark law or regulation or
any trademark law or regulation of any foreign country and to apply for,
renew and extend the Trademarks, Registrations and Trademark Rights, the
right (but not the obligation) to sue or bring opposition or cancellation
proceedings in the name of such Grantor or in the name of Secured Party or
otherwise for past, present and future infringements of the Trademarks,
Registrations or Trademark Rights and all rights (but not obligations)
corresponding thereto in the United States and any foreign country, and
the Associated Goodwill; it being understood that the rights and interests
included herein shall include, without limitation, all rights and
interests pursuant to licensing or other contracts in favor of such
Grantor pertaining to the Trademarks, Registrations or Trademark Rights
presently or in the future owned or used by third parties but, in the case
of third parties which are not Affiliates of such Grantor, only to the
extent permitted by such licensing or other contracts or otherwise
permitted by applicable law and, if not so permitted under any such
contracts and applicable law, only with the consent of such third parties;
(b) the following documents and things in such Grantor's possession,
or subject to such Grantor's right to possession, related to (Y) the
production, sale and delivery by such Grantor, or by any Affiliate,
licensee or subcontractor of such Grantor, of products or services sold or
delivered by or under the authority of such Grantor in connection with the
Trademarks, Registrations or Trademark Rights (which products and services
shall, for purposes of this Agreement, be deemed to include, without
limitation, products and services sold or delivered pursuant to
merchandising operations utilizing any Trademarks, Registrations or
Trademark Rights); or (Z) any retail or other merchandising operations
conducted under the name of or in connection with the Trademarks,
Registrations or Trademark Rights by such Grantor or any Affiliate,
licensee or subcontractor of such Grantor:
XI-3
<PAGE>
(i) all lists and ancillary documents that identify and
describe any of such Grantor's customers, or those of their
Affiliates, licensees or subcontractors, for products sold and
services delivered under or in connection with the Trademarks or
Trademark Rights, including without limitation any lists and
ancillary documents that contain a customer's name and address, the
name and address of any of its warehouses, branches or other places
of business, the identity of the Person or Persons having the
principal responsibility on a customer's behalf for ordering
products or services of the kind supplied by such Grantor, or the
credit, payment, discount, delivery or other sale terms applicable
to such customer, together with information setting forth the total
purchases, by brand, product, service, style, size or other
criteria, and the patterns of such purchases;
(ii) all product and service specification documents and
production and quality control manuals used in the manufacture or
delivery of products and services sold or delivered under or in
connection with the Trademarks or Trademark Rights;
(iii) all documents which reveal the name and address of any
source of supply, and any terms of purchase and delivery, for any
and all materials, components and services used in the production of
products and services sold or delivered under or in connection with
the Trademarks or Trademark Rights; and
(iv) all documents constituting or concerning the then current
or proposed advertising and promotion by such Grantor or its
Affiliates, licensees or subcontractors of products and services
sold or delivered under or in connection with the Trademarks or
Trademark Rights including, without limitation, all documents which
reveal the media used or to be used and the cost for all such
advertising conducted within the described period or planned for
such products and services; and
(c) all patents and patent applications and rights and interests in
patents and patent applications that are presently, or in the future may
be, owned, held (whether pursuant to a license or otherwise) or used by
such Grantor in whole or in part (including, without limitation, the
patents and patent applications listed in Schedule II annexed hereto, as
the same may be amended pursuant hereto from time to time), all rights
(but not obligations) corresponding thereto (including without limitation
the right (but not the obligation) to sue for past, present and future
infringements in the name of such Grantor or in the name of Secured
Party), and all re-issues, divisions, continuations, renewals, extensions
and continuations-in-part thereof (all of the foregoing being collectively
referred to as the "Patents"); it being understood that the rights and
interests assigned hereby shall include, without limitation, all rights
and interests pursuant to licensing or other contracts in favor of such
Grantor pertaining to any Patent presently or in the future owned, held or
used by third parties but, in the case of third parties which are not
Affiliates of such Grantor, only to the extent permitted by such licensing
XI-4
<PAGE>
or other contracts or otherwise permitted by applicable law and, if not so
permitted under any such contracts and applicable law, only with the
consent of such third parties;
(d) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that
at any time evidence or contain information relating to any of the
Collateral or are otherwise necessary or helpful in the collection thereof
or realization thereupon; and
(e) all proceeds, products, rents and profits (including without
limitation license royalties and proceeds of infringement suits) of or
from any and all of the foregoing Collateral and, to the extent not
otherwise included, all payments under insurance (whether or not Secured
Party is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of
the foregoing Collateral. For purposes of this Agreement, the term
"proceeds" includes whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether
such disposition is voluntary or involuntary.
SECTION 2. Security for Obligations.
This Agreement secures, and the Collateral assigned by each Grantor is
collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including without limitation the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured Obligations
with respect to such Grantor. "Secured Obligations" means
(a) with respect to Company, all obligations and liabilities of
every nature of Company now or hereafter existing under or arising out of
or in connection with the Credit Agreement and the other Loan Documents
and any Lender Interest Rate Agreement, and
(b) with respect to each Additional Grantor, all obligations and
liabilities of every nature of Grantors now or hereafter existing under or
arising out of or in connection with the Subsidiary Guaranty,
in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased,
XI-5
<PAGE>
created or incurred, and all or any portion of such obligations or liabilities
that are paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from Secured Party or any Lender or Interest
Rate Exchanger as a preference, fraudulent transfer or otherwise, and all
obligations of every nature of Grantors now or hereafter existing under this
Agreement.
SECTION 3. Grantors Remains Liable.
Anything contained herein to the contrary notwithstanding, (a) each
Grantor shall remain liable under any contracts and agreements included in the
Collateral, to the extent set forth therein, to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights hereunder shall
not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) Secured Party shall
not have any obligation or liability under any contracts and agreements included
in the Collateral by reason of this Agreement, nor shall Secured Party be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 4. Representations and Warranties.
Each Grantor represents and warrants as of the date it becomes a party
hereto as follows:
(a) Ownership of Collateral. Except as expressly permitted by the
Credit Agreement and for the security interest assigned and created by
this Agreement, such Grantor is the legal and beneficial owner of the
entire right, title and interest in and to (i) each Material Trademark
Property (as defined in subsection 4(b) of this Agreement), free and clear
of any Lien other than Liens of mechanics, materialmen, attorneys and
other similar liens imposed by laws in the ordinary course of business in
connection with the establishment, creation or application for
Registration of any Trademarks, Registrations or Trademark Rights for sums
not yet delinquent or being contested in good faith (such Liens being
referred to herein as "Permitted Trademark Liens"), and (ii) each Material
Patent (as defined in subsection 4(b) of this Agreement), free and clear
of any Lien other than Liens of mechanics, materialmen, attorneys and
other similar liens imposed by law in the ordinary course of business in
connection with the establishment, creation or application for any Patent
for sums not yet delinquent or being contested in good faith (such Liens
being referred to herein as "Permitted Patent Liens"). Except such as may
have been filed in favor of Secured Party relating to this Agreement, no
effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing or
recording office, including the United States Patent and Trademark Office.
XI-6
<PAGE>
(b) Description of Collateral. A true and complete list of all
Trademarks, Registrations and Trademark Rights owned or held (whether
pursuant to a license or otherwise) by such Grantor, in whole or in part,
as of the date such Grantor has entered into this Agreement is set forth
in Schedule I annexed hereto. Each Trademark, Registration or Trademark
Right designated on Schedule I annexed hereto as a Material Trademark
Property, and each other Trademark, Registration or Trademark Right
hereafter arising or otherwise owned or held by any Grantor that is
material to any of such Grantor's business or operations is referred to
herein as a "Material Trademark Property". A true and complete list of all
Patents owned or held (whether pursuant to a license or otherwise) by such
Grantor, in whole or in part, as of the date such Grantor has entered into
this Agreement is set forth in Schedule II annexed hereto. Each Patent
designated on Schedule II annexed hereto as a Material Patent and each
other Patent hereafter arising or otherwise owned or held by such Grantor
that is material to any of such Grantor's business or operations is
referred to herein as a "Material Patent".
(c) Validity and Enforceability of Collateral. To the knowledge of
Grantors, each Material Trademark Property and each Material Patent is
valid, subsisting and enforceable. As of the date each Grantor has entered
into this Agreement, such Grantor is not aware of any pending or
threatened claim by any third party that any Material Trademark Property
or any Material Patent is invalid or unenforceable or that the use of any
Material Trademark Property or any Material Patent violates the rights of
any third person or of any basis for any such claim, and there is no such
pending or threatened claim whether arising prior to or after the Closing
Date, that could reasonably be expected to have a Material Adverse Effect.
(d) Office Locations. The chief place of business, the chief
executive office and the office where such Grantor keeps its records
regarding the Collateral is at the locations set forth on Schedule III
annexed hereto.
(e) Names. No Grantor has in the past done, and no Grantor now does,
business under any other name (including any tradename or fictitious
business name) except under the names listed on Schedule IV annexed
hereto.
(f) Perfection. The security interests in the Collateral granted to
Secured Party for the ratable benefit of the Lenders and Interest Rate
Exchangers hereunder constitute valid security interests in the
Collateral. Upon the filing of UCC financing statements naming each
Grantor as "debtor", naming Secured Party as "secured party" and
describing the Collateral in the filing offices set forth on Schedule V
annexed hereto and the recording of this Agreement with the United Sates
Patent and Trademark Office, the security interests in the Collateral
granted to Secured Party for the ratable benefit of the Lenders and
Interest Rate Exchangers will, to the extent a security interest in the
Collateral may be perfected by filing UCC financing statements and
recording this Agreement, constitute valid and perfected security
interests therein prior to all other Liens (subject only to Permitted
Patent Liens and Permitted Trademark Liens).
XI-7
<PAGE>
SECTION 5. Further Assurances; New Trademarks, Registrations and Trademark
Rights; New Patents and Patent Applications; Certain Inspection
Rights.
(a) Each Grantor agrees that from time to time, at the expense of
Grantors, such Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security
interest assigned or purported to be assigned or granted hereby or to enable
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
each Grantor will: (i) at the request of Secured Party, take reasonable steps to
indicate that such Collateral is subject to the security interest granted
hereby, (ii) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Secured Party may request, in order to perfect and preserve
the security interests granted or purported to be granted hereby, (iii) use its
best efforts to obtain any necessary consents of third parties to the assignment
and perfection of a security interest to Secured Party with respect to any
Collateral, and (iv) at Secured Party's request, appear in and defend any action
or proceeding that may materially affect such Grantor's title to or Secured
Party's security interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of any Grantor. Each Grantor
agrees that a carbon, photographic or other reproduction of this Agreement or of
a financing statement signed by such Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all
jurisdictions.
(c) Each Grantor hereby authorizes Secured Party to modify this Agreement
without obtaining such Grantor's approval of or signature to such modification
by (i) amending Schedule I annexed hereto to include reference to any right,
title or interest in any existing Trademark, Registration or Trademark Right or
any Trademark, Registration or Trademark Right acquired or developed by any
Grantor after its execution hereof or to delete any reference to any right,
title or interest in any Trademark, Registration or Trademark Right in which no
Grantor has or claims any right, title or interest, or (ii) amending Schedule II
annexed hereto to include reference to any right, title or interest in any
existing Patent or any Patent acquired or developed by any Grantor after its
execution hereof or to delete any reference to any right, title or interest in
any Patent in which no Grantor has or claims any right, title or interest.
(d) Each Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
(e) If any Grantor shall obtain rights to any new Trademarks,
Registrations or Trademark Rights, or to any patentable inventions, or become
entitled to the benefit of any patent application or patent or any reissue,
division, continuation, renewal, extension, or continuation-in-part of any
Patent or any improvement in any Patent, the provisions of this
XI-8
<PAGE>
Agreement shall automatically apply thereto. Each Grantor shall promptly notify
Secured Party in writing of any of the foregoing rights or benefits, including,
without limitation, rights to any new Trademarks or Trademark Rights, acquired
by such Grantor after the date hereof and of any Registrations issued or
applications for Registration made after the date hereof, which notice shall
state whether such Trademark, Registration or Trademark Right constitutes a
Material Trademark Property or whether such Patent constitutes a Material
Patent. Within a reasonable time after the filing of an application for
Registration for any Trademark, or an application for any Patent the applicable
Grantor shall execute, deliver and record in all places where this Agreement is
recorded an appropriate Patent and Trademark Security Agreement, substantially
in the form hereof, with appropriate insertions, or an amendment to this
Agreement, in form and substance satisfactory to Secured Party, pursuant to
which such Grantor shall assign and grant a security interest to the extent of
its interest in such Registration or Patent as provided herein to Secured Party
unless so doing would, in the reasonable judgment of such Grantor, after due
inquiry, result in the grant of a Patent or Registration in the name of Secured
Party, in which event such Grantor shall give written notice to Secured Party as
soon as reasonably practicable and the filing shall instead be undertaken as
soon as practicable but in no case later than immediately following the grant of
such Patent or Registration.
(f) Each Grantor hereby grants to Secured Party and its employees,
representatives and agents the right to visit such Grantor's and any of its
Affiliate's or subcontractor's plants, facilitates and other places of business
that are utilized in connection with the manufacture, production, inspection,
storage or sale of products and services sold or delivered under any of the
Patents, Trademarks, Registrations or Trademark Rights (or which were so
utilized during the prior six month period), and to inspect the quality control
and all other records relating thereto upon reasonable notice to such Grantor
and as often as my be reasonably requested.
SECTION 6. Certain Covenants of Grantors.
Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the
Collateral;
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any change
in such Grantor's chief place of business or chief executive office or the
office where such Grantor keeps its records regarding the Collateral;
(d) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except
to the extent the validity thereof
XI-9
<PAGE>
is being contested in good faith; provided that such Grantor shall in any
event pay such taxes, assessments, charges, levies or claims not later
than five days prior to the date of any proposed sale under any judgement,
writ or warrant of attachment entered or filed against such Grantor or any
of the Collateral as a result of the failure to make such payment;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit
Agreement;
(f) except for Permitted Patent Liens and Permitted Trademark Liens
and the security interest assigned and created by this Agreement, not
create or suffer to exist any Lien upon or with respect to any of the
Collateral to secure the indebtedness or other obligations of any Person;
(g) diligently keep reasonable records respecting the Collateral
assigned by it hereunder and at all times keep at least one complete set
of its records concerning substantially all of the Patents, Trademarks,
Registrations and Trademark Rights at its chief executive office or
principal place of business;
(h) not permit the inclusion in any contract to which it becomes a
party of any provision that could or might in any way conflict with this
Agreement or impair or prevent the assignment and creation of a security
interest in any Grantor's rights and interests in any property included
within the definitions of any Patents, Trademarks, Registrations,
Trademark Rights and Associated Goodwill acquired;
(i) use proper statutory notice in connection with its use of each
Material Patent and Material Trademark Property to the extent reasonably
necessary for the protection of such Material Patent or Material Trademark
Property;
(j) use consistent standards of quality (which may be consistent
with such Grantor's past practices) in the manufacture, sale and delivery
of products and services sold or delivered under or in connection with the
Trademarks, Registrations and Trademark Rights, including, to the extent
applicable, in the operation and maintenance of its retail stores and
other merchandising operations; and
(k) upon any officer of such Grantor obtaining knowledge thereof,
promptly notify Secured Party in writing of any event that may materially
and adversely affect the value of the Collateral or any portion thereof,
the ability of any Grantor or Secured Party to dispose of the Collateral
or any portion thereof, or the rights and remedies of Secured Party in
relation thereto, including without limitation the levy of any legal
process against the Collateral or any portion thereof.
XI-10
<PAGE>
SECTION 7. Amounts Payable in Respect of the Collateral.
Except as otherwise provided in this Section 7, each Grantor shall
continue to collect, at its own expense, all amounts due or to become due to
Grantors in respect of the Collateral or any portion thereof. In connection with
such collections, each Grantor may take (and, at Secured Party's direction,
shall take) such action as such Grantor or Secured Party may deem necessary or
advisable to enforce collection of such amounts; provided, however, that Secured
Party shall have the right at any time, upon the occurrence and during the
continuation of an Event of Default or a Potential Event of Default and upon
written notice to such Grantor of its intention to do so, to notify the obligors
with respect to any such amounts of the existence of the security interest
assigned and created hereby, and to direct such obligors to make payment of all
such amounts directly to Secured Party, and, upon such notification and at the
expense of Grantors, to enforce collection of any such amounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as such Grantor might have done. After receipt by such Grantor
of the notice from Secured Party referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including checks and other instruments)
received by such Grantor in respect of amounts due to such Grantor in respect of
the Collateral or any portion thereof shall be received in trust for the benefit
of Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 14, and (ii) such Grantor shall not adjust,
settle or compromise the amount or payment of any such amount or release wholly
or partly any obligor with respect thereto or allow any credit or discount
thereon.
SECTION 8. Patent or Trademark Applications and Litigation.
(a) Each Grantor shall have the duty diligently to prosecute any trademark
application relating to any Material Trademark Property that is pending as of
the date such Grantor has entered into this Agreement, to make federal
application on any existing or future registerable but unregistered Material
Trademark Property (whenever it is commercially reasonable in the reasonable
judgement of such Grantor to do so), and to file and prosecute opposition and
cancellation proceedings, renew Registrations and do any and all acts which are
necessary or desirable to preserve and maintain all rights in all Material
Trademark Properties. Any expenses incurred in connection therewith shall be
borne solely by Grantors. No Grantor shall abandon any Material Trademark
Property unless it is commercially reasonable in the judgment of such Grantor to
do so.
(b) Each Grantor shall have the duty diligently to prosecute any patent
application relating to any Material Patent that is pending as of the date such
Grantor has entered into this Agreement and to do any and all acts which are
necessary or desirable to preserve and maintain all rights in all Material
Patents. Any expenses incurred in connection therewith shall be borne solely by
Grantors. Each Grantor shall not, as to any patentable invention or Patent that
constitutes or could constitute a Material Patent, abandon any pending patent
application or any Patent without the prior written consent of Secured Party.
XI-11
<PAGE>
(c) Except as provided in Section 8(e), each Grantor shall have the right
to commence and prosecute in its own name, as real party in interest, for its
own benefit and at its own expense, such suits, proceedings or other actions for
infringement, unfair competition, dilution or other damage as are in its
reasonable business judgment necessary to protect the Collateral. Secured Party
shall provide, at Grantor's expense, all reasonable and necessary cooperation in
connection with any such suit, proceeding or action including, without
limitation, joining as a necessary party.
(d) Each Grantor shall promptly, following its becoming aware thereof,
notify Secured Party of the institution of, or of any adverse determination in,
any proceeding (whether in the United States Patent and Trademark Office or any
federal, state, local or foreign court) described in subsection 8(a), 8(b) or
8(c) or regarding such Grantor's claim of ownership in or right to use any of
the Trademarks, Registrations or Trademark Rights, its right to register the
same, or its right to keep and maintain such Registration. Such Grantor shall
provide to Secured Party any information with respect thereto requested by
Secured Party.
(e) Anything contained herein to the contrary notwithstanding, upon the
occurrence and during the continuation of an Event of Default, Secured Party
shall have the right (but not the obligation) to bring suit, in the name of any
Grantor, Secured Party or otherwise, to enforce any Patent, Trademark,
Registration, Trademark Right and any license thereunder and to enforce its
rights hereunder in Associated Goodwill, in which event each Grantor shall, at
the request of Secured Party, do any and all lawful acts and execute any and all
documents required by Secured Party in aid of such enforcement and each Grantor
shall promptly, upon demand, reimburse and indemnify Secured Party as provided
in Section 15 in connection with the exercise of its rights under this Section
8. To the extent that Secured Party shall elect not to bring suit to enforce any
Patent, Trademark, Registration, Trademark Right or any license thereunder or to
enforce its rights hereunder in Associated Goodwill as provided in this Section
8(e), each Grantor agrees to use all reasonable measures, whether by action,
suit, proceeding or otherwise, to prevent the infringement of any of the
Patents, Trademarks, Registrations or Trademark Rights or of Grantors' or
Secured Party's rights in Associated Goodwill by others and for that purpose
agrees to diligently maintain any action, suit or proceeding against any Person
so infringing necessary to prevent such infringement.
SECTION 9. Non-Disturbance Agreements, etc.
If and to the extent that any Grantor is permitted to license the
Collateral, Secured Party shall enter into a non-disturbance agreement or other
similar arrangement, at Grantors' request and expense, with such Grantor and any
licensee of any Collateral permitted hereunder in form and substance
satisfactory to Secured Party pursuant to which (a) Secured Party shall agree
not to disturb or interfere with such licensee's rights under its license
agreement with such Grantor so long as such licensee is not in default
thereunder and (b) such licensee shall acknowledge and agree that the Collateral
licensed to it is subject to the security interest assigned and created in favor
of Secured Party and the other terms of this Agreement.
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SECTION 10. Secured Party Appointed Attorney-in-Fact.
Each Grantor hereby irrevocably appoints Secured Party as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) upon the occurrence and during the continuance of an Event of
Default, to endorse such Grantor's name on all applications, documents,
papers and instruments necessary for Secured Party in the use or
maintenance of the Collateral;
(b) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) upon the occurrence and during the continuance of an Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) upon the occurrence and during the continuance of an Event of
Default, to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and
the amounts necessary to discharge the same to be determined by Secured
Party in its sole discretion, any such payments made by Secured Party to
become obligations of such Grantor to Secured Party, due and payable
immediately without demand; and
(f) upon the occurrence and during the continuance of an Event of
Default, (i) to execute and deliver any of the assignments or documents
requested by Secured Party pursuant to Section 13(b), (ii) to grant or
issue an exclusive or non-exclusive license to the Collateral or any
portion thereof to any Person, and (iii) otherwise generally to sell,
transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though Secured Party
were the absolute owner thereof for all purposes, and to do, at Secured
Party's option and Grantors' expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect,
preserve or realize upon the Collateral and Secured Party's security
interest therein in order to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do.
XI-13
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SECTION 11. Secured Party May Perform.
If any Grantor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
such Grantor under Section 15.
SECTION 12. Standard of Care.
The powers conferred on Secured Party hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for monies actually received by
it hereunder, Secured Party shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Secured Party accords its own property of a similar nature.
SECTION 13. Remedies.
If any Event of Default shall have occurred and be continuing:
(a) Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "Code") (whether or not the Code applies to the affected
Collateral), and also may (i) require each Grantor to, and each Grantor
hereby agrees that it will at its expense and upon request of Secured
Party forthwith, assemble all or part of the Collateral as directed by
Secured Party and make it available to Secured Party at a place to be
designated by Secured Party that is reasonably convenient to both parties,
(ii) enter onto the property where any Collateral is located and take
possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store the Collateral or otherwise prepare
the Collateral for disposition in any manner to the extent Secured Party
deems appropriate, (iv) take possession of any Grantor's premises or place
custodians in exclusive control thereof, remain on such premises and use
the same for the purpose of taking any actions described in the preceding
clause (iii) and collecting any Secured Obligation, (v) exercise any and
all rights and remedies of Grantors under or in connection with the
contracts related to the Collateral or otherwise in respect of the
Collateral, including without limitation any and all rights of Grantors to
demand or otherwise require payment of any amount under, or performance of
any provision of, such contracts, and (vi) without notice except as
specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such
XI-14
<PAGE>
time or times and at such price or prices and upon such other terms as
Secured Party may deem commercially reasonable. Secured Party or any
Lender or Interest Rate Exchanger may be the purchaser of any or all of
the Collateral at any such sale and Secured Party, as agent for and
representative of Lenders and Interest Rate Exchangers (but not any Lender
or Lenders or Interest Rate Exchanger or Interest Rate Exchangers in its
or their respective individual capacities unless Requisite Obligees (as
defined in Section 17(a)) shall otherwise agree in writing), shall be
entitled, for the purpose of bidding and making settlement or payment of
the purchase price for all or any portion of the Collateral sold at any
such public sale, to use and apply any of the Secured Obligations as a
credit on account of the purchase price for any Collateral payable by
Secured Party at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it
now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Each Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten days'
notice to such Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification. Secured Party shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. Secured
Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Each Grantor hereby waives any claims against Secured Party
arising by reason of the fact that the price at which any Collateral may
have been sold at such a private sale was less than the price which might
have been obtained at a public sale, even if Secured Party accepts the
first offer received and does not offer such Collateral to more than one
offeree. If the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all the Secured Obligations, Grantors
shall be jointly and severally liable for the deficiency and the fees of
any attorneys employed by Secured Party to collect such deficiency.
(b) Upon written demand from Secured Party, each Grantor shall
execute and deliver to Secured Party an assignment or assignments of the
Patents, Trademarks, Registrations, Trademark Rights and the Associated
Goodwill and such other documents as are requested by Secured Party. Each
Grantor agrees that such an assignment and/or recording shall be applied
to reduce the Secured Obligations outstanding only to the extent that
Secured Party (or any Lender) receives cash proceeds in respect of the
sale of, or other realization upon, the Collateral.
(c) Within five Business Days after written notice from Secured
Party, each Grantor shall make available to Secured Party, to the extent
within each applicable Grantor's power and authority, such personnel in
such Grantor's employ on the date of such Event of Default as Secured
Party may reasonably designate, by name, title or job responsibility, to
permit such Grantor to continue, directly or indirectly, to produce,
advertise and sell the products and services sold or delivered by such
Grantor under or in connection with the Patents, Trademarks, Registrations
and Trademark Rights, such
XI-15
<PAGE>
persons to be available to perform their prior functions on Secured
Party's behalf and to be compensated by Secured Party at Grantors' expense
on a per diem, pro-rata basis consistent with the salary and benefit
structure applicable to each as of the date of such Event of Default.
SECTION 14. Application of Proceeds.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied as provided
in subsection 2.4D of the Credit Agreement.
SECTION 15. Indemnity and Expenses.
(a) Grantors jointly and severally agree to indemnify Secured Party, each
Lender and each Interest Rate Exchanger from and against any and all claims,
losses and liabilities in any way relating to, growing out of or resulting from
this Agreement and the transactions contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from Secured Party's or such Lender's or
Interest Rate Exchanger's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantors jointly and severally agree to pay to Secured Party upon
demand the amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that Secured
Party may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the failure
by any Grantor to perform or observe any of the provisions hereof.
(c) The obligations of Grantors in this Section 15 shall survive the
termination of this Agreement and the discharge of Grantors' other obligations
under this Agreement, the Interest Rate Agreements, the Credit Agreement and the
other Loan Documents.
SECTION 16. Continuing Security Interest; Transfer of Loans.
This Agreement shall assign and create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the payment
in full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Grantors and their respective successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the
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Credit Agreement, any Lender may assign or otherwise transfer any Loans held by
it to any other Person, and such other Person shall thereupon become vested with
all the benefits in respect thereof granted to Lenders herein or otherwise. Upon
the payment in full of all Secured Obligations, the cancellation or termination
of the Commitments and the cancellation or expiration of all outstanding Letters
of Credit, the security interest assigned and granted hereby shall terminate and
all rights to the Collateral shall revert to the applicable Grantors. Upon any
such termination Secured Party will, at Grantors' expense, execute and deliver
to Grantors such documents as Grantors shall reasonably request to evidence such
termination.
SECTION 17. Secured Party as Administrative Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
without limitation the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement; provided that Secured
Party shall exercise, or refrain from exercising, any remedies provided for in
Section 13 in accordance with the instructions of (i) Requisite Lenders or (ii)
after payment in full of all Obligations under the Credit Agreement and the
other Loan Documents, the holders of a majority of the aggregate notional amount
(or, with respect to any Lender Interest Rate Agreement that has been terminated
in accordance with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early termination payments then
due) under such Lender Interest Rate Agreement) under all Lender Interest Rate
Agreements (Requisite Lenders or, if applicable, such holders being referred to
herein as "Requisite Obligees"). In furtherance of the foregoing provisions of
this Section 17(a), each Interest Rate Exchanger, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to realize upon
any of the Collateral hereunder, it being understood and agreed by such Interest
Rate Exchanger that all rights and remedies hereunder may be exercised solely by
Secured Party for the benefit of Lenders and Interest Rate Exchangers in
accordance with the terms of this Section 17(a).
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and
XI-17
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other documents necessary or appropriate in connection with the performance of
the duties of the successor Secured Party under this Agreement, and (ii) execute
and deliver to such successor Secured Party such amendments to financing
statements, and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Secured Party of the security
interests created hereunder, whereupon such retiring or removed Secured Party
shall be discharged from its duties and obligations under this Agreement. After
any retiring or removed Administrative Agent's resignation or removal hereunder
as Secured Party, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was Secured Party hereunder.
SECTION 18. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by any Grantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Grantors;
provided that any amendment hereto pursuant to Section 21 or Section 5(c) shall
be effective upon execution by any Additional Grantor and Grantors hereby waive
any requirement of notice of or consent to any such amendment. Any such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 19. Notices.
Any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex (with received answerback), or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Secured Party shall not be effective until
received. For the purposes hereof, the address of each party hereto shall be
provided in subsection 10.8 of the Credit Agreement or as set forth under such
party's name on the signature pages hereof or such other address as shall be
designated by such party in a written notice delivered to the other parties
hereto.
SECTION 20. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
XI-18
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SECTION 21. Additional Grantors.
From time to time subsequent to the date hereof, Subsidiaries of Company
may become parties hereto as additional Grantors (each an "Additional Grantor")
by executing an acknowledgement to this Agreement substantially in the form of
Schedule VI annexed hereto. Upon delivery of any such acknowledgment to
Administrative Agent and Secured Party, notice of which is hereby waived by
Grantors, each such Additional Grantor shall be a Grantor and shall be as fully
a party hereto as if such Additional Grantor were an original signatory hereto.
Each Grantor expressly agrees that its obligations arising hereunder shall not
be affected or diminished by the addition or release of any other Grantor
hereunder, nor by any election of Administrative Agent not to cause any
Subsidiary of Company to become an Additional Grantor hereunder. This Agreement
shall be fully effective as to any Grantor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Grantor hereunder.
SECTION 22. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 23. Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 24. Governing Law; Terms; Rules of Construction.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES
THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform
Commercial Code in the State of New York are
XI-19
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used herein as therein defined. The rules of construction set forth in
subsection 1.3 of the Credit Agreement shall be applicable to this Agreement
mutatis mutandis.
SECTION 25. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY
OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 19; (IV) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION;
AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 25 RELATING TO JURISDICTION
AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE
UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
SECTION 26. Waiver of Jury Trial.
GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Each Grantor and Secured Party
acknowledge that this waiver is a material inducement for Grantors and Secured
Party to enter into a business relationship, that Grantors and Secured Party
have already relied on this waiver in entering into this Agreement and that each
will continue to rely on this waiver in their related future dealings. Each
Grantor and Secured Party further warrant and represent that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. THIS
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<PAGE>
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS
SECTION 26 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
SECTION 27. Counterparts.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, Grantors and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
MBW FOODS INC.
By: ________________________________
Name:
Title:
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THE CHASE MANHATTAN BANK,
as Secured Party
By: ________________________________
Name: Karen Sharf
Title: Vice President
XI-23
<PAGE>
SCHEDULE I
TO
PATENT AND TRADEMARK SECURITY AGREEMENT
Registered United States Trademark Registration Registration
Owner Description Number Date
- ---------- ----------------------- ------------ ------------
XI-I-1
<PAGE>
SCHEDULE II
TO
TO PATENT AND SECURITY AGREEMENT
PATENTS ISSUED
--------------
Patent No. Issue Date Invention
---------- ---------- ---------
PATENTS PENDING
---------------
Applicant's Date Application
Name Filed No. Invention Inventor
---- ----- ----------- --------- --------
XI-II-1
<PAGE>
SCHEDULE III
TO
PATENT AND TRADEMARK SECURITY AGREEMENT
Office Locations
----------------
Name of Grantor Office Location
- --------------- ---------------
XI-III-1
<PAGE>
SCHEDULE IV
TO
PATENT AND TRADEMARK SECURITY AGREEMENT
Other Names
-----------
Name of Grantor Other Names
- --------------- -----------
XI-IV-1
<PAGE>
SCHEDULE V
TO
PATENT AND TRADEMARK SECURITY AGREEMENT
Filing Offices
--------------
XI-V-1
<PAGE>
SCHEDULE VI
TO PATENT AND TRADEMARK SECURITY AGREEMENT
[FORM OF ACKNOWLEDGEMENT]
This Acknowledgement, dated _______________, [199_] [200_], is delivered
pursuant to Section 20 of the Patent and Trademark Security Agreement referred
to below. The undersigned hereby agrees that this Acknowledgement may be
attached to the Patent and Trademark Security Agreement dated December __, 1996,
by and among the Grantors referred to therein and The Chase Manhattan Bank, as
Secured Party (the "Patent and Trademark Security Agreement", capitalized terms
defined therein being used herein as therein defined), that the undersigned by
executing and delivering this Acknowledgement hereby becomes a Grantor under the
Patent and Trademark Security Agreement in accordance with Section 20 thereof
and agrees to be bound by all of the terms thereof, and that the Patents,
Registrations and Trademark Rights described on this Acknowledgement shall be
deemed to be part of the and shall become part of the Collateral and shall
secure all Secured Obligations.
[NAME OF ADDITIONAL GRANTOR]
By: ________________________________
Name:
Title:
Notice Address:
__________________________________
__________________________________
__________________________________
__________________________________
Trademark Registrations
-----------------------
Registered Trademark Registration Registration
Owner Description Number Date Jurisdiction
- ---------- ----------- ------------ ------------- ------------
Patents Issued
--------------
XI-VI-1
<PAGE>
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
Patents Pending
---------------
Applicant's Name Date Filed Application No. Invention Inventor
---------------- ---------- --------------- --------- --------
XI-VI-2
<PAGE>
EXHIBIT XII
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected [Title] of MBW Foods Inc., a Delaware
corporation ("Company");
(2) I have reviewed the terms of that certain Credit Agreement dated
as of December __, 1996, by and among Company, MBW Holdings Inc., a
Delaware corporation, the financial institutions listed therein as
Lenders, The Chase Manhattan Bank, as Administrative Agent, and Chase
Securities Inc., as Arranging Agent, as amended, restated, supplemented or
otherwise modified to the date hereof (said Credit Agreement, as so
amended, restated, supplemented or otherwise modified, being the "Credit
Agreement", the terms defined therein and not otherwise defined in this
Certificate (including Attachment No. 1 annexed hereto and made a part
hereof) being used in this Certificate as therein defined), and the terms
of the other Loan Documents, and I have made, or have caused to be made
under my supervision, a review in reasonable detail of the transactions
and condition of Company and its Subsidiaries during the accounting period
covered by the attached financial statements; and
(3) The examination described in paragraph (2) above did not
disclose, and I have no knowledge of, the existence of any condition or
event which constitutes an Event of Default or Potential Event of Default
during or at the end of the accounting period covered by the attached
financial statements or as of the date of this Certificate[, except as set
forth below].
[Set forth [below] [in a separate attachment to this Certificate] are all
exceptions to paragraph (3) above listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
Company has taken, is taking, or proposes to take with respect to each such
condition or event:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________]
XII-1
<PAGE>
The foregoing certifications, together with the computations set forth in
Attachment No. 1 annexed hereto and made a part hereof and the financial
statements delivered with this Certificate in support hereof, are made and
delivered this __________ day of _____________, [199_] [200_] pursuant to
subsection 6.1(iv) of the Credit Agreement.
MBW FOODS INC.
By:__________________________________
Name:
Title:
XII-2
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Compliance
Certificate dated as of ____________, [199_][200_] and pertains to the period
from ____________, [199_][200_] to ____________, [199_][200_]. Subsection
references herein relate to subsections of the Credit Agreement.
A. Indebtedness
1. Indebtedness under Capital Leases of the type
described in subsection 7.1(iii)(a): $______________
2. Indebtedness in respect of sale and lease-back
transactions expressly permitted under
subsection 7.8: $______________
3. Indebtedness secured by Liens permitted under
subsection 7.2A(iii): $______________
4. Indebtedness of the type described in subsection
7.1(iii) (A.1 + A.2 + A.3): $______________
5. Maximum Indebtedness permitted under subsection
7.1(iii): $5,000,000
6. Aggregate principal amount of Permitted Seller
Notes issued after the Closing Date: $______________
7. Maximum principal amount permitted under
subsection 7.1(ix): $10,000,000
8. Indebtedness of the type described in subsection
7.1(ix): $______________
9. Maximum Indebtedness permitted under subsection
7.1(viii): $5,000,000
B. Liens
1. Indebtedness secured by Liens described in
subsection 7.2A(iii): $______________
XII-A-1
<PAGE>
2. Original purchase price (or cost of acquisition,
construction or improvement) of assets financed
with Indebtedness secured by Liens permitted
under subsection 7.2A(iii): $______________
3. Percentage of purchase price (or cost of
acquisition, construction or improvement)
financed with Indebtedness secured by Liens
permitted under subsection 7.2A(iii)
((B.1)/(B.2)): ______________
4. Maximum percentage permitted to be financed
under subsection 7.2A(iii): 100%
5. Minimum percentage permitted to be financed
under subsection 7.2A(iii): 80%
6. Proceeds of Indebtedness permitted by subsection
7.1(iii)(b) incurred during period and secured
by Liens on assets: $______________
7. Fair market value of assets securing Liens
described in item B.6: $______________
8. Percentage of fair market value constituted by
proceeds of Indebtedness ((B.6)/(B.7)): ______________
9. Minimum percentage permitted under subsection
7.2A(iv): 80%
10. Indebtedness secured by Liens described in
subsection 7.2A(v): $______________
11. Maximum Indebtedness permitted to be secured by
Liens under subsection 7.2A(v): $2,500,000
C. Investments
1. Investments consisting of advances made during
Fiscal Year-to-date to Holdings to make payments
contemplated by subsection 7.5(vi)(a): $______________
2. Maximum permitted under subsection 7.5(vi)(a): $250,000
3. Outstanding amount of loans and advances to
employees
XII-A-2
<PAGE>
and directors of Holdings or Company of the type
described in subsection 7.3(vii): $______________
4. Maximum permitted under subsection 7.3(vii): $1,000,000
5. Investments of the type described in subsection
7.3(viii): $______________
6. Maximum permitted under subsection 7.3(viii): $2,500,000
D. Contingent Obligations
1. Net amount which Company would be liable to pay
to counterparties under Interest Rate Agreements
of the type described in subsection 7.4(iii) in
the event such Interest Rate Agreements were
terminated on the date hereof: $______________
2. Maximum amount permitted under subsection
7.4(iii): $2,500,000
3. Contingent Obligations under guarantees in the
ordinary course of business of the type
described in subsection 7.4(v): $______________
4. Maximum permitted under subsection 7.4(v): $250,000
5. Contingent Obligations of the type described in
subsection 7.4(vii): $______________
6. Maximum permitted under subsection 7.4(vii): $250,000
E. Restricted Junior Payments
1. Restricted Junior Payments made during Fiscal
Year-to-date of the type described in subsection
7.5(vi)(a): $______________
2. Aggregate advances made during Fiscal
Year-to-date to Holdings to make payments
contemplated by subsection 7.5(vi)(a) (E.1 +
C.1): $______________
3. Maximum permitted under subsection 7.5(vi)(a): $250,000
XII-A-3
<PAGE>
4. Restricted Junior Payments made after the
Closing Date of the type described in subsection
7.5(vii): $______________
5. Maximum permitted under subsection 7.5(vii): $2,000,000
F. Minimum Interest Coverage Ratio ([calculated on a pro
forma basis for Fiscal Quarters ending prior to the
Closing Date] for the four-Fiscal Quarter period
ending _____________, [199_] [200_])
1. Consolidated Net Income: $______________
2. Consolidated Interest Expense (to the extent
deducted in determining Consolidated Net
Income): $______________
3. Depreciation (to the extent deducted in
determining Consolidated Net Income): $______________
4. Depletion (to the extent deducted in determining
Consolidated Net Income): $______________
5. Amortization (to the extent deducted in
determining Consolidated Net Income): $______________
6. Federal, state, local and foreign income taxes
(to the extent deducted in determining
Consolidated Net Income): $______________
7. Transaction fees paid to the MDC Entities and/or
Dartford in connection with acquisitions made in
accordance with the terms of the MDC Advisory
Services Agreement and the Dartford Management
Agreement (to the extent deducted in determining
Consolidated Net Income): $______________
8. [PERIODS PRIOR TO FIRST ANNIVERSARY ONLY]
Non-recurring charges incurred with respect to
relocation of Company's assets (to the extent
deducted in determining Consolidated Net Income)
(if greater than $2,000,000, enter
"$2,000,000"): $______________
9. Other non-cash items reducing Consolidated Net
Income (to the extent deducted in determining
Consolidated Net Income): $______________
XII-A-4
<PAGE>
10. Extraordinary and unusual losses (to the extent
deducted in determining Consolidated Net
Income): $______________
11. Non-cash items increasing Consolidated Net
Income: $______________
12. Extraordinary and unusual gains: $______________
13. Consolidated EBITDA ((F.1 + F.2 + F.3 + F.4 +
F.5 + F.6 + F.7 + F.8 + F.9 + F.10) - (F.11 +
F.12)): $______________
14. Consolidated Cash Interest Expense: $______________
15. Interest Coverage Ratio ((F.13):(F.14)): _____:1.00
16. Minimum Interest Coverage Ratio required under
subsection 7.6A: _____:1.00
G. Maximum Leverage Ratio ([calculated on a pro forma
basis for Fiscal Quarters ending prior to the Closing
Date] as of _____________, [199_] [200_])
1. Consolidated Total Debt: $______________
2. Cash on hand of Company minus $3,500,000 (if
difference is equal to or less than zero, enter
"0"): $______________
3. Consolidated EBITDA for the four-Fiscal Quarter
period ended on the above date (F.13 above): $______________
4. Leverage Ratio ((G.1 - G.2)/G.3): $______________
5. Maximum Leverage Ratio permitted under
subsection 7.6B: _____:1.00
H. Minimum Fixed Charge Coverage Ratio ([calculated on a
pro forma basis for Fiscal Quarters ending prior to
the Closing Date] for the four-Fiscal Quarter period
ending _____________, [199_] [200_])
1. Consolidated EBITDA (F.13 above): $______________
2. Scheduled amortization of Indebtedness of
Holdings and its Subsidiaries (as reduced by
prepayments previously made),
XII-A-5
<PAGE>
and discount or premium relating to any such
Indebtedness, whether expensed or capitalized: $______________
3. Consolidated Cash Interest Expense (F.14 above): $______________
4. Consolidated Capital Expenditures: $______________
5. Taxes actually paid in cash by Holdings and its
Subsidiaries: $______________
6. Consolidated Fixed Charges (H.2 + H.3 + H.4 +
H.5): $______________
7. Fixed Charge Coverage Ratio ((H.1):(H.6)): _____:1.00
8. Minimum Fixed Charge Coverage Ratio required
under subsection 7.6C: _____:1.00
I. Consolidated Capital Expenditures (for the Fiscal Year
ending in December [199_] [200_] [to date])
1. Consolidated Capital Expenditures: $______________
2. Maximum Consolidated Capital Expenditures Amount
permitted under subsection 7.6D (as adjusted
(calculations and supporting information therefor
attached hereto) in accordance with the provisos to
such subsection): $______________
J. Fundamental Changes
1. Aggregate fair market value of assets sold in
Asset Sales described in subsection 7.7(vi)
during the period commencing _________________,
[199_] [200_]: $______________
2. Consolidated EBITDA (F.13 above): $______________
3. Maximum Asset Sales permitted under subsection
7.7(vi) (.10 x (J.2)): $______________
4. Consideration received in Asset Sales described
in subsection 7.7(vi) during the period
commencing _________________, [199_] [200_]: $______________
XII-A-6
<PAGE>
5. Cash consideration received in Asset Sales
described in subsection 7.7(vi) during the
period commencing _________________, [199_]
[200_]: $______________
6. Minimum cash consideration permitted under
subsection 7.7(vi) (.80 x (J.4)): $______________
[K. Consolidated Excess Cash Flow (for the Fiscal Year ending
December 31, [199_] [200_]) [ONLY USE FOR FISCAL YEARS
[1998] [1999] AND THEREAFTER]
1. Consolidated EBITDA (F.13 above): $______________
2. Extraordinary and unusual cash gains (to the
extent included in item F.12 above): $______________
3. Consolidated Working Capital Adjustment: $______________
4. Voluntary and scheduled cash repayments of
Consolidated Total Debt (excluding repayments of
Revolving Loans except to the extent the
Revolving Loan Commitments are permanently
reduced): $______________
5. Consolidated Capital Expenditures (net of any
proceeds of related financings with respect to
such expenditures): $______________
6. Expenditures made in connection with any
Permitted Acquisition pursuant to subsection
7.7(vii) (net of any proceeds of related
financings with respect to such acquisitions),
including without limitation transaction fees
paid in cash to the MDC Entities and/or Dartford
in connection with such acquisitions in
accordance with the terms of the MDC Advisory
Services Agreement and the Dartford Management
Agreement: $______________
7. Consolidated Interest Expense (F.14 above): $______________
8. Extraordinary and unusual cash losses (to the
extent included in item F.10 above): $______________
XII-A-7
<PAGE>
9. Provision for current taxes based on income of
Holdings and its Subsidiaries and payable in
cash with respect to such period: $______________
10. Consolidated Excess Cash Flow ((K.1 + K.2 + K.3)
- (K.4 + K.5 + K.6 + K.7 + K.8 + K.9)): $______________
11. Portion of Consolidated Excess Cash Flow
required to be prepaid (.50 x (K.10)): $_____________]
XII-A-8
<PAGE>
EXHIBIT XIII
[FORM OF OPINION OF WHITE & CASE]
[Closing Date]
The Chase Manhattan Bank,
as Administrative Agent under the Credit
Agreement referred to below, and
Chase Securities Inc.,
as Arranging Agent under the Credit Agreement
referred to below
270 Park Avenue
New York, New York 10025
and
The Lenders Listed on
Schedule A Annexed Hereto
Re: Credit Agreement dated as of December __, 1996, by and among
MBW Foods Inc., MBW Holdings Inc., the financial institutions
listed therein as Lenders, The Chase Manhattan Bank, as
Administrative Agent, and Chase Securities Inc., as Arranging
Agent
Ladies and Gentlemen:
We have acted as counsel to (i) MBW Foods Inc., a Delaware
corporation ("Company"), in connection with that certain Credit Agreement dated
as of December __, 1996 (the "Credit Agreement"; capitalized terms used herein
without definition have the same meanings as in the Credit Agreement), by and
among Company, the financial institutions listed therein as Lenders, The Chase
Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging
Agent, (ii) MBW Holdings Inc., a Delaware corporation ("Holdings"), in
connection with the Credit Agreement and that certain Holdings Guaranty dated as
of December __, 1996 (the "Holdings Guaranty"), in favor of and for the benefit
of Administrative Agent as Guarantied Party thereunder (Company and Holdings are
collectively referred to herein as "Loan Parties" and each individually as a
"Loan Party"), and (iii) Loan Parties in connection with documents executed in
connection with the Credit Agreement and the Holdings Guaranty. This opinion is
rendered to you in compliance with subsection 4.1O of the Credit Agreement.
In our capacity as such counsel, we have examined originals, or
copies identified to our satisfaction as being true copies, of such records,
documents or other instruments as in
XIII-1
<PAGE>
our judgment are necessary or appropriate to enable us to render the opinions
expressed below. These records, documents and instruments included the
following:
(a) The Certificate of Incorporation of each of the Loan Parties, in
each case as amended to date;
(b) The Bylaws of each of the Loan Parties, in each case as amended
to date;
(c) All records of proceedings and actions of the respective Boards
of Directors of each of the Loan Parties relating to the Credit Agreement
and the transactions contemplated thereby;
(d) The Credit Agreement;
(e) The Term Notes, the Revolving Notes and the Swing Line Note
delivered on the Closing Date (collectively, the "Notes");
(f) The Collateral Account Agreement;
(g) The Holdings Guaranty;
(h) The Pledge Agreement;
(i) The Security Agreement;
(j) The Patent and Trademark Security Agreement;
(k) that certain Grant of Trademark Security Interest dated as of
December __, 1996 executed by Company;
(l) that certain Grant of Patent Security Interest dated as of
December __, 1996 executed by Company;
(m) The Subordinated Bridge Notes, the Subordinated Bridge Loan
Agreement and the other Subordinated Bridge Loan Documents; [and]
[(n) the Asset Purchase Agreement; and]
([o][p]) Copies of Uniform Commercial Code financing statements (the
"Financing Statements") to be filed in the filing offices listed for
Company and Holdings on Schedule 1 annexed hereto (the "Filing Offices")
in the States indicated therein (the "Relevant States").
The documents referenced in items (d) through (l) above are
collectively referred to herein as the "Loan Documents".
XIII-2
<PAGE>
[NOTE: OPINIONS IN RESPECT OF THE SUBORDINATED BRIDGE
LOANS AND THE TRANSITION AGREEMENTS MAY BE REQUIRED]
In connection with this opinion, we have also examined such other
agreements, documents, certificates and other statements of government officials
and corporate officers of the Loan Parties and such other papers as we have
deemed necessary as a basis for such opinions. In all such examinations, we have
assumed the genuineness of all signatures on original and certified documents
(other than the signatures of officers of the Loan Parties on the Loan Documents
and the Financing Statements), and the conformity to original or certified
documents of all documents submitted to us as conformed or photostatic copies.
On the basis of the foregoing, and in reliance thereon, and subject
to the limitations, qualifications and exceptions set forth below, we are of the
opinion that:
12. Each Loan Party is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own and operate its properties and to carry on
its business as now conducted.
13. Each Loan Party has all requisite corporate power and authority
to execute and deliver the Loan Documents to which it is a party and the
Financing Statements in which it is named as Debtor and to perform the Loan
Documents to which it is a party and to carry out the transactions contemplated
thereby.
14. The execution and delivery of each of the Loan Documents and the
Financing Statements and the performance of each of the Loan Documents have been
duly authorized by all necessary corporate action on the part of each Loan Party
which is a party thereto or which is named therein as a Debtor. Each Loan
Document and each Financing Statement has been duly executed and delivered by
each Loan Party which is a party thereto or which is named therein as a Debtor,
and each Loan Document constitutes the valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its terms, except
as the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally or by general equitable principles (regardless of whether the
issue of enforceability is considered in a proceeding in equity or at law).
15. None of the execution or delivery by the Loan Parties of the
Loan Documents to which it is a party or the Financing Statements in which it is
named as a debtor nor the performance by the Loan Parties of the Loan Documents
nor the consummation of the transactions contemplated thereby will (i) conflict
with, result in a breach or violation of, or constitute a default under, any of
the terms, conditions or provisions of (a) the Certificate of Incorporation or
Bylaws of any Loan Party, (b) any term of any material agreement or instrument
known to us to which any of the Loan Parties is a party or by which any of their
respective properties or assets are bound, or (c) any New York State or Federal
or Delaware corporation law, statute, rule or regulation (including, without
limitation, Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System) or any order, writ, judgment, injunction or decree of any New
York State or Federal court or other adjudicative body or
XIII-3
<PAGE>
arbitrator to which Company or any Loan Party or any of their respective assets
or properties is subject and of which we are aware, or (ii) result in the
creation of any Lien upon any of the properties or assets of any Loan Party
under any agreement or order referred to in clause (b) or (c) above (other than
Liens created pursuant to the Loan Documents and the Financing Statements).
16. The authorized and outstanding capital stock of each Loan Party
is as set forth on Schedule B annexed hereto. Loan Parties indicated on Schedule
I annexed to the Pledge Agreement are the record owners of the Pledged Shares
(as defined in the Pledge Agreement). Upon delivery to Administrative Agent
pursuant to the Pledge Agreement of the certificates representing the Pledged
Shares, and assuming (i) continued possession by Administrative Agent (or an
agent of Administrative Agent) of the certificates representing the Pledged
Shares in the State or New York, (ii) that Administrative Agent has taken
delivery of the certificates representing the Pledged Shares in good faith and
(iii) that neither Administrative Agent nor any Lender has notice, prior to or
on the date of delivery of such Pledged Shares, of an adverse claim within the
meaning of the Uniform Commercial Code (the "UCC") as in effect on the date
hereof in the State of New York (the "New York UCC"), the execution of the
Pledge Agreement by the Loan Parties will create a perfected security interest
in favor of Administrative Agent in the Pledged Shares, which security interest
has priority over all other liens except as follows:
(a) we express no opinion as to any Loan Party's right in or
title to the Pledged Shares;
(b) priority may be subject to claims or liens in favor of the
United States, of any State of the United States or any agency,
instrumentality or political subdivision thereof, including, without
limitation, (i) liens for the payment of Federal, state or local
taxes which are given priority by operation of law, (ii) liens under
Title IV of the Employee Retirement Income Security Act of 1974, as
amended, and (iii) claims arising under the Federal Priority Statute
(31 U.S.C. ss. 3713);
(c) we express no opinion as to the security interest of
Administrative Agent in proceeds of or distributions on the Pledged
Shares; and
(d) we express no opinion as to the priority of the security
interests in the Pledged Shares as against any lien creditor (as
such term in defined in Article 9 of the New York UCC) or any buyer,
to the extent that the security interests therein purport to secure
any advances or other extensions of credit other than obligations
incurred pursuant to existing commitments under the Credit
Agreement.
17. Upon delivery to Administrative Agent pursuant to the Pledge
Agreement of the instruments representing the Pledged Debt (as defined in the
Pledge Agreement), and assuming (i) continued possession by Administrative Agent
(or an agent of Administrative Agent)
XIII-4
<PAGE>
of the instruments representing the Pledged Debt in the State or New York, (ii)
that Administrative Agent has taken delivery of the instruments representing the
Pledged Debt in good faith and (iii) that neither Administrative Agent nor any
Lender has notice, prior to or on the date of delivery of such Pledged Debt, of
an adverse claim within the meaning of the New York UCC, the execution of the
Pledge Agreement by the Loan Parties will create a perfected security interest
in favor of Administrative Agent in the Pledged Debt, which security interest
has priority over all other liens except as follows:
(a) we express no opinion as to any Loan Party's right in or
title to the Pledged Debt;
(b) priority may be subject to claims or liens in favor of the
United States, of any State of the United States or any agency,
instrumentality or political subdivision thereof, including, without
limitation, (i) liens for the payment of Federal, state or local
taxes which are given priority by operation of law, (ii) liens under
Title IV of the Employee Retirement Income Security Act of 1974, as
amended, and (iii) claims arising under the Federal Priority Statute
(31 U.S.C. ss. 3713);
(c) we express no opinion as to the security interest of the
Administrative Agent in proceeds of or distributions on the
Pledged Debt; and
(d) we express no opinion as to the priority of the security
interests in the Pledged Debt as against any lien creditor (as such
term in defined in Article 9 of the New York UCC) or any buyer, to
the extent that the security interests therein purport to secure any
advances or other extensions of credit other than obligations
incurred pursuant to existing commitments under the Credit
Agreement.
18. The Security Agreement creates a valid lien and security
interest in favor of Administrative Agent in the Collateral (as defined in the
Security Agreement) purported to be covered thereby. The Financing Statements
are in appropriate form and upon the filing of such Financing Statements in the
applicable Filing Offices, assuming that the representations made by each of the
Loan Parties in the Security Agreement with respect to the locations of their
respective Collateral (as defined in the Security Agreement) are true and
correct, all filings, registrations and recordings necessary or appropriate to
create, maintain, preserve, protect and perfect the security interests granted
by each Loan Party to Administrative Agent under the Security Agreement in
respect of all Collateral (as defined in the Security Agreement) will have been
accomplished in accordance with the UCC as in effect on the date hereof in the
respective Relevant States and the security interests granted by the Loan
Parties to Administrative Agent pursuant to the Security Agreement in and to
such Collateral will constitute perfected security interests therein to the
extent that such Collateral consists of the type of property in which a security
interest may be perfected by filing a financing statement under the UCC as in
effect on the date hereof in the Relevant States except as follows:
XIII-5
<PAGE>
(a) we express no opinion as to the security interest of the
Administrative Agent in proceeds of or distributions on the
Collateral;
(b) in the case of Collateral referred to in this paragraph 9,
Article 9 of the UCC requires the filing of continuation statements
within the period of six months prior to the expiration of five
years from the date of the original filings, in order to maintain
the effectiveness of the filings referred to in this paragraph; and
(c) in the case of property which becomes Collateral after the
date hereof, section 552 of the United States Bankruptcy Code limits
the extent to which priority 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.
19. Upon the filing of the Financing Statements relating to the
Collateral under the Patent and Trademark Security Agreement in the office of
the Secretary of State of the State of ______________ and the recording of the
Grant of Trademark Security Interest in the trademark records of the United
States Patent and Trademark Office (the "PTO") and the Grant of Patent Security
Interest in the patent records of the PTO, we are aware of no additional actions
to be taken in order to create and perfect security interests in favor of
Administrative Agent in the Trademarks (as defined in the Patent and Trademark
Security Agreement) described on Schedule I annexed to the Patent and Trademark
Security Agreement or the Patents (as defined in the Patent and Trademark
Security Agreement) described in Schedule II to the Patent and Trademark
Security Agreement. However, we express no opinion as to the sufficiency of the
foregoing actions to create and perfect security interests in such Patents and
Trademarks to the extent federal law is determined to be applicable to the
creation and perfection of such security interests. In addition, we express no
opinion as to whether federal law or the laws of the State of _____________
govern the validity or perfection of such security interests.
20. Upon receipt by Administrative Agent of any cash representing
Collateral under the Collateral Account Agreement and assuming Administrative
Agent maintains dominion and control of the Collateral Account in the manner set
forth in the Collateral Account Agreement, the Collateral Account Agreement will
create in favor of Administrative Agent a perfected security interest in the
Collateral Account.
21. The choice of law of the State of New York as the governing law
of each of the Loan Documents is a valid choice of law.
22. None of the Loan Parties 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 a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or of a "subsidiary company"
XIII-6
<PAGE>
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
23. All Obligations under the Credit Agreement are within the
definition of "Designated Senior Indebtedness" contained in the subordination
provisions of the Subordinated Bridge Loan Documents.
24. No law of the State of New York regulating the maximum rate of
interest which may be charged, taken or received applies to the Loans.
To the extent that the obligations of any of the Loan Parties may be
dependent upon such matters, we have assumed for purposes of this opinion, other
than with respect to the Loan Parties, that each additional party to the
agreements and contracts referred to herein is duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; that each such other party has the requisite corporate or other
organizational power and authority to perform its obligations under such
agreements and contracts, as applicable; and that such agreements and contracts
have been duly authorized, executed and delivered by, and each of them
constitutes the legally valid and binding obligation of, such other parties, as
applicable, enforceable against such other parties in accordance with their
respective terms. Except as expressly covered in this opinion, we are not
expressing any opinion as to the effect of compliance by any Lender with any
state or federal laws or regulations applicable to the transactions because of
the nature of any of its businesses.
The opinions contained in paragraphs 3, 6, 7, 8 and 9 are subject to
the following additional limitations, qualifications, exceptions and
assumptions:
(a) We express no opinion as to the enforceability of any
indemnification or contribution provisions in the Loan Documents to
the extent the rights to indemnification or contribution provided
for therein are violative of any law, rule or regulation (including
any securities law, rule or regulation) or public policy relating
thereto.
(b) There may be limitations upon the exercise of remedial or
procedural provisions contained in the Loan Documents, but such
limitations do not make the rights and remedies provided in or
contemplated by the Loan Documents inadequate for the practical
realization of the rights and remedies afforded thereby.
(c) We express no opinion as the applicability to the Loan
Documents of Section 548 of the Bankruptcy Code (11 U.S.C. Section
548) or Article 10 of the New York Debtor and Creditor Law relating
to fraudulent transfers and obligations.
XIII-7
<PAGE>
(d) We wish to point out that the law of the State of New York
generally imposes an obligation of good faith and reasonableness in
the performance and enforcement of contracts.
A copy of this opinion letter may be delivered by any of you to any
Eligible Assignee in connection with and at the time of any assignment and
delegation by any of you as a Lender to such Eligible Assignee of all or a
portion of your Loans and Commitments in accordance with the provisions of the
Credit Agreement, and such Eligible Assignee may rely on the opinions expressed
above as if this opinion letter were addressed and delivered to such Eligible
Assignee on the date hereof.
This opinion is rendered only to Arranging Agent, Administrative Agent and
Lenders and is solely for their benefit in connection with the above
transactions. This opinion may not be relied upon by Arranging Agent,
Administrative Agent or Lenders for any other purpose, or quoted to or relied
upon by any other person, firm or corporation for any purpose without our prior
written consent.
The opinions expressed above are limited to questions arising under the
Federal law of the United States, the General Corporation Law of the State of
Delaware and the law of the State of New York, except that our opinions set
forth in paragraph 7 above (to the extent governed by a law other than that of
the Federal law of the United States, the General Corporation Law of the State
of Delaware or the law of the State of New York) are based upon our review of
generally available compilations of law relating to such matters.
Very truly yours,
XIII-8
<PAGE>
SCHEDULE A
The Chase Manhattan Bank
[INSERT NAMES OF ADDITIONAL LENDERS]
XIII-A-1
<PAGE>
SCHEDULE B
[CAPITALIZATION OF LOAN PARTIES]
XIII-B-1
<PAGE>
SCHEDULE 1
FILING OFFICES AND RELEVANT STATES
XIII-Sched. 1-1
<PAGE>
EXHIBIT XIV
[FORM OF OPINION OF O'MELVENY & MYERS LLP]
[Date]
1 9 9 6
148,999-056
[doc ID]
The Chase Manhattan Bank,
as Administrative Agent
Chase Securities Inc.,
as Arranging Agent
270 Park Avenue
New York, New York 10017
and
The Lenders Party to the Credit
Agreement Referenced Below
Re: Loans to MBW Foods Inc.
Ladies and Gentlemen:
We have acted as counsel to The Chase Manhattan Bank, as Administrative
Agent (in such capacity, the "Administrative Agent"), and Chase Securities Inc.,
as Arranging Agent (in such capacity, the "Arranging Agent"), in connection with
the preparation and delivery of a Credit Agreement dated as of December __, 1996
(the "Credit Agreement") among MBW Foods Inc., a Delaware corporation
("Company"), MBW Holdings Inc., a Delaware corporation, the financial
institutions listed therein as lenders, Arranging Agent and Administrative Agent
(collectively, Administrative Agent and Arranging Agent are "Agents") and in
connection with the preparation and delivery of certain related documents.
We have participated in various conferences with representatives of
Company and Agents and conferences and telephone calls with White & Case and
Richards & O'Neil, LLP, counsel to Loan Parties, during which the Credit
Agreement and related matters have been discussed, and we have also participated
in the meeting held on the date hereof (the "Closing") incident to the funding
of the initial loans made under the Credit Agreement. We have reviewed the forms
of the Credit Agreement and the exhibits thereto, including the forms of the
promissory notes annexed thereto (the "Notes"), and the opinions of White &
XIV-2
<PAGE>
The Chase Manhattan Bank
Chase Securities Inc.
[date]
Page 3
Case and Richards & O'Neil, LLP (collectively, the "Opinions"), and the
officers' certificates and other documents delivered at the Closing. We have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals or copies and the due authority of all persons
executing the same, and we have relied as to factual matters on the documents
that we have reviewed.
Although we have not independently considered all of the matters covered
by the Opinions to the extent necessary to enable us to express the conclusions
therein stated, we believe that the Credit Agreement and the exhibits thereto
are in substantially acceptable legal form and that the Opinions and the
officers' certificates and other documents delivered in connection with the
execution and delivery of, and as conditions to the making of the initial loans
under, the Credit Agreement and the Notes are substantially responsive to the
requirements of the Credit Agreement.
Respectfully submitted,
XIV-3
<PAGE>
EXHIBIT XV
[FORM OF ASSIGNMENT AGREEMENT]
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "Agreement") is entered into by and
between the parties designated as Assignor ("Assignor") and Assignee
("Assignee") above the signatures of such parties on the Schedule of Terms
attached hereto and hereby made an integral part hereof (the "Schedule of
Terms") and relates to that certain Credit Agreement described in the Schedule
of Terms (said Credit Agreement, as amended, restated, supplemented or otherwise
modified to the date hereof and as it may hereafter be amended, restated,
supplemented or otherwise modified from time to time, being the "Credit
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined).
IN CONSIDERATION of the agreements, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. Assignment and Assumption.
(a) Effective upon the Settlement Date specified in Item 4 of the Schedule
of Terms (the "Settlement Date"), Assignor hereby sells and assigns to Assignee,
without recourse, representation or warranty (except as expressly set forth
herein), and Assignee hereby purchases and assumes from Assignor, that
percentage interest in all of Assignor's rights and obligations as a Lender
arising under the Credit Agreement and the other Loan Documents with respect to
Assignor's Commitments and outstanding Loans, if any, which represents, as of
the Settlement Date, the percentage interest specified in Item 3 of the Schedule
of Terms of all rights and obligations of Lenders arising under the Credit
Agreement and the other Loan Documents with respect to the Commitments and any
outstanding Loans (the "Assigned Share"). Without limiting the generality of the
foregoing, the parties hereto hereby expressly acknowledge and agree that any
assignment of all or any portion of Assignor's rights and obligations relating
to Assignor's Revolving Loan Commitment shall include (i) in the event Assignor
is an Issuing Lender with respect to any outstanding Letters of Credit (any such
Letters of Credit being "Assignor Letters of Credit"), the sale to Assignee of a
participation in the Assignor Letters of Credit and any drawings thereunder as
contemplated by subsection 3.1C of the Credit Agreement and (ii) the sale to
Assignee of a ratable portion of any participations previously purchased by
Assignor pursuant to said subsection 3.1C with respect to any Letters of Credit
other than the Assignor Letters of Credit.
XV-1
<PAGE>
(b) In consideration of the assignment described above, Assignee hereby
agrees to pay to Assignor, on the Settlement Date, the principal amount of any
outstanding Loans included within the Assigned Share, such payment to be made by
wire transfer of immediately available funds in accordance with the applicable
payment instructions set forth in Item 5 of the Schedule of Terms.
(c) Assignor hereby represents and warrants that Item 3 of the Schedule of
Terms correctly sets forth the amount of the Commitments, the outstanding Term
Loan and the Pro Rata Share corresponding to the Assigned Share.
(d) Assignor and Assignee hereby agree that, upon giving effect to the
assignment and assumption described above, (i) Assignee shall be a party to the
Credit Agreement and shall have all of the rights and obligations under the Loan
Documents, and shall be deemed to have made all of the covenants and agreements
contained in the Loan Documents, arising out of or otherwise related to the
Assigned Share, and (ii) Assignor shall be absolutely released from any of such
obligations, covenants and agreements assumed or made by Assignee in respect of
the Assigned Share. Assignee hereby acknowledges and agrees that the agreement
set forth in this Section 1(d) is expressly made for the benefit of Company,
Agents, Assignor and the other Lenders and their respective successors and
permitted assigns.
(e) Assignor and Assignee hereby acknowledge and confirm their
understanding and intent that (i) this Agreement shall effect the assignment by
Assignor and the assumption by Assignee of Assignor's rights and obligations
with respect to the Assigned Share, (ii) any other assignments by Assignor of a
portion of its rights and obligations with respect to the Commitments and any
outstanding Loans shall have no effect on the Commitments, the outstanding Term
Loan and the Pro Rata Share corresponding to the Assigned Share as set forth in
Item 3 of the Schedule of Terms or on the interest of Assignee in any
outstanding Revolving Loans corresponding thereto, and (iii) from and after the
Settlement Date, Administrative Agent shall make all payments under the Credit
Agreement in respect of the Assigned Share (including without limitation all
payments of principal and accrued but unpaid interest, commitment fees and
letter of credit fees with respect thereto) (1) in the case of any such interest
and fees that shall have accrued prior to the Settlement Date, to Assignor, and
(2) in all other cases, to Assignee; provided that Assignor and Assignee shall
make payments directly to each other to the extent necessary to effect any
appropriate adjustments in any amounts distributed to Assignor and/or Assignee
by Administrative Agent under the Loan Documents in respect of the Assigned
Share in the event that, for any reason whatsoever, the payment of consideration
contemplated by Section 1(b) occurs on a date other than the Settlement Date.
SECTION 2. Certain Representations, Warranties and Agreements.
(a) Assignor represents and warrants that it is the legal and beneficial
owner of the Assigned Share, free and clear of any adverse claim.
XV-2
<PAGE>
(b) Assignor shall not be responsible to Assignee for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of any of the Loan Documents or for any representations, warranties,
recitals or statements made therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Assignor to Assignee or by or on behalf
Company or of any other Loan Party to Assignor or Assignee in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Assignor be required to ascertain
or inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or the use of the Letters of Credit or
as to the existence or possible existence of any Event of Default or Potential
Event of Default.
(c) Assignee represents and warrants that it is an Eligible Assignee; that
it has experience and expertise in the making or purchasing of loans such as the
Loans; that it has acquired the Assigned Share for its own account in the
ordinary course of its business and without a view to distribution of the Loans
within the meaning of the Securities Act or the Exchange Act or other federal
securities laws (it being understood that, subject to the provisions of
subsection 10.1 of the Credit Agreement, the disposition of the Assigned Share
or any interests therein shall at all times remain within its exclusive
control); and that it has received, reviewed and approved a copy of the Credit
Agreement (including all Exhibits and Schedules thereto).
(d) Assignee represents and warrants that it has received from Assignor
such financial information regarding Company and its Subsidiaries as is
available to Assignor and as Assignee has requested, that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the assignment evidenced by this Agreement,
and that it has made and shall continue to make its own appraisal of the
creditworthiness of Company and its Subsidiaries. Assignor shall have no duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Assignee or to provide Assignee
with any other credit or other information with respect thereto, whether coming
into its possession before the making of the initial Loans or at any time or
times thereafter, and Assignor shall not have any responsibility with respect to
the accuracy of or the completeness of any information provided to Assignee.
(e) Each party to this Agreement represents and warrants to the other
party hereto that it has full power and authority to enter into this Agreement
and to perform its obligations hereunder in accordance with the provisions
hereof, that this Agreement has been duly authorized, executed and delivered by
such party and that this Agreement constitutes a legal, valid and binding
obligation of such party, enforceable against such party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity.
XV-3
<PAGE>
SECTION 3. Miscellaneous.
(a) Each of Assignor and Assignee hereby agrees from time to time, upon
request of the other such party hereto, to take such additional actions and to
execute and deliver such additional documents and instruments as such other
party may reasonably request to effect the transactions contemplated by, and to
carry out the intent of, this Agreement.
(b) Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except by an instrument in writing signed by the party
(including, if applicable, any party required to evidence its consent to or
acceptance of this Agreement) against whom enforcement of such change, waiver,
discharge or termination is sought.
(c) Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed. For the purposes hereof, the notice address of each of
Assignor and Assignee shall be as set forth on the Schedule of Terms or, as to
either such party, such other address as shall be designated by such party in a
written notice delivered to the other such party. In addition, the notice
address of Assignee set forth on the Schedule of Terms shall serve as the
initial notice address of Assignee for purposes of subsection 10.8 of the Credit
Agreement.
(d) In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
(e) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
(f) This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors and assigns.
(g) This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and
XV-4
<PAGE>
attached to a single counterpart so that all signature pages are physically
attached to the same document.
(h) This Agreement shall become effective upon the date (the "Effective
Date") upon which all of the following conditions are satisfied: (i) the
execution of a counterpart hereof by each of Assignor and Assignee, (ii) the
giving of notice to Company, (iii) the receipt by Administrative Agent of the
processing and recordation fee referred to in subsection 10.1B(i) of the Credit
Agreement, (iv) in the event Assignee is a Non-US Lender (as defined in
subsection 2.7B(iii)(a) of the Credit Agreement), the delivery by Assignee to
Administrative Agent of such forms, certificates or other evidence with respect
to United States federal income tax withholding matters as Assignee may be
required to deliver to Administrative Agent pursuant to said subsection
2.7B(iii)(a), (v) the execution of a counterpart hereof by Administrative Agent
as evidence of its consent hereto to the extent required under subsection
10.1B(i) of the Credit Agreement and by Administrative Agent as evidence of its
acceptance hereof in accordance with subsection 10.1B(ii) of the Credit
Agreement, (vi) the receipt by Administrative Agent of originals or
telefacsimiles of the counterparts described above and authorization of delivery
thereof, and (vii) the recordation by Administrative Agent in the Register of
the pertinent information regarding the assignment effected hereby in accordance
with subsection 10.1B(ii) of the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized, such execution being made as of the Effective Date in the applicable
spaces provided on the Schedule of Terms.
XV-5
<PAGE>
SCHEDULE OF TERMS
1. Company: MBW FOODS INC., a Delaware corporation
2. Name and Date of Credit Agreement: Credit Agreement dated as of December
__, 1996, by and among Company, MBW Holdings Inc., a Delaware corporation,
the financial institutions listed therein as Lenders, The Chase Manhattan
Bank, as Administrative Agent, and Chase Securities Inc., as Arranging
Agent.
3. Amounts: Re: Revolving
Re: Term Loans Loans
-------------- -------------
(a) Aggregate Commitments of all
all Lenders: $_______ $_______
(b) Assigned Share/Pro Rata Share: _____% ______%
(c) Amount of Assigned Share of
Commitments: $_______ $_______
(d) Amount of Assigned Share of
Term Loans: $_______
4. Settlement Date: ____________, [199_][200_]
5. Payment Instructions:
ASSIGNOR: ASSIGNEE:
See Annex A See Annex B
6. Notice Addresses:
ASSIGNOR: ASSIGNEE:
See Annex A See Annex B
XV-Schedule-1
<PAGE>
7. Signatures:
[NAME OF ASSIGNOR], [NAME OF ASSIGNEE],
as Assignor as Assignee
By: ____________________ By: ____________________
Name: Name:
Title: Title:
Consented to and accepted in accor-
dance with subsections 10.1B(i) and
(ii) of the Credit Agreement
THE CHASE MANHATTAN
BANK,
as Administrative Agent
By:______________________
Name:
Title:
XV-Schedule-2
<PAGE>
ANNEX A
Assignor Payment Instructions:
------------------------------
_______________________________
_______________________________
Attention:_____________________
Reference:_____________________
Assignor Notice Addresses:
--------------------------
_______________________________
_______________________________
Attention:_____________________
Reference:_____________________
XV-Schedule Annex A-1
<PAGE>
ANNEX B
Assignor Payment Instructions:
------------------------------
_______________________________
_______________________________
Attention:_____________________
Reference:_____________________
Assignor Notice Addresses:
--------------------------
_______________________________
_______________________________
Attention:_____________________
Reference:_____________________
XV-Schedule Annex B-1
<PAGE>
EXHIBIT XVI
[FORM OF PERMITTED SELLER NOTE]
% NON-NEGOTIABLE SUBORDINATED NOTE
[Insert Date] $_________________
MBW FOODS INC., a Delaware corporation (the "Borrower"), hereby
promises upon the terms and subject to the provisions hereof to pay to [NAME OF
SELLER] (the "Holder"), the principal amount of [ ] Dollars ($ ).
This % Non-Negotiable Junior Subordinated Note (the "Note") was issued
pursuant to the Purchase Agreement (the "Purchase Agreement") dated as of
[__________, [199_] [200_], between the Borrower and the Holder.
1. Definitions. As used herein, the following terms shall have the
following meanings:
"Indebtedness" means (i) all obligations for borrowed money or for
the deferred purchase price of property or services (including, without
limitation, all obligations contingent or otherwise in connection with
acceptance, letter of credit or similar facilities, (ii) all obligations
evidenced by bonds, notes, debentures or other similar instruments or
securities, (iii) all indebtedness created or arising under any sale and
leaseback arrangement, conditional sale or other title retention agreement with
respect to property owned or acquired (whether or not 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), (iv) all rental obligations under
capital leases to the extent not included in clause (iii) above, (v) all
guarantees (direct or indirect), all contingent reimbursement obligations under
undrawn letters of credit and all other contingent obligations in respect of, or
obligations to purchase or otherwise acquire or to assure payment of,
indebtedness of others and (vi) indebtedness of others secured by any lien upon
property, whether or not assumed, but only to the extent of such property's fair
market value.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof
"Senior Agent" shall mean The Chase Manhattan Bank, N.A., as
Administrative Agent for the Lenders under the Senior Credit Agreement, and its
successors in such capacity, or if there is then no acting Administrative Agent
under the Senior Credit Agreement, financial institutions holding a majority in
principal amount of the Senior Debt outstanding thereunder.
XVI-1
<PAGE>
"Senior Credit Agreement" shall mean the Credit Agreement, dated as
of December __, 1996, by and among the Borrower, MBW Holdings Inc., a Delaware
corporation, the financial institutions listed therein as Lenders, The Chase
Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging
Agent, as amended, restated, modified or supplemented from time to time
hereafter, together with any credit agreement or similar document from time to
time executed by the Borrower to evidence any Refinancing (as defined in the
definition of Senior Indebtedness) or successive Refinancings.
"Senior Indebtedness" shall mean (i) all Obligations (as defined in
the Senior Credit Agreement) (including Contingent Obligations, as defined in
the Senior Credit Agreement) now or hereafter incurred pursuant to and in
accordance with the terms of the Senior Debt Documents, (ii) any additional
Indebtedness incurred under or pursuant to the Senior Credit Agreement and the
other Senior Debt Documents whether such Obligations or additional Indebtedness
involve principal prepayment charges, interest (including, without limitation,
interest accruing after the filing of a petition initiating any proceeding under
the Bankruptcy Code, whether or not allowed as a claim in such proceeding)
indemnities or reimbursement of fees, expenses or other amounts, and (iii) any
indebtedness incurred for the purpose of refinancing, restructuring, extending
or renewing (collectively, "Refinancing") the obligations of the Borrower under
the Senior Credit Agreement as set forth in clauses (i) and (ii) above.
"Senior Debt Documents" shall mean the Senior Credit Agreement and
all other documents and instruments delivered or filed in connection with the
creation or incurrence of any Senior Indebtedness (including, without
limitation, the guaranty agreements executed and delivered by the subsidiaries
of the Borrower in respect of the Obligations under the Senior Credit
Agreement).
"Senior Lenders" shall mean the financial institutions party to the
Senior Credit Agreement as "Lenders" from time to time.
2. Payment of Interest. Interest shall accrue on the unpaid
principal amount of this Note from the date hereof at the rate of [ ]% per annum
[NOT TO EXCEED 12%] (the "Interest Rate"), calculated on the basis of a 365 day
year. The Borrower shall pay interest semi-annually in arrears on the fifteenth
day of January and July in each year (each, an "Interest Payment Date")
commencing on , [199_][200_].
3. Payment of Principal.
(a) Scheduled Payment. Subject to the provisions of Section 4
hereof, on [_____________], [199_][200_] (the "Maturity Date"), the Borrower
shall pay to the holder of this Note the entire principal amount of this Note,
plus all accrued and unpaid interest hereon which is then unpaid.
(b) Optional Prepayments. Subject to the provisions of Section 4
hereof, the Borrower may, at any time and from time to time, without premium or
penalty, prepay all or a portion of the unpaid principal amount of this Note,
together with unpaid interest accrued since
XVI-2
<PAGE>
the preceding Interest Payment Date to which interest has been paid on such
portion of the principal amount which it is prepaying; provided, that no such
prepayment shall be made if such prepayment is then prohibited by the terms of
any Senior Indebtedness. A prepayment of less than all of the unpaid principal
amount of this Note shall not relieve the Borrower of its obligation to make the
scheduled payment on this Note on the Maturity Date. Each partial payment under
this Note shall first be credited to accrued and unpaid interest on the
principal being prepaid, and the remainder shall be credited to principal.
Whenever any payment to be made hereunder shall be due on a date which is not a
business day, the payment shall be made on the next succeeding business day and
such extension of time shall be included in the computation of interest with
respect to such payment
4. Subordination.
(a) Agreement to Subordinate. The Borrower and, by its acceptance
hereof, each Holder agree that the indebtedness of the Borrower evidenced by
this Note, whether for principal, interest on any other amount payable under or
in respect hereof and all rights or claims arising out of or associated with
such Indebtedness (the "Subordinated Obligations"), shall be junior and
subordinate in right of payment to the prior payment in full in cash of all
Senior Indebtedness, in accordance with the provisions of this Section 4. Each
holder of Senior Indebtedness shall be deemed to have acquired Senior
Indebtedness in reliance upon the agreements of the Borrower and the holder of
this Note contained in this Section 4. The provisions of this Section 4 shall be
reinstated if at any time any payment of any of the Senior Indebtedness is
rescinded or must otherwise be returned by any holder of Senior Indebtedness or
any representative of such holder upon the insolvency, bankruptcy or
reorganization of the Borrower. Any provision of this Note to the contrary
notwithstanding (other than the provision contained in Section 6), the Borrower
shall not make, and no Holder shall accept, any payment or prepayment of
principal, or prepayment of other amounts due thereunder, of any kind whatsoever
(including without limitation by distribution of assets, set off, exchange or
any other manner) with respect to the Subordinated Obligations at any time when
any of the Senior Indebtedness remains outstanding. Holder may receive interest
payments in respect of the Subordinated Obligations in accordance with the terms
of this Note except to the extent and at the times prohibited or restricted by
the provisions of this Section 4. In no event shall the Holder commence any
action or proceeding to contest the provisions of this Section 4 or the priority
of the Liens (as defined in the Senior Credit Agreement) granted to the holders
of the Senior Indebtedness by the Borrower. No Holder shall take, accept or
receive any collateral security from the Borrower for the payment of the
Subordinated Obligations.
(b) Liquidation, Dissolution, Bankruptcy. In the event of any
insolvency, bankruptcy, dissolution, winding up, liquidation, arrangement,
reorganization, marshalling of assets or liabilities, composition, assignment
for the benefit of creditors or other similar proceedings relating to the
Borrower, its debts, its property or its operations, whether voluntary or
involuntary, including, without limitation the filing of any petition or the
taking of any action to commence any of the foregoing (which, in the case of
action by a third party, is not dismissed within 60 days) (a "Bankruptcy
Event"), all Senior Indebtedness shall first be paid in full in cash or other
immediately available funds before Holder shall be entitled to receive or retain
any
XVI-3
<PAGE>
payment or distribution of assets of the Borrower with respect to any
Subordinated Obligations. In the event of any such Bankruptcy Event, any payment
or distribution of assets to which Holder would be entitled if the Subordinated
Obligations were not subordinated to the Senior Indebtedness in accordance with
this Section 4, whether in cash, property, securities or otherwise, shall be
paid or delivered by the debtor, custodian, trustee or agent or other Person
making such payment or distribution, or by the Holder if received by it,
directly to the Senior Agent on behalf of the holders of the Senior Indebtedness
for application to the payment of the Senior Indebtedness remaining unpaid, to
the extent necessary to make payment in full in cash or other immediately
available funds of all Senior Indebtedness remaining unpaid, after giving effect
to any concurrent payment or distribution to or for the holders of the Senior
Indebtedness.
(c) No Payments with Respect to Subordinated Obligations in Certain
Circumstances.
(i) In circumstances in which Section 4(b) is not applicable,
no payment of any nature (including, without limitation, any distribution of
assets) in respect of the Subordinated Obligations (including, without
limitation, pursuant to any judgment with respect thereto or on account of the
purchase or redemption or other acquisition of Subordinated Obligations, by set
off, prepayment exchange or other manner) shall be made by or on behalf of the
Borrower if, at the time of such payment:
(A) a default in the payment when due (whether at the
maturity thereof, or upon acceleration of maturity or otherwise and
without giving effect to any applicable grace periods) of all or any
portion of the Senior Indebtedness (whether of principal, interest
or any other amount with respect thereto) shall have occurred, and
such default shall not have been cured or waived in accordance with
the terms of the Senior Debt Documents; or
(B) subject to the last sentence of this Section 4(c),
(x) the Borrower shall have received notice from the Senior Agent of
the occurrence of one or more Events of Default (as defined in the
Senior Credit Agreement) in respect of the Senior Indebtedness
(other than payment defaults described in Section 4(c)(i)(A) above),
(y) each such Event of Default shall not have been cured or waived
in accordance with the terms of the Senior Debt Documents, and (z)
180 days shall not have elapsed since the date such notice was
received.
The Borrower may resume payments (and may make any payments missed
due to the application of Section 4(c)(i) in respect of the Subordinated
Obligations or any judgment with respect thereto:
(A) in the case of a default referred to in clause (A)
of this Section 4(c)(i), upon a cure or waiver thereof in accordance
with the terms of the Senior Debt Documents; or
XVI-4
<PAGE>
(B) in the case of an Event of Default or Events of
Default referred to in clause (B) of this Section 4(c)(i), upon the
earlier to occur of (1) the cure or waiver of all such Events of
Default in accordance with the terms of the Senior Debt Documents,
or (2) the expiration of such period of 180 days.
(ii) Following any acceleration of the maturity of any Senior
Indebtedness and as long as such acceleration shall continue unrescinded
and unannulled, such Senior Indebtedness shall first be paid in full in
cash, or provision for such payment shall be made in a manner satisfactory
to the holders of the Senior Indebtedness, before any payment is made on
account of or applied on the Subordinated Obligations.
(iii) The Borrower shall give prompt written notice to the Holder of
(i) any default in respect of Senior Obligations referred to in Section
4(c)(i)(A) and (ii) any notice of the type described in Section 4(c)(i)(B)
from the Senior Agent.
(d) When Distribution Must Be Paid Over. In the event that Holder
shall receive any payment or distribution of assets that Holder is not entitled
to receive or retain under the provisions of this Note, Holder shall hold any
amount so received in trust for the holders of Senior Indebtedness, shall
segregate such assets from other assets held by Holder and shall forthwith turn
over such payment or distribution (without liability for interest thereon) to
the Senior Agent on behalf of the holders of Senior Indebtedness in the form
received (with any necessary endorsement) to be applied to Senior Indebtedness.
(e) Exercise of Remedies. So long as any Senior Indebtedness is
outstanding (including any loans, any letters of credit, any commitments to lend
or any lender guarantees), Holder (solely in its capacity as a holder of this
Note) shall not exercise any rights or remedies with respect to an Event of
Default under this Note, including, without limitation, any action (l) to demand
or sue for collection of amounts payable hereunder, (2) to accelerate the
principal of this Note, or (3) to commence or join with any other creditor
(other than the holder of a majority in principal amount of the Senior
Indebtedness) in commencing any proceeding in connection with or premised on the
occurrence of a Bankruptcy Event prior to the earlier of:
(A) the payment in full in cash or other immediately
available funds of all Senior Indebtedness;
(B) the initiation of a proceeding (other than a
proceeding prohibited by clause (3) of this Section 4(e)) in
connection with or premised upon the occurrence of a Bankruptcy
Event;
(C) the expiration of 180 days immediately following the
receipt by the Senior Agent of notice of the occurrence of such
Event of Default from the Holder; and
(D) the acceleration of the maturity of the Senior
Indebtedness;
XVI-5
<PAGE>
provided, however, that if, with respect to (B) and (D) above, such proceeding
or acceleration, respectively, is rescinded, or with respect to (C) above,
during such 180-day period such Event of Default has been cured or waived, the
prohibition against taking the actions described in this section 4(e) shall
automatically be reinstated as of the date of the rescission, cure or waiver, as
applicable. In all events, unless an event described in clause (A), (B) or (D)
above has occurred and not been rescinded, the Holder shall give thirty (30)
days prior written notice to the Senior Agent before taking any action described
in this Section 4(e), which notice shall describe with specificity the action
that the Holder in good faith intends to take.
(f) Acceleration of Payment of Note. If this Note is declared due
and payable prior to the Maturity Date, no direct or indirect payment that is
due solely by reason of such declaration shall be made, nor shall application be
made of any distribution of assets of the Borrower (whether by set off or in any
other manner, including, without limitation, from or by way of collateral) to
the payment, purchase or other acquisition or retirement of this Note, unless,
in either case, (i) all amounts due or to become due on or in respect of the
Senior Indebtedness (including with respect to any outstanding letters of
credit) shall have been previously paid in full in cash or other immediately
available funds or in any other manner satisfactory to all holders of such
Senior Indebtedness, (ii) all commitments to lend under Senior Indebtedness
shall have been terminated, (iii) all guarantees constituting Senior
Indebtedness shall have been terminated and (iv) all lender guarantees
constituting Senior Indebtedness shall have been permanently reduced to zero.
(g) Proceedings Against Borrower. So long as any Senior Indebtedness
is outstanding (including any loans, any commitments to lend or open lender
guarantees or any lender guarantees, Holder (solely in its capacity as a holder
of this Note) shall not commence any bankruptcy, insolvency, reorganization or
other similar proceeding against Borrower.
(h) Amending Senior Indebtedness. Any holder of Senior Indebtedness
may, at any time and from time to time, without the consent of or notice to
Holder (i) modify or amend the terms of the Senior Indebtedness provided that
such Senior Indebtedness cannot be extended or renewed past December __, 2001,
(ii) sell, exchange, release, fail to perfect a lien on or a security interest
in or otherwise in any manner deal with or apply any property pledged or
mortgaged to secure, or otherwise securing, Senior Indebtedness, (iii) release
any guarantor or any other person liable in any manner for the Senior
Indebtedness, (iv) exercise or refrain from exercising any rights against
Borrower or any other person, (v) apply any sums by whomever paid or however
realized to Senior Indebtedness or (vi) take any other action that might be
deemed to impair in any way the rights of the holder of this Note. Any and all
of such actions may be taken by the holders of Senior Indebtedness without
incurring responsibility to Holder and without impairing or releasing the
obligations of Holder to the holders of Senior Indebtedness.
(i) Certain Rights in Bankruptcy. Holder hereby irrevocably
authorizes and empowers each holder of Senior Indebtedness (and its
representative or representatives) to demand, sue for, collect and receive all
payments and distributions under the terms of this Note, to file and prove all
claims (including claims in bankruptcy) relating to this Note, to exercise any
XVI-6
<PAGE>
right to vote arising with respect to this Note and any claims hereunder in any
bankruptcy, insolvency or similar proceeding and take any and all other actions
in the name of Holder (solely in its capacity as a holder of this Note), as such
holder of Senior Indebtedness determines to be necessary or appropriate.
(j) Subrogation. No payment or distribution to any holder of Senior
Indebtedness pursuant to the provisions of this Note shall entitle Holder to
exercise any right of subrogation in respect thereof until (i)(w) all Senior
Indebtedness shall have been paid in full in cash or other immediately available
funds or in any other manner satisfactory to all holders of Senior Indebtedness,
(x) all commitments to lend under Senior Indebtedness shall have been
terminated, (y) all guarantees constituting Senior Indebtedness shall have been
terminated and (z) all lender guarantees constituting Senior Indebtedness shall
have been permanently reduced to zero or (ii) all holders of Senior Indebtedness
have consented in writing to the taking of such action.
(k) Relative Rights. The provisions of this Section 4 are for the
benefit of the holders of Senior Indebtedness (and their successors and assigns)
and shall be enforceable by them directly against Holder. Holder acknowledges
and agrees that any breach of the provisions of this Section 4 will cause
irreparable harm for which the payment of monetary damages may be inadequate.
For this reason, Holder agrees that, in addition to any remedies at law or
equity to which a holder of the Senior Indebtedness may be entitled, a holder of
the Senior Indebtedness will be entitled to an injunction or other equitable
relief to prevent breaches of the provisions of this Section 4 and/or to compel
specific performance of such provisions. The provisions of this Section 4 shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of Senior Indebtedness is rescinded or must otherwise be returned by
any holder of Senior Indebtedness upon the occurrence of a Bankruptcy Event or
otherwise, all as though such payment had not been made. The provisions of this
Section 4 are not intended to impair and shall not impair as between Borrower
and Holder, the obligation of Borrower, which is absolute and unconditional, to
pay Holder all amounts owing under this Note.
(l) Reliance on Orders and Decrees. Subject to the provisions of
Section 4(d) hereof, upon any payment or distribution of assets of Borrower,
whether in cash, property, securities or otherwise, Holder shall be entitled to
rely upon any order or decree entered by any court of competent jurisdiction in
which any insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to Holder for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section 4.
XVI-7
<PAGE>
5. Events of Default.
(a) Definition. The following shall be an "Event of Default" under
this Note;
(i) the Borrower shall fail to make any payment of interest on
this Note when the same shall become due and payable and such failure
shall continue for a period of 5 days;
(ii) the Borrower shall fail to make any payment of the
principal of this Note when the same shall become due and payable, whether
on the Maturity Date or otherwise;
(iii) (A) the Borrower shall commence any case, proceeding or
action (x) 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, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to its debts, or (y)
seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, (B) the
Borrower shall make a general assignment for the benefit of its creditors,
(C) there shall be commenced against the Borrower any case, proceeding or
other action of a nature referred to in clause (A) above which shall not
have been vacated or discharged within 60 days from the commencement
thereof, or (iv) a court shall enter a decree or order for relief in any
involuntary case under Title 11 of the United States Code, as amended from
time to time, or any applicable bankruptcy or similar law now or hereafter
in effect, which decree or order is not stayed, vacated, discharged, or
bonded pending appeal within 60 days from the entry thereof; or
(iv) the acceleration of the maturity of the Senior
Indebtedness.
(b) Remedies. If an Event of Default shall occur and be continuing,
then, subject to the provisions of Section 4, the Holder may, upon written
notice to the Borrower, declare all amounts owing under this Note to be
immediately due and payable.
Subject to the immediately preceding paragraph and to Section 4
above, the Holder shall also have all other rights in respect of this Note
following the occurrence and during the continuance of an Event of Default which
are available pursuant to applicable law or in equity.
[6. Right of Set-Off. Anything in this Note to the contrary
notwithstanding, nothing in this Note shall preclude the Borrower from timely
exercising such Borrower's right pursuant to Section ______ of the Purchase
Agreement to set-off indemnification claims against this Note and/or interest
payments under this Note.]
7. No Presentment. The Borrower, for itself and any guarantors
hereof, and their successors and assigns, waives presentment, demand, protest
and notice thereof or of
XVI-8
<PAGE>
dishonor, and waives any right to be released by reason of any extension of time
or change in the terms of payment.
8. Amendment. So long as any Senior Indebtedness is outstanding
(including any commitment under the Senior Agent Documents) the terms of this
Note may be amended only with the consent of the Senior Agent. Subject to the
foregoing, without the consent of the Senior Agent hereof, this Note may be
amended by the Borrower and the Holder to cure any ambiguity, defect or
inconsistency that does not affect the subordination provisions hereof or the
rights of the Senior Lenders.
9. Cancellation. After all unpaid principal and interest owed on
this Note has been paid in full, this Note shall be surrendered to the Borrower
for cancellation and shall not be reissued.
10. Transfer Restrictions: Acknowledgment of Security Interest. This
Note shall not be transferrable by the Holder hereof without the prior written
consent of the Borrower (which consent shall not be unreasonably withheld). The
Holder hereby acknowledges, and agrees to, the Borrower's grant of its interest
herein to the Lenders under the Credit Agreement, dated as of the date hereof,
to collaterally secure the Borrower's obligations under such Credit Agreement.
11. Payment of Expenses. The Borrower agrees to pay all costs and
expenses (including reasonable attorneys' fees) reasonably incurred by the
Holder after the occurrence and during the continuance of an Event of Default in
enforcing any obligations under this Note or in collecting any payments due from
Borrower under this Note (including in connection with a bankruptcy or
insolvency proceeding with respect to the Borrower).
12. Governing Law. The construction, validity and interpretation of
this Note shall be governed by and construed in accordance with the domestic
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
13. Descriptive Headings. The descriptive headings of this Note are
inserted for convenience only, and do not constitute a part of this Note.
XVI-9
<PAGE>
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Note on the date first written above.
MBW FOODS INC.
By:_____________________________________
Name:
Title:
Agreed:
[NAME OF SELLER]
By: ____________________________
Name:
Title:
XVI-10
<PAGE>
EXHIBIT XVII
[FORM OF CERTIFICATE RE NON-BANK STATUS]
CERTIFICATE RE NON-BANK STATUS
Reference is hereby made to that certain Credit Agreement dated as of
December __, 1996 (said Credit Agreement, as amended, restated, supplemented or
otherwise modified to the date hereof, being the "Credit Agreement"), by and
among MBW Foods Inc., a Delaware corporation, MBW Holdings Inc., a Delaware
corporation, the financial institutions listed therein as Lenders ("Lenders"),
The Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as
Arranging Agent. Pursuant to subsection 2.7B(iii) of the Credit Agreement, the
undersigned hereby certifies that it is not a "bank" or other Person described
in Section 881(c)(3) of the Internal Revenue Code of 1986, as amended.
[NAME OF LENDER]
By: ________________________________
Name:
Title:
XVII-1
<PAGE>
EXHIBIT XVIII
[FORM OF COLLATERAL ACCOUNT AGREEMENT]
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is dated as of
December __, 1996 and entered into by and between MBW FOODS INC., a Delaware
corporation ("Pledgor"), and THE CHASE MANHATTAN BANK, as administrative agent
for and representative of (in such capacity herein called "Secured Party") the
financial institutions ("Lenders") party to the Credit Agreement referred to
below.
PRELIMINARY STATEMENTS
A. Pursuant to that certain Credit Agreement dated as of December __, 1996
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined), by and among Pledgor, MBW Holdings Inc., a Delaware corporation,
Secured Party, as Administrative Agent, and Chase Securities Inc., as Arranging
Agent, Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Pledgor.
B. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and issue Letters of Credit under the Credit Agreement and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledgor hereby agrees with Secured Party as follows:
SECTION 1. Certain Definitions.
The following terms used in this Agreement shall have the following
meanings:
"Collateral" means (i) the Collateral Account, (ii) all amounts on
deposit from time to time in the Collateral Account, (iii) all interest,
cash, instruments, securities and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Collateral, and (iv) to the extent not covered by
clauses (i) through (iii) above, all proceeds of any or all of the
foregoing Collateral.
XVIII-1
<PAGE>
"Collateral Account" means the restricted deposit account
established and maintained by Secured Party pursuant to subsection 2(a).
"Secured Obligations" means all obligations and liabilities of every
nature of Pledgor now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and all
extensions or renewals thereof, whether for principal, interest (including
without limitation interest that, but for the filing of a petition in
bankruptcy with respect to Pledgor, would accrue on such obligations),
reimbursement of amounts drawn under Letters of Credit, fees, expenses,
indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or
not jointly owed with others, and whether or not from time to time
decreased or extinguished and later increased, created or incurred, and
all or any portion of such obligations or liabilities that are paid, to
the extent all or any part of such payment is avoided or recovered
directly or indirectly from Secured Party or any Lender as a preference,
fraudulent transfer or otherwise, and all obligations of every nature of
Pledgor now or hereafter existing under this Agreement.
SECTION 2. Establishment and Operation of Collateral Account.
(a) Secured Party is hereby authorized to establish and maintain at its
office at _____________________________________________, as a blocked account in
the name of Secured Party and under the sole dominion and control of Secured
Party, a restricted deposit account designated as "MBW Foods Inc. Collateral
Account".
(b) The Collateral Account shall be operated in accordance with the terms
of this Agreement.
(c) All amounts at any time held in the Collateral Account shall be
beneficially owned by Pledgor but shall be held in the name of Secured Party
hereunder, for the benefit of Lenders, as collateral security for the Secured
Obligations upon the terms and conditions set forth herein. Pledgor shall have
no right to withdraw, transfer or, except as expressly set forth herein,
otherwise receive any funds deposited into the Collateral Account.
(d) Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
SECTION 3. Deposits of Cash Collateral.
(a) All deposits of funds in the Collateral Account shall be made by wire
transfer (or, if applicable, by intra-bank transfer from another account of
Pledgor) of immediately available funds, in each case addressed as follows:
XVIII-2
<PAGE>
Account No.:
ABA No.:
Reference:
Attention:
Pledgor shall, promptly after initiating a transfer of funds to the Collateral
Account, give notice to Secured Party by telefacsimile of the date, amount and
method of delivery of such deposit.
(b) If an Event of Default has occurred and is continuing and, in
accordance with Section 8 of the Credit Agreement, Pledgor is required to pay to
Secured Party an amount equal to the maximum amount that may at any time be
drawn under all Letters of Credit then outstanding under the Credit Agreement,
Pledgor shall deliver funds in such an amount for deposit in the Collateral
Account in accordance with Section 3(a). Upon any drawing under any outstanding
Letter of Credit in respect of which Pledgor has deposited in the Collateral
Account any amounts described above, Secured Party shall apply such amounts to
reimburse the Issuing Lender for the amount of such drawing. In the event the
amount deposited in the Collateral Account pursuant to this Section 3(b) exceeds
the maximum amount available to be drawn under all Letters of Credit, Secured
Party shall apply such excess amount then on deposit in the Collateral Account
in accordance with subsection 2.4D of the Credit Agreement.
(c) Pledgor shall, promptly after initiating a transfer of funds to the
Collateral Account, give notice to Secured Party by telefacsimile of the date,
amount and method of delivery of such deposit.
SECTION 4. Pledge of Security for Secured Obligations.
Pledgor hereby pledges and assigns to Secured Party, and hereby grants to
Secured Party a security interest in, all of Pledgor's right, title and interest
in and to the Collateral as collateral security for the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all
Secured Obligations.
SECTION 5. No Investment of Amounts in the Collateral Account; Interest on
Amounts in the Collateral Account.
(a) Cash held by Secured Party in the Collateral Account shall not be
invested by Secured Party but instead shall be maintained as a cash deposit in
the Collateral Account pending application thereof as elsewhere provided in this
Agreement.
(b) To the extent permitted under Regulation Q of the Board of Governors
of the Federal Reserve System, any cash held in the Collateral Account shall
bear interest at the standard rate paid by Secured Party to its customers for
deposits of like amounts and terms.
XVIII-3
<PAGE>
(c) Subject to Secured Party's rights under Section 12, any interest
earned on deposits of cash in the Collateral Account in accordance with
subsection 5(b) shall be deposited directly in, and held in the Collateral
Account.
SECTION 6. Representations and Warranties.
Pledgor represents and warrants as follows:
(a) Ownership of Collateral. Pledgor is (or at the time of transfer
thereof to Secured Party will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Secured Party, free
and clear of any Lien except for the security interest created by this
Agreement.
(b) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Pledgor of the
security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by Pledgor, or (iii) the perfection of or
the exercise by Secured Party of its rights and remedies hereunder (except
as may have been taken by or at the direction of Pledgor).
(c) Perfection. The pledge and assignment of the Collateral pursuant
to this Agreement creates a valid and perfected first priority security
interest in the Collateral, securing the payment of the Secured
Obligations.
(d) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Pledgor with
respect to the Collateral is accurate and complete in all respects.
SECTION 7. Further Assurances.
Pledgor agrees that from time to time, at the expense of Pledgor, Pledgor
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that Secured
Party may request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, Pledgor will: (a) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Secured
Party may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby and (b) at Secured Party's request,
appear in and defend any action or proceeding that may affect Pledgor's
beneficial title to or Secured Party's security interest in all or any part of
the Collateral.
XVIII-4
<PAGE>
SECTION 8. Transfers and other Liens.
Pledgor agrees that it will not (a) sell, assign (by operation of law or
otherwise) or otherwise dispose of any of the Collateral or (b) create or suffer
to exist any Lien upon or with respect to any of the Collateral, except for the
security interest under this Agreement.
SECTION 9. Secured Party Appointed Attorney-in-Fact.
Pledgor hereby irrevocably appoints Secured Party as Pledgor's
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any instrument that Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation to file one or more financing or
continuation statements, or amendments thereto, relative to all or any part of
the Collateral without the signature of Pledgor.
SECTION 10. Secured Party May Perform.
If Pledgor fails to perform any agreement contained herein, Secured Party
may itself perform, or cause performance of, such agreement, and the expenses of
Secured Party incurred in connection therewith shall be payable by Pledgor under
subsection 10.2 of the Credit Agreement.
SECTION 11. Standard of Care.
The powers conferred on Secured Party hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Secured Party shall have no duty as to any Collateral, it being
understood that Secured Party shall have no responsibility for (a) taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above to maintain possession of the Collateral) to preserve rights
against any parties with respect to any Collateral or (b) taking any necessary
steps to collect or realize upon the Secured Obligations or any guarantee
therefor, or any part thereof, or any of the Collateral. Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property of like
kind.
XVIII-5
<PAGE>
SECTION 12. Remedies.
(a) If any Event of Default or Potential Event of Default shall have
occurred and be continuing, Secured Party may (i) transfer any or all of the
Collateral to an account established in Secured Party's name (whether at Secured
Party or otherwise) or (ii) otherwise register title to any Collateral in the
name of Secured Party or one of its nominees or agents, without reference to any
interest of Pledgor.
(b) If any Event of Default shall have occurred and be continuing, subject
to the provisions of subsection 3(b), Secured Party may exercise in respect of
the Collateral, in addition to all other rights and remedies otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code as in effect in any relevant jurisdiction (the "Code")
(whether or not the Code applies to the affected Collateral).
(c) If the proceeds of any disposition of the Collateral are insufficient
to pay all the Secured Obligations, Pledgor shall be liable for the deficiency
and the fees of any attorneys employed by Secured Party to collect such
deficiency.
(d) Anything contained herein to the contrary notwithstanding, any of the
Collateral consisting of cash held by Secured Party in the Collateral Account
shall be subject to Secured Party's rights of set-off under subsection 10.4 of
the Credit Agreement.
SECTION 13. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Pledgor, its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the benefit
of Secured Party and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Pledgor. Upon any such termination Secured Party shall, at Pledgor's
expense, execute and deliver to Pledgor such documents as Pledgor shall
reasonably request to evidence such termination and Pledgor shall be entitled to
the return, upon its request and at its expense, against receipt and without
recourse to Secured Party, of such of the Collateral as shall not have been
otherwise applied pursuant to the terms hereof.
XVIII-6
<PAGE>
SECTION 14. Secured Party as Administrative Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders. Secured Party shall be obligated, and shall have the right hereunder,
to make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including without
limitation the release or substitution of Collateral), solely in accordance with
this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums held by Secured Party hereunder (which
shall be deposited in a new Collateral Account established and maintained by
such successor Secured Party), together with all records and other documents
necessary or appropriate in connection with the performance of the duties of the
successor Secured Party under this Agreement, and (ii) execute and deliver to
such successor Secured Party such amendments to financing statements, and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Administrative Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.
SECTION 15. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by Pledgor therefrom, shall in any
event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Pledgor. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
XVIII-7
<PAGE>
SECTION 16. Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex (with
received answerback), or three Business Days after depositing it in the United
States mail with postage prepaid and properly addressed; provided that notices
to Secured Party shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as provided in subsection 10.8 of the
Credit Agreement.
SECTION 17. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 18. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 19. Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 20. Governing Law; Terms.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES
THAT THE PERFECTION OF THE SECURITY INTEREST
XVIII-8
<PAGE>
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless
otherwise defined herein or in the Credit Agreement, terms used in Articles 8
and 9 of the Uniform Commercial Code in the State of New York are used herein as
therein defined.
SECTION 21. Counterparts.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
XVIII-9
<PAGE>
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
MBW FOODS INC.
By: __________________________
Name:
Title:
XVIII-10
<PAGE>
THE CHASE MANHATTAN BANK,
as Secured Party
By: __________________________
Name: Karen Sharf
Title: Vice President
XVIII-11
<PAGE>
EXHIBIT XIX
[FORM OF COLLATERAL ACCESS AGREEMENT]
COLLATERAL ACCESS AGREEMENT
RECORDING REQUESTED BY:
O'Melveny & Myers LLP
AND WHEN RECORDED MAIL TO:
O'Melveny & Myers LLP
153 East 53rd Street
New York, New York 10022
Attn: Yongjin Im
Re: MBW FOODS INC.
- --------------------------------------------------------------------------------
Space above this line for recorder's use only
REAL PROPERTY HOLDER'S WAIVER AND CONSENT AGREEMENT
This REAL PROPERTY HOLDER'S WAIVER AND CONSENT AGREEMENT (this
"Agreement") is dated as of ___________, [199__][200_] and entered into by
_________________________, a ____________________ ("Real Property Holder"), to
and for the benefit of THE CHASE MANHATTAN BANK, having offices at 270 Park
Avenue, New York, New York 10025, as administrative agent (in such capacity,
"Administrative Agent") for the financial institutions ("Lenders") which are or
may hereafter become parties to the Credit Agreement (as hereinafter defined).
R E C I T A L S
C. [MBW Foods Inc.][Name of Subsidiary], a [_________] corporation
("Company"), has possession of and occupies all or a portion of the property
described on Exhibit A annexed hereto (the "Premises").
D. Company's interest in the Premises [arises under the lease
agreement (the "Lease")][is subject to the [mortgage][deed of trust] (the
"Mortgage")] more particularly described on Exhibit B annexed hereto, pursuant
to which Real Property Holder has rights, upon the terms and conditions set
forth therein, to take possession of, and otherwise assert control over, the
Premises.
XIX-1
<PAGE>
E. Administrative Agent, Lenders, and Chase Securities Inc., as
Arranging Agent, have entered into that certain Credit Agreement dated as of
December __, 1996 (said Credit Agreement, as amended, restated, supplemented or
otherwise modified from time to time, being the "Credit Agreement") with
[Company] [MBW Foods Inc., a Delaware corporation of which Company is a
subsidiary ("Borrower")] and MBW Holdings Inc., a Delaware corporation, and
Company has executed [a guaranty,] a security agreement and other collateral
documents in relation to the Credit Agreement.
F. [Company's guaranty of] the extensions of credit made by Lenders
to [Company] [Borrower] under the Credit Agreement will be secured, in part, by
all raw materials, work-in-process and finished goods inventory of Company
(including all inventory of Company now or hereafter located on the Premises
(the "Inventory")) and all equipment, machinery and other goods used in
Company's business (including all equipment of Company now or hereafter located
on the Premises (the "Equipment" and, together with the Inventory, the
"Collateral")).
G. Administrative Agent has requested that Real Property Holder
execute this Agreement as a condition to the extension of credit to [Company]
[Borrower] under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Real Property Holder hereby represents and warrants to, and
covenants and agrees with, Administrative Agent as follows:
1. Real Property Holder hereby (a) waives and releases unto
Administrative Agent and its successors and assigns any and all rights granted
by or under any present or future laws to levy or distraint for rent or any
other charges which may be due to Real Property Holder against the Collateral,
and any and all other claims, liens and demands of every kind which it now has
or may hereafter have against the Collateral, and (b) agrees that any rights it
may have in or to the Collateral, no matter how arising (to the extent not
effectively waived pursuant to clause (a) of this paragraph 1), shall be second
and subordinate to the rights of Administrative Agent in respect thereof. Real
Property Holder acknowledges that the Collateral is and will remain personal
property and not fixtures even though it may be affixed to or placed on the
Premises.
2. Real Property Holder certifies that (a) Real Property Holder is
the [landlord under the Lease][beneficiary under the Mortgage], (b) the
[Lease][Mortgage] is in full force and effect and has not been amended,
modified, or supplemented except as set forth on Exhibit B annexed hereto, (c)
there is no defense, offset, claim or counterclaim by or in favor of Real
Property Holder against Company under the [Lease][Mortgage] or against the
obligations of Real Property Holder under the [Lease][Mortgage], (d) no notice
of default has been given under or in connection with the [Lease][Mortgage]
which has not been cured, and Real Property Holder has no knowledge of the
occurrence of any other default under or in connection with the
[Lease][Mortgage], and (e) except as disclosed to Administrative Agent, no
portion of the
XIX-2
<PAGE>
Premises is encumbered in any way by any deed of trust or mortgage lien or
ground or superior lease.
3. Real Property Holder consents to the installation or placement of
the Collateral on the Premises, and Real Property Holder grants to
Administrative Agent a license to enter upon and into the Premises to do any or
all of the following with respect to the Collateral: assemble, have appraised,
display, remove, maintain, prepare for sale or lease, repair, transfer, or sell
(at public or private sale). In entering upon or into the Premises,
Administrative Agent hereby agrees to indemnify, defend and hold Real Property
Holder harmless from and against any and all claims, judgments, liabilities,
costs and expenses incurred by Real Property Holder caused solely by
Administrative Agent's entering upon or into the Premises and taking any of the
foregoing actions with respect to the Collateral. Such costs shall include any
damage to the Premises made by Administrative Agent in severing and/or removing
the Collateral therefrom.
4. Real Property Holder agrees that it will not prevent
Administrative Agent or its designee from entering upon the Premises at all
reasonable times to inspect or remove the Collateral. In the event that Real
Property Holder has the right to, and desires to, obtain possession of the
Premises [(either through expiration of the Lease or termination thereof due to
the default of Company thereunder)] [(through the exercise of its rights under
the Mortgage upon a default by Company thereunder)], Real Property Holder will
deliver notice (the "Real Property Holder's Notice") to Administrative Agent to
that effect. Within the 45 day period after Administrative Agent receives the
Real Property Holder's Notice, Administrative Agent shall have the right, but
not the obligation, to cause the Collateral to be removed from the Premises.
During such 45 day period, Real Property Holder will not remove the Collateral
from the Premises nor interfere with Administrative Agent's actions in removing
the Collateral from the Premises or Administrative Agent's actions in otherwise
enforcing its security interest in the Collateral. Notwithstanding anything to
the contrary in this paragraph, Administrative Agent shall at no time have any
obligation to remove the Collateral from the Premises.
5. Real Property Holder shall send to Administrative Agent a copy of
any notice of default under the [Lease][Mortgage] sent by Real Property Holder
to Company. In addition, Real Property Holder shall send to Administrative Agent
a copy of any notice received by Real Property Holder of a breach or default
under any other lease, mortgage, deed of trust, security agreement or other
instrument to which Real Property Holder is a party which may affect Company's
rights in, or possession of, the Premises.
6. All notices to Administrative Agent under this Agreement shall be
in writing and sent to Administrative Agent at its address set forth on the
signature page hereof by telefacsimile, by United States mail, or by overnight
delivery service.
7. The provisions of this Agreement shall continue in effect until
Real Property Holder shall have received Administrative Agent's written
certification that all amounts advanced under the Credit Agreement have been
paid in full.
XIX-3
<PAGE>
8. This Agreement and the rights and obligations of the parties
hereunder shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New York, without regard to
conflicts of laws principles.
XIX-4
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered as of the day and year first set forth above.
[NAME OF REAL PROPERTY HOLDER]
By: ________________________________
Name:
Title:
By its acceptance hereof, as of the day and year first set forth
above, Administrative Agent agrees to be bound by the provisions hereof.
THE CHASE MANHATTAN BANK,
as Administrative Agent
By: ________________________________
Name: Karen Sharf
Title: Vice President
XIX-5
<PAGE>
EXHIBIT A TO COLLATERAL ACCESS AGREEMENT
----------------------------------------
LEGAL DESCRIPTION OF PREMISES
XIX-A-1
<PAGE>
EXHIBIT B TO COLLATERAL ACCESS AGREEMENT
----------------------------------------
DESCRIPTION OF [LEASE] [MORTGAGE]]
XIX-B-1
<PAGE>
Ex-10.13
Transitional Co-Pack Agreement
TRANSITIONAL CO-PACK AGREEMENT
THIS TRANSITIONAL CO-PACK AGREEMENT (this "Agreement"), dated as of
July 1, 1997, by and between KRAFT FOODS, INC., a Delaware corporation
("Co-Packer"), and Aurora Foods Inc. (formerly MBW Foods Inc.), a Delaware
corporation ("Buyer");
W I T N E S S E T H:
WHEREAS, Buyer has purchased the LOG CABIN(R), COUNTRY KITCHEN(R)
and WIGWAM(R) syrup business (the "Business") of Co-Packer pursuant to that
certain Asset Purchase Agreement, dated as of May 7, 1997, by and between
Co-Packer and Buyer (the "Asset Purchase Agreement");
WHEREAS, pursuant to the Asset Purchase Agreement, Buyer has
purchased from Co-Packer certain machinery and equipment used in the Business, a
list of which is attached hereto as Exhibit A (the "Equipment");
WHEREAS, ownership of (and risk of loss with respect to) the
Equipment has been transferred to Buyer as of the Closing Date (as defined in
the Asset Purchase Agreement);
WHEREAS, Buyer wishes to engage Co-Packer for the purpose of
manufacturing, processing and packaging the syrup products listed on Exhibit B
attached hereto (the "Product"), utilizing the Equipment owned by Buyer and
located at Co-Packer's facilities in Chicago, Illinois (the "Chicago Facility")
and Allentown, Pennsylvania (the "Allentown Facility" and, together with the
Chicago Facility, the "Facilities"); and
WHEREAS, Co-Packer wishes to utilize certain of the Equipment owned
by Buyer for the purpose of manufacturing, processing and packaging the syrup
products listed on Exhibit C attached hereto (the "Co-Packer Product") in order
to enable Co-Packer to continue (i) to supply such Co-Packer Product to Alliant
Foodservice ("Alliant") pursuant to the Distribution Agreement, dated as of
February 13, 1995, by and among Co-Packer, Alliant and CDRF Acquisition
Corporation (the "Distribution Agreement") and (ii) to export such Co-Packer
Product to Mexico;
<PAGE>
NOW, THEREFORE, in consideration of the premises and of the mutual
promises and covenants hereinafter set forth, the parties hereto agree as
follows:
1. Product and Its Manufacture/Packaging
1.1 Subject to and on the terms and conditions hereof, Co-Packer shall
supply the Product to Buyer.
1.2 Subject to and on the terms and conditions hereof, Co-Packer shall
manufacture and process the Product in accordance with the formulas, raw and
packaging material specifications and finished product standards, the equipment
and the manufacturing practices (collectively, the "Specifications") used by
Co-Packer in manufacturing the Product as of the date of the Asset Purchase
Agreement. Subject to Co-Packer's approval (which shall not be unreasonably
withheld), the Specifications may be changed by Buyer from time to time on
ninety (90) days' prior written notice; provided, however, that Co-Packer and
Buyer shall mutually agree upon a schedule for any such Specifications change to
minimize the incremental costs resulting from such change; and further provided,
however, that (i) Buyer shall pay for any necessary administrative or technical
support services relating to the implementation of any such change to the
Specifications and shall promptly reimburse Co-Packer for any and all expenses
and costs associated with or arising out of any such change in the
Specifications (including the write-off of any stock of raw and packaging
materials (including labels) and work-in-process and any start-up costs), (ii)
Buyer shall pay for and provide any new equipment necessary to produce Product
with such changed Specifications and (iii) the prices (and all components
thereof) charged for the Product as set forth on Exhibit B attached hereto may
be adjusted by Co-Packer (on a retroactive basis to the date of such
Specifications change) to reflect incremental costs resulting from any such
change in the Specifications. Co-Packer shall notify Buyer in writing of any
such price changes and Exhibit B shall be deemed to be amended to reflect the
new prices in effect for the Product as a result of any such change in the
Specifications.
1.3 All packaging (including labels) for the Product shall have been
approved by Buyer prior to use; provided, however, that the types and designs of
the stock of packaging existing as of the date of this Agreement shall be deemed
approved. Buyer hereby grants to Co-Packer the right and license to use Buyer's
trademarks relating to the Product solely for the purpose of performing services
under this Agreement during the term hereof. Co-Packer shall not use packaging
materials for the Product for any purpose other than the exercise of its rights
and performance of its obligations pursuant to this Agreement. Co-Packer hereby
grants to Buyer a fully-paid license to sell Product with labels bearing the
trademarks
-2-
<PAGE>
"KRAFT", "KRAFT FOODS", "KRAFT GENERAL FOODS" and the "KRAFT IN ELONGATED
HEXAGON" design but only to the extent of the supply of labels for Product
existing as of the date of this Agreement (and in no event for more than one
year from the date hereof), and thereafter Buyer shall have no right or license
hereunder to use the trademarks "KRAFT", "KRAFT FOODS", "KRAFT GENERAL FOODS"
and the "KRAFT IN ELONGATED HEXAGON" design in any way.
1.4 Co-Packer shall replace without charge any Product not complying with
the Specifications or having any defects in manufacturing or packaging
demonstrated to have existed at the time of shipment to Buyer ("Defective
Product"); provided that Buyer gives Co-Packer reasonably prompt written notice
upon discovery of any Defective Product; and provided, further, however, that
Buyer shall bear any losses due to Defective Product or otherwise unsaleable
Product attributable in any respect to the Specifications relating thereto
(including any change to the Specifications pursuant to Section 1.2 hereof).
1.5 Co-Packer shall continue to purchase all raw and packaging materials
used for the Product, other than those raw and packaging materials purchased by
Buyer pursuant to the Asset Purchase Agreement (which shall be used to
manufacture, process and package the Product on a "first-in, first-out" basis
before Co-Packer uses any similar materials acquired after the date hereof), and
Co-Packer shall retain title thereto until title to finished Product has passed
to Buyer pursuant to Section 4.3 hereof. In the event Buyer desires to supply
any raw or packaging materials to Co-Packer, Buyer shall make a written proposal
to Co-Packer (which proposal shall describe the method of procurement of such
materials by Co-Packer), and if Co-Packer's computer systems permit Co-Packer to
procure such materials on a basis which does not unreasonably burden Co-Packer
or unreasonably interfere with the manner in which Co-Packer procures other raw
and packaging materials or the manner in which it performs its other duties
under this Agreement or the Transition Services Agreement (e.g., invoicing,
shipping, etc.), Co-Packer shall reasonably cooperate with Buyer to implement
Buyer's proposal. If Buyer's proposal is implemented, the Raw Material Cost (as
defined below) and/or Packaging Cost (as defined below) shall be reduced for any
Product using such materials supplied by Buyer by the cost of such materials so
supplied, and Buyer shall be responsible for any additional costs (or additional
yield losses) incurred by Co-Packer as a result of using such materials supplied
by Buyer.
1.6 Yield losses, on a monthly basis, for raw materials shall be
maintained by Co-Packer at or below historical levels (calculated by averaging
Co-Packer's monthly loss allowances for such raw materials during the
twelve-month period immediately preceding the date of this Agreement), except to
the extent changes in Specifications result in higher levels.
-3-
<PAGE>
2. License to Use Equipment
2.1 Buyer hereby grants to Co-Packer and its affiliates (and Co-Packer
hereby accepts) a fully-paid right and license to use at the Facilities the
Equipment for the sole and exclusive purpose of manufacturing and packaging (i)
the Product for Buyer during the term of this Agreement, (ii) the Co-Packer
Product during the period beginning on the date of this Agreement and ending,
with respect to any such Equipment, on the thirtieth day preceding the removal
of such Equipment from a Facility, and (iii) Product for export and sale in
jurisdictions other than the United States. The Equipment shall at all times be
and remain the property of Buyer, Co-Packer shall have no interest therein or
rights thereto except as provided in this Agreement, and Buyer shall bear the
risk of loss of such Equipment at all times during the term of and following the
termination or expiration of this Agreement. Except as otherwise provided in the
last sentence of Section 2.3 below, Co-Packer shall not remove the Equipment
from the Facilities during the term of this Agreement, or during the forty-five
(45) day period thereafter, without Buyer's written consent. If requested by
Buyer, Co-Packer shall affix to the Equipment asset tags supplied by Buyer
indicating that the Equipment is the property of Buyer.
2.2 Co-Packer agrees to provide normal routine maintenance for the
Equipment as has historically been performed on the Equipment at such intervals
as has been historically performed to maintain the Equipment in good working
order in all material respects; provided that Buyer shall bear the cost of all
spare parts (other than those purchased by Buyer pursuant to the Asset Purchase
Agreement) necessary to provide such normal routine maintenance (it being
understood that an estimate of such spare parts costs has been included in the
Manufacturing Variable, Labor and Expense Costs (as defined below) set forth on
Exhibit B attached hereto and that Buyer shall not be separately charged to the
extent reflected therein). Buyer shall bear all costs of repairs to the
Equipment that are not normal and routine, including repairs that extend the
useful life of the Equipment beyond routine maintenance and servicing (referred
to herein as "Capital Repairs"). If Co-Packer determines that the Equipment
requires any Capital Repairs, Co-Packer shall promptly advise Buyer thereof by
telephone or telecopy. Buyer shall have the right to direct a reasonable manner
in which Capital Repairs shall be effected, and Co-Packer shall abide by such
directions; provided that if Buyer fails to deliver such directions within three
(3) business days of its receipt of the notice from Co-Packer of the need
therefor, Co-Packer may effect, at Buyer's expense, such Capital Repairs as it
determines in its reasonable discretion are appropriate. Buyer shall bear all
costs of all Capital Repairs, including labor expense and technical support
incurred by Co-Packer during the course of such repairs. Co-Packer shall invoice
Buyer therefor on an as-provided basis, which invoice shall be accompanied by
the
-4-
<PAGE>
invoices or vouchers for such costs. Buyer shall pay such invoice within twenty
(20) days of receipt thereof. Co-Packer shall be excused from performance
hereunder to the extent any of the Equipment is not in working condition, except
to the extent such Equipment is not in working condition due to the fault of
Co-Packer. Buyer shall be responsible for the purchase of any new equipment
(including any new tool, die and mold costs) and spare parts necessary to (i)
maintain or increase production of the Product or (ii) produce any Product with
Specifications which have been changed by Buyer pursuant to Section 1.2 hereof
or as a result of changes in regulatory requirements.
2.3 Buyer shall remove Equipment from the Facilities within sixty (60)
days following the termination of production with such Equipment. Co-Packer
shall reasonably cooperate with Buyer in removing the Equipment. Co-Packer
shall, at Co-Packer's cost, remove all utility sources and shared piping, bulk
handling, materials handling and related equipment from the Equipment and
prepare for and remove the Equipment from the production floor, crate the
Equipment (where practicable) and deliver the Equipment to Buyer at the loading
dock of the applicable Facility at which the Equipment is located in a manner
suitable for shipping, F.O.B. loading dock of such Facility. Buyer and Co-Packer
shall jointly develop a timetable for the preparation for removal of, and the
removal and shipping of, the Equipment, and Buyer shall be responsible for
removing the Equipment from the loading dock of the applicable Facility and
shipping the Equipment. When removing such Equipment from any Facility, Buyer
and its agents shall comply with all rules and regulations of Co-Packer relating
to such Facility, and Buyer shall be responsible for any damages to such
Facility caused by Buyer and its agents during such removal. If Buyer fails to
remove any Equipment from the Facilities within sixty (60) days following the
termination of production with such Equipment (provided that such Equipment was
available for removal a reasonable time prior thereto), Co-Packer may, at
Buyer's expense and risk, arrange for such removal and shipment to Buyer, or, if
Buyer refuses to accept the Equipment, Co-Packer may, at Buyer's expense and
risk, arrange for the removal, shipment and/or scrapping of the Equipment.
2.4 Buyer shall provide at least sixty (60) days' notice to Co-Packer of
its intention to cease production pursuant to this Agreement at the Chicago
Facility and at least ninety (90) days' notice to Co-Packer of its intention to
cease production pursuant to this Agreement at the Allentown Facility so as to
permit Co-Packer to build inventories of the Co-Packer Product prior to the
removal.
-5-
<PAGE>
3. Estimates, Orders and Volume Requirements
3.1 Buyer shall, on a monthly basis, provide a rolling 13-week production
requirements forecast (each, a "Forecast") by SKU and distribution center. Buyer
shall be responsible for all the Product produced by Co-Packer in reasonable
reliance on each Forecast. Buyer shall place firm orders for the Product for no
less than the minimum run quantity set forth in Exhibit B, and orders for less
than such minimum run quantity shall be treated by Co-Packer as orders for such
minimum run quantity. Exceptions to minimum run quantities shall be made only by
mutual consent in writing between Buyer and Co-Packer, and Buyer shall bear all
incremental costs associated with such exceptions to minimum run quantities.
Buyer shall, in accordance with Section 6.3 hereof, bear the cost of any unused
raw materials and packaging materials procured by Co-Packer in reliance on the
Forecast in the event that Buyer's firm orders for specific Product are lower
than the Forecast for such Product. Buyer shall provide Co-Packer reasonable
notice of any increases in any Forecast due to any material increase in demand
and shall bear the incremental costs resulting from any increase in production
to meet such demand. To the extent such increases in Forecasts exceed
Co-Packer's manufacturing capacity and/or raw or packaging material
availability, Buyer and Co-Packer shall mutually agree upon product scheduling
to deliver priority customer orders.
3.2 In the event of any failure by Co-Packer timely to deliver the Product
to Buyer in the quantities set forth in any Order or in compliance with the
Specifications, Buyer shall use all commercially reasonable efforts to mitigate
or eliminate any adverse impact to Buyer resulting from such failure, and
Co-Packer shall use all commercially reasonable efforts to resume full
performance of its obligations hereunder as soon as practicable following the
onset of the events or circumstances giving rise to such failure.
4. Storage and Handling, Redistribution and Delivery
4.1 Co-Packer shall provide storage and handling services for the Product
at the applicable production Facility and in Co-Packer's distribution centers.
The cost of such storage and handling services shall be included in the Variable
Warehousing Costs (as defined below) for Product set forth on Exhibit B attached
hereto. Finished Product shall remain in Facilities no longer than 60 days from
the date of production of such Product.
4.2 Co-Packer shall load and ship the Product, with appropriate shipping
documents, to such delivery point (e.g., customer warehouses or other final
destination) and in such quantities as may be designated by Buyer in its Order
for such Product. Co-Packer
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shall bear all responsibility for selecting the carrier, including the
scheduling of pickups and negotiating of freight rates. The cost of such
transportation services for Product, including, as applicable, the cost of
transporting Product from the Facility at which such Product was produced to a
distribution center determined by Co-Packer, between distribution centers and to
Buyer's customers (collectively, "Freight Costs"), shall be charged to Buyer (i)
where actual cost information is available, at Co-Packer's actual cost for such
services or (ii) where actual cost information is not available, on an allocated
basis consistent with Co-Packer's past custom and practice of allocating such
costs. Co-Packer shall not provide any storage, handling or distribution
services with respect to any products manufactured by Buyer or third parties.
4.3 During the term of the Transition Services Agreement, delivery shall
be made in accordance with the terms of the Transition Services Agreement, and
title to (and risk of loss with respect to) the Product shall pass to Buyer at
such time as Co-Packer ships the Product to Buyer's customers. After the term of
the Transition Services Agreement, Co-Packer shall deliver the Product at the
loading dock of the Facility at which such Product was produced, F.O.B. dock of
production, and title to (and risk of loss with respect to) the Product shall
pass to Buyer upon such delivery.
5. Price and Payment
5.1 Buyer shall pay Co-Packer the prices for Product set forth on Exhibit
B attached hereto, subject to adjustment by Co-Packer from time to time as
described below. Such prices include the following components: (i) Raw Material
Costs, (ii) Packaging Costs, (iii) Manufacturing Variable, Labor and Expense
Costs, (iv) Variable Warehousing Costs and (v) Fixed Overhead Costs. Buyer shall
also reimburse Co-Packer for all Freight Costs.
5.1(a) Buyer shall pay the actual cost of raw materials for Product
("Raw Material Costs"). Current estimates of Raw Material Costs for each
Product are set forth on the appropriate tier price list for such Product
on Exhibit B attached hereto. Raw Material Costs are subject to adjustment
pursuant to Section 5.2 hereof.
5.1(b) Buyer shall pay the actual cost of packaging materials for
Product ("Packaging Costs"). Current estimates of Packaging Costs for each
Product are set forth on the appropriate tier price list for such Product
on Exhibit B attached hereto. Packaging Costs are subject to adjustment
pursuant to Section 5.2 hereof.
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<PAGE>
5.1(c) Buyer shall pay the Manufacturing Variable, Labor and Expense
Costs for Product set forth on the appropriate tier price list for such
Product on Exhibit B attached hereto. For purposes of this Agreement,
"Manufacturing Variable, Labor and Expense Costs" shall mean for any
Product all variable costs (other than Raw Material Costs and Packaging
Costs) relating to the manufacture, process and packaging of such Product
(e.g., conversion costs). Manufacturing Costs are subject to adjustment
pursuant to Section 5.3 hereof.
5.1(d) Buyer shall pay the Variable Warehousing Costs for Product
set forth on the appropriate tier price list for such Product on Exhibit B
attached hereto. For purposes of this Agreement, "Variable Warehousing
Costs" shall mean for any Product all variable costs relating to the
storage, handling and distribution of such Product within Co-Packer's
distribution network. Variable Warehousing Costs are subject to adjustment
pursuant to Section 5.3 hereof.
5.1(e) During the term of this Agreement, Buyer shall pay on a
monthly basis (for each month during the term of this Agreement) the Fixed
Costs ("Fixed Costs") set forth in Note 1 on Exhibit B attached hereto for
such month; provided that, if this Agreement is terminated early, such
Fixed Costs shall be prorated during the final month of the term of this
Agreement.
5.2 Prices charged for Product shall be retroactively adjusted by
Co-Packer from time to time to reflect the actual Raw Material Costs and
Packaging Costs for such Product. An appropriate payment shall be made to
compensate for any such variance, either by Buyer to Co-Packer or by Co-Packer
to Buyer, as the case may be, within thirty (30) days of the notification of
cost changes given by Co-Packer pursuant to the following sentence. Co-Packer
shall notify Buyer in writing of all such cost changes on Buyer's invoice, and
Exhibit B attached hereto shall be deemed to be amended to reflect the new
prices which shall then be in effect. Upon Buyer's request, Co-Packer shall
provide to Buyer in writing a reasonable explanation of any Raw Material Cost
and Packaging Cost changes that resulted in the price change; provided that
Co-Packer shall not be required to describe specific prices for Raw Material
Costs and Packaging Costs where such prices are subject to confidentiality
agreements with third parties.
5.3 At the end of each fiscal quarter of Co-Packer ("Fiscal Quarter"),
Manufacturing Variable, Labor and Expense Costs and Variable Warehousing Costs
(collectively, "Conversion Costs") charged for Product for the next Fiscal
Quarter may be retroactively adjusted by Co-Packer to reflect any reductions in
volume during such Fiscal
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Quarter below Co-Packer's historical volume of production for such quarter
resulting from shipments of Product manufactured by third-party co-packers to
Buyer's customers. Adjustments at times other than the end of each Fiscal
Quarter shall be effective as of such time as any actual increases in Conversion
Costs occurred. Upon such adjustment, an appropriate payment shall be made by
Buyer to Co-Packer to compensate for such variance within thirty (30) days of
the notification of cost changes given by Co-Packer pursuant to the following
sentence. Co-Packer shall notify Buyer in writing of all such Conversion Cost
changes and Exhibit B attached hereto shall be deemed to be amended to reflect
the new prices which shall then be in effect. All such written notices shall
contain a reasonable explanation of the Conversion Cost change that resulted in
the price change.
5.4 The Variable Warehousing Costs set forth on Exhibit B attached hereto
include the cost of pallet services to be provided pursuant to Co-Packer's
existing pallet delivery system. Buyer shall pay any amounts that are required
to be paid to Co-Packer's pallet provider in connection with the provision of
pallet services hereunder, and any amounts that are required to be paid to such
pallet provider to obtain the consent of such pallet provider to provide any
such pallet services hereunder. Subject to the immediately preceding sentence,
Co-Packer shall use reasonable efforts to obtain any consents that may be
required from such pallet provider in order to obtain any such pallet services.
5.5 On January 1, 1998, Co-Packer shall adjust the prices on Exhibit B to
reflect the new prices which shall then be in effect for Products listed on
Exhibit B as a result of changes in Co-Packer's standard costs.
5.6 Co-Packer shall invoice Buyer on a monthly basis for all shipments of
the Products made for such month, indicating on such invoice (i) a description
of all Products shipped, (ii) the quantity of Products shipped and (iii) the
total price for such Products. Notwithstanding the time at which title to and
risk of loss for the Product passes to Buyer pursuant to Section 4.3 hereof,
Buyer shall make payment to Co-Packer within thirty (30) days following the date
of such invoice.
5.7 Buyer's obligation to make payments to Co-Packer under this Agreement
shall not be subject to offset or reduction by reason of any amounts alleged to
be owing from Co-Packer to Buyer, whether pursuant to the Asset Purchase
Agreement or otherwise.
5.8 Notwithstanding anything to the contrary in this Section 5, Buyer
shall not be required to make payment to Co-Packer for any of the raw materials,
packaging materials and work-in-process acquired by Buyer pursuant to the Asset
Purchase Agreement that is
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used by Co-Packer to manufacture, process and package the Product pursuant to
Section 1.5 hereof, and the invoices issued with respect to such Product will
not reflect any charge for such raw materials, packaging materials and
work-in-process or, if such invoices do so reflect a charge for such materials,
such invoices shall also reflect a credit in the amount that Buyer paid for such
materials pursuant to the terms of the Asset Purchase Agreement. To the extent
that Co-Packer uses raw materials, packaging materials and work-in-process
acquired by Buyer pursuant to the Asset Purchase Agreement in order to
manufacture, process and package the Co-Packer Product, Buyer shall be entitled
to a credit on the first invoices issued pursuant to this Agreement after such
use.
6. Term and Termination
6.1 The term of this Agreement shall commence on the Closing Date and
shall expire on April 1, 1998, unless terminated earlier in accordance with the
provisions of this Section 6 or by Buyer upon 60 days' prior written notice to
Co-Packer.
6.2 Either party may immediately terminate this Agreement if a Default (as
defined below) by the other party has occurred and is continuing by giving
written notice thereof to the defaulting party. The term "Default" shall mean
any of the following:
(i) failure by a party to comply with or to perform any material
provision or condition of this Agreement for ten (10) days after written
notice thereof to such party; or
(ii) a party becomes insolvent, is unable to pay its debts as they
mature or is the subject of a petition in bankruptcy, whether voluntary or
involuntary, or of any other proceeding under bankruptcy, insolvency or
similar laws; or makes an assignment for the benefit of creditors; or is
named in, or its property is subject to a suit for appointment of a
receiver; or is dissolved or liquidated; or
(iii) any warranty made in this Agreement is breached, false, or
misleading in any material respect.
In the event of such termination, the non-defaulting party shall be
entitled to pursue any remedy provided in law or equity, including injunctive
relief and the right to recover any damages it may have suffered by reason of
such Default.
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6.3 Upon termination or expiration of this Agreement, Buyer shall purchase
from Co-Packer any and all raw materials, packaging materials (including labels)
and work-in-process held by Co-Packer for use in production of Product at
Co-Packer's costs therefor and all finished goods then held by Co-Packer at the
prices set forth on Exhibit B. Co-Packer shall submit an invoice to Buyer for
the costs of such materials (which invoice shall be accompanied by the invoices
or vouchers for such costs) and finished goods, which Buyer shall pay within
thirty (30) days of receipt.
6.4 Upon termination or expiration of this Agreement, all rights,
obligations, and causes of action accruing hereunder prior to such termination
shall survive and the provisions of this Agreement shall continue to be
controlling for the purpose of determining the rights of the parties hereto. The
waiver or repeated waiver by either party hereto of any breach of any provision
of this Agreement by the other party shall not be deemed a waiver of a future
breach.
6.5 Upon termination or expiration of this Agreement, Buyer shall remove
the Equipment from the Facilities in accordance with Section 2.3 hereof.
6.6 The provisions of Sections 6, 7, 8 and 9 hereof shall survive any
termination or expiration of this Agreement.
7. Confidentiality
7.1 Co-Packer shall regard as confidential and proprietary all of the
information communicated to it by Buyer in connection with this Agreement (which
information shall at all times be the property of Buyer). Co-Packer shall not,
without Buyer's prior written consent, at any time (a) use such information for
any purpose other than in connection with the performance of its obligations
under this Agreement or (b) disclose any portion of such information to third
parties, excluding Co-Packer's agents or subcontractors which are directly
performing services for Co-Packer in connection with this Agreement. Co-Packer
shall at the termination or expiration of this Agreement return to Buyer all
such information which is in written or tangible form (including all copies,
summaries and notes of the contents thereof).
Notwithstanding the foregoing, Co-Packer's obligations pursuant to
this Section 7.1 shall not apply to (i) information that, at the time of
disclosure, is, or after disclosure becomes part of, the public domain other
than as a consequence of Co-Packer's breach, (ii) information that was known or
otherwise available to Co-Packer prior to the
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<PAGE>
disclosure by Buyer (other than as a result of Co-Packer's ownership of the
Business prior to the date of this Agreement), (iii) information disclosed by a
third party to Co-Packer after the disclosure by Buyer, if such third party's
disclosure neither violates any obligation of the third party to Buyer nor is a
consequence of Co-Packer's breach, (iv) information that Buyer authorizes in
writing for release or (v) information which is independently developed by
Co-Packer.
7.2 Buyer shall regard as confidential and proprietary all of the
information communicated to it by Co-Packer in connection with this Agreement
(which information shall at all times be the property of Co-Packer). Buyer shall
not, without Co-Packer's prior written consent, at any time (a) use such
information for any purpose other than in connection with the performance of its
obligations under this Agreement or (b) disclose any portion of such information
to third parties, excluding Buyer's agents or subcontractors which are directly
performing services for Buyer in connection with this Agreement. Buyer shall at
the termination or expiration of this Agreement return to Co-Packer all such
information which is in written or tangible form (including all copies,
summaries and notes of the contents thereof).
Notwithstanding the foregoing, Buyer's obligations pursuant to this
Section 7.2 shall not apply to (i) information that, at the time of disclosure,
is, or after disclosure becomes part of, the public domain other than as a
consequence of Buyer's breach, (ii) information that was known or otherwise
available to Buyer prior to the disclosure by Co-Packer, (iii) information
disclosed by a third party to Buyer after the disclosure by Co-Packer, if such
third party's disclosure neither violates any obligation of the third party to
Co-Packer nor is a consequence of Buyer's breach, (iv) information that
Co-Packer authorizes, in writing, for release, or (v) information that is
acquired by Buyer pursuant to the terms of the Asset Purchase Agreement.
7.3 Each of the parties hereto agrees that any breach of this Section 7 by
such party, its employees, agents or subcontractors shall cause irreparable
injury to the other party, that the other party shall be entitled to specific
performance and injunctive or other equitable relief as a remedy for any such
breach, and, further, each party agrees to waive any requirement for the
securing or posting of any bond in connection with any such remedy.
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<PAGE>
8. Guarantees and Indemnifications
8.1 Co-Packer represents and warrants that it has delivered to Buyer an
executed Continuing Guaranty in the form of Exhibit D hereto for all Product
manufactured, processed and packaged for Buyer pursuant to this Agreement.
8.2 Co-Packer shall indemnify Buyer for all claims, actions and other
liabilities, including reasonable legal fees or other costs (collectively,
"Losses"), that may be claimed, asserted or recovered against Buyer (i) by any
person, firm or corporation on account of any actual or alleged damage to
property, injury or death occurring to any person arising out of any obligation
defaulted upon by Co-Packer under this Agreement (including any recalls of
products), (ii) out of actual or alleged injury to person or property or death
occurring to any Co-Packer employees, agents or any other individuals on
Co-Packer's premises and (iii) for any negligent acts or omissions of Co-Packer
employees or agents, in each case other than Losses arising from adherence to
the Specifications and other than consequential damages or lost profits. Buyer
shall indemnify Co-Packer for all Losses that arise from any complaints, claims
or legal actions (a) alleging infringement of any letters patent, trademarks,
copyrights or otherwise, resulting from the use of any packaging materials
(including labels) or new Specifications for the Product, (b) brought by any
governmental authority against or concerning the Product or (c) that in any way
arise in connection with the quality of the Product (including a defect in any
Product attributable to the Specifications relating thereto), except if such
liability arises as a result of Co-Packer's breach of any of its obligations
under this Agreement.
8.3 In order for a party (the "Indemnified Party") to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim or demand, made by any person, firm, governmental authority
or corporation against the Indemnified Party (a "Third Party Claim"), such
Indemnified Party must notify the indemnifying party in writing of the Third
Party Claim within ten (10) business days after receipt by such Indemnified
Party of written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have been actually
prejudiced as a result of such failure.
If a Third Party Claim is made against an Indemnified Party, the
indemnifying party will be entitled to participate in the defense thereof and,
upon notice to the Indemnified Party, to assume the defense thereof; provided
that (i) the indemnifying party's counsel is reasonably satisfactory to the
Indemnified Party, and (ii) the indemnifying party shall
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thereafter consult with the Indemnified Party upon the Indemnified Party's
reasonable request for such consultation from time to time with respect to such
suit, action or proceeding. If the indemnifying party assumes such defense, the
Indemnified Party shall have the right (but not the duty) to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the indemnifying party. The indemnifying party shall be
liable for the fees and expenses of counsel employed by the Indemnified Party
for any period during which the indemnifying party has not assumed the defense
thereof, but the indemnifying party shall not be liable to the Indemnified Party
for any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof. Whether or not the indemnifying party
chooses to defend or prosecute any Third Party 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 Indemnified Party shall not
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the indemnifying party's prior written consent, which
shall not be unreasonably withheld.
Any payment pursuant to this Section 8.3 shall be made not later than
thirty (30) days after receipt by the indemnifying party of written notice from
the Indemnified Party stating that any Third Party Claim has been paid by any
Indemnified Party and the amount thereof and the indemnity payment requested.
Any payment not made when due shall accrue interest at the rate of one and
one-half percent (1 1/2%) per month until paid in full.
8.4 Notwithstanding anything herein to the contrary, in no event shall
Co-Packer or Buyer be liable to the other party under any provision of this
Agreement for any consequential, incidental or punitive damages or lost profits;
provided, however, that Co-Packer shall be responsible for Buyer's cost of cover
and any incidental damages incurred by Buyer in connection with any Defective
Product.
8.5 Co-Packer shall promptly notify Buyer, and Buyer shall promptly notify
Co-Packer, if Co-Packer or Buyer, as the case may be, reasonably determines at
any time, or is notified orally or in writing by any public authority, that any
Product ("Designated Product") is or may be contaminated or adulterated or
otherwise poses a health risk. In any such case, Buyer shall promptly follow all
instructions delivered by Co-Packer with respect to: (i) public announcements
regarding such Designated Product, (ii) recalls, withdrawals or
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seizures of such Designated Product and (iii) any other action reasonably
requested by Co-Packer in connection with such Designated Product. Buyer shall
pay all costs and expenses associated with any actions taken with respect to
Designated Product pursuant to this Section 8.5; provided that payment of such
costs and expenses by Buyer shall not be deemed to prejudice or otherwise affect
Buyer's rights under Section 8.2 hereof.
9. Miscellaneous
9.1 With reasonable prior notice to Co-Packer and to the extent reasonably
necessary to protect its rights under this Agreement, Buyer shall have the right
(a) to inspect only those areas of the Facilities where the Product is produced
and stored during hours when the Product is being manufactured and (b) to review
Co-Packer's manufacturing records pertaining to the Product during regular
business hours. Representatives of Buyer shall be allowed access only to those
areas of the Facilities where Product is situated for the purpose of inspecting
the Product prior to delivery to Buyer. In addition, Co-Packer shall provide
Buyer on a timely basis with copies of all written inspection reports relating
to the Facilities which are issued to Co-Packer by the U.S. Food and Drug
Administration or any state or local food and drug or similar agency (but only
to the extent such reports relate to the Product).
9.2 If Co-Packer is prevented from complying, either totally or in part,
with any of the terms or provisions of this Agreement by reason of fire, flood,
storm, strike, lockout or other labor trouble, any law, order, proclamation,
regulation, ordinance, demand or requirement of any governmental authority,
riot, war, rebellion, or other causes beyond the reasonable control of Co-Packer
or other acts of God, then upon written notice to Buyer, the affected provisions
and/or other requirements of this Agreement shall be suspended during the period
of such disability. Co-Packer shall make all reasonable efforts to remove such
disability within thirty (30) days of giving notice of such disability. If the
disability continues for more than ten (10) days after the cessation of the
reason for such disability, Buyer shall have the right to terminate this
Agreement, and neither party shall thereafter have any further rights or
obligations hereunder, except as set forth in Section 6. During said period,
Buyer may seek to have its needs, which would otherwise be met hereunder, met by
others without liability to Co-Packer hereunder.
9.3 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Illinois applicable to agreements made and to
be performed entirely within such State, without regard to the conflicts of law
principles of such State.
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9.4 Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement or the application of any such provision
to any person or circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
9.5 This Agreement and any rights and obligations hereunder shall not be
assignable or transferrable by Buyer or Co-Packer (including by operation of law
in connection with a merger or sale of stock, or sale of substantially all the
assets, of Buyer or Co-Packer), without the prior written consent of the other
party, provided that, without the consent of Co-Packer, Buyer may assign its
rights hereunder (i) to one or more wholly owned subsidiaries of Buyer upon
written notice of such assignment to Co-Packer, (ii) to Buyer's secured lenders
as collateral to secure indebtedness of Buyer or (iii) in connection with the
sale of all or substantially all of the assets of the Business to any
unaffiliated third party (regardless of the form of transaction) (it being
understood, however, that no such assignment shall limit or otherwise affect
Buyer's obligations hereunder) and provided further that, without the consent of
Buyer, Co-Packer may assign its rights hereunder to one or more wholly owned
subsidiaries of Co-Packer upon written notice of such assignment to Buyer (it
being understood, however, that no such assignment shall limit or otherwise
affect Co-Packer's obligations hereunder).
9.6 This Agreement and the Asset Purchase Agreement contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior agreements and
understandings, whether written or oral, relating to such subject matter.
9.7 No alleged waiver, modification or amendment to this Agreement or the
Exhibits hereto shall be effective against either party hereto, unless in
writing, signed by the party against which such waiver, modification or
amendment is asserted, and referring specifically the provision hereof alleged
to be waived, modified or amended; provided, however, that Exhibit B attached
hereto may be amended by Co-Packer in accordance with the provisions of Sections
1.2, 5.2, 5.3 and 5.5.
9.8 All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent by prepaid
telex, cable or telecopy, or sent, postage prepaid, by registered, certified or
express mail, or reputable overnight courier service and shall be deemed given
when so delivered by hand, telexed,
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cabled or telecopied, or if mailed, three days after mailing (one business day
in the case of express mail or overnight courier service), as follows:
If to Co-Packer: Kraft Foods, Inc.
Three Lakes Drive
Northfield, IL 60093
Attention: General Counsel
Telecopy No.: (847) 646-2950
with a copy to: Kraft Foods, Inc.
Three Lakes Drive
Northfield, Illinois 60093
Attention: Theodore Banks
Associate General Counsel
Telecopy No.: (708) 646-4431
If to Buyer: Aurora Foods Inc.
445 Hutchinson Avenue, Suite 960
Columbus, Ohio 43235
Attention: President
Telecopy No.: (614) 436-6655
with a copy to: Dartford Partnership, L.L.C.
456 Montgomery Street, Suite 2200
San Francisco, California 94133
Attention: Ian Wilson
Telecopy No.: (415) 982-3023
Either party may change its mailing address by written notice to the
other party in accordance with this Section 9.8.
9.9 The failure or delay of either party to insist upon the other party's
strict performance of the provisions in this Agreement or to exercise in any
respect any right, power, privilege, or remedy provided for under this Agreement
shall not operate as a waiver or relinquishment thereof, nor shall any single or
partial exercise of any right, power, privilege, or remedy preclude other or
further exercise thereof, or the exercise of any other right, power, privilege,
or remedy; provided, however, that the obligations and duties of either party
with
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respect to the performance of any term or condition in this Agreement shall
continue in full force and effect.
9.10 Nothing contained herein shall be deemed or construed to create any
partnership or joint venture between Buyer and Co-Packer. All activities by
Co-Packer under the terms of this Agreement shall be carried on by Co-Packer as
an independent contractor and not as an agent for or employee of Buyer. Under no
circumstances shall any employee of Co-Packer be deemed or construed to be an
employee of Buyer.
9.11 Buyer shall pay all sales, revenue, excise or other federal, state or
local taxes payable with respect to any purchase or shipment of Product
hereunder, excluding franchise, ad valorem, or income taxes of Co-Packer. In
lieu of sales taxes, Buyer may provide Co-Packer with an appropriate sales tax
exemption certificate acceptable to the relevant taxing authority.
9.12 The headings and captions contained in this Agreement and any Exhibit
hereto are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Any capitalized terms used in any
Exhibit and not otherwise defined therein shall have the meanings set forth in
this Agreement. The use of the word "including" herein shall mean "including
without limitation."
9.13 This Agreement may be executed in one or more counterparts (including
by means of telecopied signature pages), all of which shall be considered one
and same agreement, and shall become effective when one or more such
counterparts have been signed by each of the parties and delivered to the other
party.
9.14 Any dispute between the parties hereto arising under or in connection
with this Agreement shall be settled exclusively by negotiation or arbitration
in accordance with the provisions of Section 30 of the Asset Purchase Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Transitional Co-Pack Agreement as of the date and year first written above.
KRAFT FOODS, INC.
BY: /s/ William J. Eichar
-------------------------------
Title: Vice President
AURORA FOODS INC.
(formerly MBW FOODS INC.)
BY: /s/ James B. Ardrey
-------------------------------
Title: Executive Vice President
<PAGE>
EXHIBIT A
EQUIPMENT LIST
Reference is made to the Equipment (as defined in the Asset Purchase Agreement).
<PAGE>
EXHIBIT B
PRODUCTS AND PRICING
See attached.
In addition, Buyer shall bear all costs of promotional packaging materials and
corresponding incremental costs.
<PAGE>
EXHIBIT C
CO-PACKER PRODUCT
Product Number Product Description
-------------- -------------------
- --------------------------------------------------------------------------------
06476 100/2oz Kraft Syrup SSCups
- --------------------------------------------------------------------------------
07852 4/1 gallon Kraft Syrup
- --------------------------------------------------------------------------------
06510 100/1.4oz Kraft Syrup SSCups
- --------------------------------------------------------------------------------
000360 Log Cabin Reg 24/12oz
- --------------------------------------------------------------------------------
000370 Log Cabin Reg 12/24oz
- --------------------------------------------------------------------------------
000390 Log Cabin Reg 9/36oz
- --------------------------------------------------------------------------------
000530 Log Cabin Lite 12/12oz
- --------------------------------------------------------------------------------
<PAGE>
Exhibit D
CONTINUING GUARANTY
Aurora Foods Inc.
(formerly MBW Foods Inc.)
Gentlemen/Ladies:
The undersigned hereby guarantees the article or articles comprising each
shipment or other delivery of Product (as defined in the Transitional Co-Pack
Agreement, dated as of the date hereof, by and between you and the undersigned
(the "Transitional Co-Pack Agreement")), hereafter made by the undersigned to
you, or on your order, or to or on the order of any subsidiary or affiliated
company of yours, as of the date of each shipment or delivery, to be, on such
date, not adulterated or misbranded within the meaning of the Federal Food, Drug
and Cosmetic Act, and not an article which may not, under the provisions of
Section 404 or 505 of the Act, be introduced into the Interstate Commerce, and
to be not adulterated or misbranded within the meaning of the statutes of any
state of the United States.
The undersigned further agrees that the above guaranty shall apply to all
Product which it shall sell to you hereafter pursuant to the terms of the
Transitional Co-Pack Agreement. Dated this 1st day of July, 1997.
KRAFT FOODS, INC.
Three Lakes Drive
Northfield, IL 60093
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
<PAGE>
Exhibit 10.14
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this "AGREEMENT") is made as of
July 1, 1997, by and between KRAFT FOODS, INC., a Delaware corporation
("SELLER"), and AURORA FOODS INC. (formerly MBW FOODS INC.), a Delaware
corporation ("BUYER");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as
of May 7, 1997, by and between Buyer and Seller (as amended, the "ASSET PURCHASE
AGREEMENT"), Seller has agreed to sell to Buyer the Assets, and Buyer has agreed
to purchase the Assets and to assume the Assumed Liabilities;
WHEREAS, in connection therewith, Buyer and Seller desire that Seller
provide Buyer with certain transition services as set forth herein; and
WHEREAS, capitalized terms used herein and not otherwise defined
herein have the meanings given to such terms in the Asset Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller and Buyer agree as follows:
1. TRANSITION SERVICES. During the term of this Agreement as set
forth in Section 5 below (the "TRANSITION PERIOD"), Seller shall provide, or
cause its affiliates to provide, to Buyer (with respect to the Business) from
the date of this Agreement and for the period of time described on ANNEX A
attached hereto with respect to each of the services, the services set forth on
ANNEX A attached hereto, in the manner and at a relative level of service
consistent in all material respects with that provided by Seller or its
affiliates to the Business immediately prior to the date hereof. Unless
otherwise agreed, such services shall be provided at Vendor Cost. For purposes
of this Agreement, "VENDOR COST" means the cost historically allocated to the
Business for such service, adjusted to reflect any changes in the nature or
level of the services. If no cost has historically been allocated to the
Business, then "VENDOR COST" shall be defined as the sum of (i) the total cost
of an individual or department of Seller or its affiliates prorated on an
<PAGE>
equitable basis for time spent on providing the services, and (ii) any other
direct out-of-pocket costs incurred by Seller and its affiliates in providing
the services. In addition, Buyer shall also pay any amounts that are required
to be paid to any licensors of software that is used in connection with the
provision of any services hereunder, and any amounts that are required to be
paid to any such licensors to obtain the consent of such licensors to provide
any of the services hereunder. Subject to the immediately preceding sentence,
Seller shall use reasonable efforts to obtain any consents that may be required
from such licensors in order to provide any of the services hereunder.
2. BILLING AND PAYMENT. Buyer shall promptly pay any bills and
invoices that it receives from Seller or its affiliates for services provided
under or pursuant to this Agreement, subject to receiving, if requested, any
appropriate support documentation for such bills and invoices. Such charges may
at Seller's option be billed as incurred if the amount involved equals or
exceeds $10,000, or, if such charges do not exceed $10,000, at the end of each
calendar month during the Transition Period. All invoices shall be paid by wire
transfer in accordance with the instructions provided by Seller (in writing to
Buyer) not later than ten (10) days following receipt by Buyer of Seller's
invoice. Buyer shall not offset any amounts owing to it by Seller or any of
Seller's affiliates against amounts payable by Buyer hereunder.
3. GENERAL INTENT. Seller shall use its reasonable commercial
efforts to provide the transition services which are set forth on ANNEX A
attached hereto and such other transition assistance as the parties may
otherwise agree during the Transition Period at a cost to be mutually agreed.
Buyer agrees to use its reasonable commercial efforts to end its need to use
such assistance as soon as reasonably possible and (unless the parties otherwise
agree) in all events to end such need with respect to each service specified in
ANNEX A attached hereto not later than six (6) months from the date hereof, or
such shorter period as may be specified in ANNEX A attached hereto for the
provision of each such service.
4. VALIDITY OF DOCUMENTS. The parties hereto shall be entitled to
rely upon the genuineness, validity or truthfulness of any document, instrument
or other writing presented in connection with this Agreement unless such
document, instrument or other writing appears on its face to be fraudulent,
false or forged.
5. TERM OF AGREEMENT. The term of this Agreement shall commence on
the date hereof and shall
<PAGE>
continue (unless sooner terminated pursuant to the terms hereof) for a period of
six (6) months, or such shorter period as may be provided in ANNEX A attached
hereto with respect to particular services described in ANNEX A attached hereto.
6. PARTIAL TERMINATION. Any and all of the services provided by
Seller and its affiliates hereunder are only terminable earlier than the period
specified in ANNEX A attached hereto by Buyer on twenty (20) days' prior written
notice to Seller. As soon as reasonably practicable following receipt of any
such notice, Seller shall advise Buyer as to whether termination of such service
will require the termination or partial termination of, or otherwise affect the
provision of, certain other services specified in ANNEX A attached hereto. If
such is the case, Buyer may withdraw its termination notice. Otherwise, such
termination shall be final.
7. ASSIGNMENT. Except as set forth below, this Agreement and any
rights and obligations hereunder shall not be assignable or transferable by
Buyer or Seller (including by operation of law in connection with a merger or
sale of stock, or sale of substantially all the assets, of Buyer or Seller)
without the prior written consent of the other party and any purported
assignment without such consent shall be void and without effect; PROVIDED,
HOWEVER, that without the consent of Seller, Buyer may assign its rights
hereunder (i) to one or more wholly-owned subsidiaries of Buyer upon written
notice of such assignment to Seller, (ii) to Buyer's secured lenders as
collateral to secure indebtedness of Buyer, or (iii) in connection with the sale
of all or substantially all of the assets of the Business to any unaffiliated
third party (regardless of the form of transaction) (it being understood,
however, that no such assignment shall limit or otherwise affect Buyer's
obligations hereunder).
8. CONFIDENTIALITY. Each party shall cause each of its affiliates
and each of their officers, directors and employees to hold all information
relating to the business of the other party disclosed to it by reason of this
Agreement confidential and will not disclose any of such information to any
party unless legally compelled to disclose such information; PROVIDED, HOWEVER,
that to the extent that any of them may become so legally compelled they may
only disclose such information if they shall first have used reasonable efforts
to, and, if practicable, shall have afforded the other party the opportunity to
obtain, an appropriate protective order or other satisfactory assurance of
confidential treatment for the information required to be so disclosed.
<PAGE>
9. LIMITATION OF LIABILITY. Seller shall not be liable to Buyer or
any third party for any special, punitive, consequential, incidental or
exemplary damages (including lost or anticipated revenues or profits relating to
the same) arising from any claim relating to this Agreement or any of the
services provided hereunder, whether such claim is based on warranty, contract,
tort (including negligence or strict liability) or otherwise, even if an
authorized representative of Seller is advised of the possibility or likelihood
of the same. In addition, Seller shall not be liable to Buyer or any third
party for any direct damages arising from any claim relating to this Agreement
or any of the services provided hereunder or required to be provided hereunder,
except to the extent that such direct damages are caused by the willful
misconduct of Seller or its affiliates.
10. NOTICES. All notices, reports and receipts shall be in writing
and shall be deemed duly given on (i) the date of personal or courier delivery;
(ii) the date of transmission by telecopy or other electronic transmission
service, provided a confirmation copy is also sent no later than the next
business day by postage paid, return receipt requested first-class mail; or
(iii) three (3) business days after the date of deposit in the United States
mails, by postage paid, return receipt requested first-class mail, addressed as
follows:
(i) if to Buyer,
Aurora Foods Inc.
445 Hutchinson Avenue, Suite 800
Columbus, Ohio 43235
Telecopy No.: (614) 436-6655
Attention: President
WITH A COPY TO:
Dartford Partnership, L.L.C.
456 Montgomery Street, Suite 2200
San Francisco, California 94133
Telecopy No.: (415) 982-3023
Attention: Ian Wilson
(ii) if to Seller,
Kraft Foods, Inc.
Three Lakes Drive
Northfield, Illinois 60093
Telecopy No. (847) 646-2950
Attention: General Counsel
<PAGE>
WITH A COPY TO:
Kraft Foods, Inc.
Three Lakes Drive
Northfield, Illinois 60093
Telecopy No. (847) 646-4431
Attention: Theodore Banks, Associate General Counsel
Either party may change its address by written notice to the other
party in accordance with this Section 10.
11. MODIFICATION; NONWAIVER. No alleged waiver, modification or
amendment to this Agreement or to ANNEX A attached hereto shall be effective
against either party hereto, unless in writing, signed by the party against
which such waiver, modification or amendment is asserted, and referring
specifically to the provision hereof alleged to be waived, modified or amended.
The failure or delay of either party to insist upon the other party's strict
performance of the provisions in this Agreement or to exercise in any respect
any right, power, privilege or remedy provided for under this Agreement shall
not operate as a waiver or relinquishment thereof, nor shall any single or
partial exercise of any right, power, privilege or remedy preclude other or
further exercise thereof, or the exercise of any other right, power, privilege
or remedy; PROVIDED, HOWEVER, that the obligations and duties of either party
with respect to the performance of any term or condition in this Agreement shall
continue in full force and effect.
12. RELATIONSHIP OF PARTIES. Except as specifically provided herein,
none of the parties shall act or represent or hold itself out as having
authority to act as an agent or partner of the other parties, or in any way bind
or commit the other party to any obligations. Nothing contained in this
Agreement shall be construed as creating a partnership, joint venture, agency,
trust or other association of any kind, each party being individually
responsible only for its obligations as set forth in this Agreement.
13. FORCE MAJEURE. If Seller is prevented from complying, either
totally or in part, with any of the terms or provisions of this Agreement by
reason of fire, flood, storm, strike, lockout or other labor trouble, any law,
order, proclamation, regulation, ordinance, demand or requirement of any
governmental authority, riot, war, rebellion or other causes beyond the
reasonable control of Seller or other acts of God, then upon written notice to
<PAGE>
Buyer, the affected provisions and/or other requirements of this Agreement shall
be suspended during the period of such disability and Seller shall have no
liability to Buyer or any other party in connection therewith. Seller shall
make all reasonable efforts to remove such disability within thirty (30) days of
giving notice of such disability.
14. INTERPRETATION. The headings and captions contained in this
Agreement and in ANNEX A attached hereto are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
The use of the word "including" herein shall mean "including without
limitation."
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts (including by means of telecopied signature pages), all of which
shall be considered one and the same agreement, and shall become effective when
one or more such counterparts have been signed by each of the parties and
delivered to the other party.
16. ENTIRE AGREEMENT. This Agreement and the Asset Purchase
Agreement contain the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, whether written or oral, relating to such subject
matter.
17. REPRESENTATION BY COUNSEL; INTERPRETATION. Seller and Buyer
acknowledge that each of them has been represented by counsel in connection with
this Agreement and the transactions contemplated hereby. Accordingly, any rule
of law or any legal decision that would require interpretation of any claimed
ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived.
18. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid and effective under
applicable law, but if any provision of this Agreement or the application of any
such provision to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof.
19. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Illinois applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
<PAGE>
20. ANNEX A. ANNEX A attached hereto and referred to herein is
hereby incorporated in and made a part of this Agreement as if set forth in full
herein.
21. ARBITRATION. The parties hereby irrevocably and unconditionally
agree that any dispute between them arising out of or relating in any way to
this Agreement or the transactions arising hereunder shall be settled
exclusively by arbitration in the City of Chicago, Illinois, pursuant to the
provisions of Section 30(b) of the Asset Purchase Agreement.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Transition Services
Agreement to be executed by their duly authorized representatives as of the date
and year first set forth above.
KRAFT FOODS, INC.
By: /s/ William J. Eichar
-----------------------------------
Its:Vice President
----------------------------------
AURORA FOODS INC.
(formerly MBW FOODS INC.)
By: /s/ James B. Ardrey
----------------------------------
Its:Executive Vice President
----------------------------------
<PAGE>
TRANSITION SERVICES AGREEMENT
BETWEEN KRAFT (SELLER) AND MBW (BUYER)
<TABLE>
<CAPTION>
TSA
SECTION DESCRIPTION PERIOD COST
- ------- ----------- ------ ----
<S> <C> <C> <C>
I A SALES SUPPORT
Retail sales brokerage July 1997 to 3.0% of net revenue through November;
Dec 1997 1.0% of net revenue in December.
Net revenue defined as gross sales less
product allowances, cash discounts and
unsaleables.
Foodservice sales July 1997 to 5.0% of net revenue.
brokerage Dec 1997
Current file of products, July 1997 to No charge.
payment terms, promotional Dec 1997
price programs, sales plans
for markets, portions of sales
manuals
I B MARKETING
Consult with marketing up to 5 No charge for service; actual costs of
management man-days out-of-pocket expenses, e.g., travel
up to 5 add'l $750 per day, plus actual
man-days out-of-pocket costs
Neilsen market data July 1997 to $8,550 per month
(required while using retail Dec 1997
sales brokerage services)
Foodservice--manage promotions July 1997 to $5,000 per month
contracts and bids; coordinate Dec 1997
with field sales
I C SALESFORCE CONSULTATION July 1997 to No charge for daily activities. No charge
Dec 1997 for up to one day per region to meet with
MBW and/or MBW's brokers. $750 per
person per day after first day to meet with
MBW and/or MBW's brokers
</TABLE>
Page 1 of 3
<PAGE>
TRANSITION SERVICES AGREEMENT
BETWEEN KRAFT (SELLER) AND MBW (BUYER)
<TABLE>
<CAPTION>
TSA
SECTION DESCRIPTION PERIOD COST
- ------- ----------- ------ ----
<S> <C> <C> <C>
II A TRANSACTION PROCESSING
Order entry, invoicing, credit, July 1997 to $120,600 per month
collections, cash applications, Dec 1997
deduction management. Order
picking and loading, schedule
carriers. Trade and consumer
promotion management,
make payments for promo-
tions and coupons. Manage
and process trade claims for
damages and returns
Foodservice--managing inventory, July 1997 to $2,500 per month
forecasting sales, managing Dec 1997
warehousing
II B ACCOUNTING SERVICES
Daily, weekly, monthly sales July 1997 to Included in II A above
reporting. Monthly reporting Dec 1997
of gross and net sales.
Monthly accounts receivable
aging. Trade deal accounting
Monthly financial reporting July 1997 to $4,000 per month
Dec 1997
Foodservice sales and financial July 1997 to $5,500 per month
reporting, systems support Dec 1997
</TABLE>
Page 2 of 3
<PAGE>
TRANSITION SERVICES AGREEMENT
BETWEEN KRAFT (SELLER) AND MBW (BUYER)
<TABLE>
<CAPTION>
TSA
SECTION DESCRIPTION PERIOD COST
- ------- ----------- ------ ----
<S> <C> <C> <C>
III A CONSUMER RESPONSE (800#) July 1997 to $8.00 per consumer contact
Dec 1997
Consumer response historical None Not applicable
data. MBW does not want this.
III B INFORMATION SERVICES
Special requests of July 1997 to $750 per person per day
information reporting and Dec 1997
presentation
KRAFT PROPRIETARY SOFTWARE
--------------------------
Inventory, warehousing, July 1997 to No charge
order management, freight Dec 1997
scheduling, freight payment
THIRD PARTY SOFTWARE
--------------------
GEAC--Fixed Assets, July 1997 to $7,000 for the 6-month period
Accts Pay, Accts Rec Dec 1997
Sterling--Gentran Plus, July 1997 to $5,000 for the 6-month period
Connect Mlbx + Dec 1997
(Third party software costs will be the lesser of
Kraft's actual out-of-pocket costs or the above)
n/a Foodservice technical support-- July 1997 to $750 per person per day
specification and packaging Dec 1997
changes
</TABLE>
NOTE:
A month is defined as Kraft's accounting month. July, August,
October and November are each 4 weeks; September and December
are each 5 weeks. The monthly fees will not be adjusted for the
varying lengths of the months.
Page 3 of 3
<PAGE>
Ex-10.15
Excluded Business Co-Pack Agreement
EXCLUDED BUSINESS CO-PACK AGREEMENT
THIS EXCLUDED BUSINESS CO-PACK AGREEMENT (this "Agreement"), dated
as of July 1, 1997, by and between KRAFT FOODS, INC., a Delaware corporation
("Buyer"), and Aurora Foods Inc. (formerly MBW Foods Inc.), a Delaware
corporation ("Co-Packer");
W I T N E S S E T H:
WHEREAS, Co-Packer has purchased the LOG CABIN(R), COUNTRY
KITCHEN(R) and WIGWAM(R) syrup business (the "Business") and certain equipment
(the "Equipment") of Buyer pursuant to that certain Asset Purchase Agreement,
dated as of May 7, 1997, by and between Co-Packer and Buyer (the "Asset Purchase
Agreement");
WHEREAS, Buyer wishes to engage Co-Packer for the purpose of
manufacturing, processing and packaging the syrup products listed on Exhibit A
attached hereto (the "Product"), utilizing the Equipment owned by Co-Packer in
order to enable Buyer to continue (i) to supply such Product to Alliant
Foodservice ("Alliant") pursuant to the Distribution Agreement, dated as of
February 13, 1995, by and among Buyer, Alliant and CDRF Acquisition Corporation
(the "Distribution Agreement") and (ii) to export Product to Mexico;
NOW, THEREFORE, in consideration of the premises and of the mutual
promises and covenants hereinafter set forth, the parties hereto agree as
follows:
1. Product and Its Manufacture/Packaging
1.1 Subject to and on the terms and conditions hereof, Co-Packer shall
supply the Product to Buyer.
1.2 Subject to and on the terms and conditions hereof, Co-Packer (or one
or more third-party co-packers retained by Co-Packer) shall manufacture and
process the Product in accordance with the formulas, raw and packaging material
specifications and finished product standards, the equipment and the
manufacturing practices (collectively, the "Specifications") used by Buyer in
manufacturing the Product as of the date of the Asset Purchase Agreement.
Subject to Co-Packer's approval (which shall not be unreasonably withheld), the
Specifications may be changed by Buyer from time to time on ninety (90) days'
prior written
-1-
<PAGE>
notice; provided, however, that Co-Packer and Buyer shall mutually agree upon a
schedule for any such Specifications change to minimize the incremental costs
resulting from such change; and further provided, however, that (i) Buyer shall
pay for any necessary administrative or technical support services relating to
the implementation of any such change to the Specifications and shall promptly
reimburse Co-Packer for any and all expenses and costs associated with or
arising out of any such change in the Specifications (including the write-off of
any stock of raw and packaging materials (including labels) and work-in-process
and any start-up costs), (ii) Buyer shall pay for and provide any new equipment
necessary to produce Product with such changed Specifications and (iii) the
prices (and all components thereof) charged for the Product may be adjusted by
Co-Packer (on a retroactive basis to the date of such Specifications change) to
reflect incremental costs resulting from any such change in the Specifications.
Co-Packer shall notify Buyer in writing of any such price changes.
1.3 All packaging (including labels) for the Product shall have been
approved by Buyer prior to use; provided, however, that the types and designs of
the stock of packaging existing as of the date of this Agreement shall be deemed
approved. Buyer hereby grants to Co-Packer the right and license to use Buyer's
trademarks relating to the Product solely for the purpose of performing services
under this Agreement during the term hereof. Co-Packer shall not use packaging
materials for the Product for any purpose other than the exercise of its rights
and performance of its obligations pursuant to this Agreement.
1.4 Co-Packer shall replace without charge any Product not complying with
the Specifications or having any defects in manufacturing or packaging
demonstrated to have existed at the time of shipment to Buyer ("Defective
Product"); provided that Buyer gives Co-Packer reasonably prompt written notice
upon discovery of any Defective Product; and provided, further, however, that
Buyer shall bear any losses due to Defective Product or otherwise unsaleable
Product attributable in any respect to the Specifications relating thereto
(including any change to the Specifications pursuant to Section 1.2 hereof).
1.5 Co-Packer shall purchase all raw and packaging materials used for the
Product, and Co-Packer shall retain title thereto until title to finished
Product has passed to Buyer pursuant to Section 4.3 hereof. In the event Buyer
desires to supply any raw or packaging materials to Co-Packer, Buyer shall make
a written proposal to Co-Packer (which proposal shall describe the method of
procurement of such materials by Co-Packer), and if Co-Packer's computer systems
permit Co-Packer to procure such materials on a basis which does not
unreasonably interfere with the manner in which it procures other raw and
packaging materials or the manner in which it performs its other duties under
this Agreement
-2-
<PAGE>
or the Transition Services Agreement (e.g., invoicing, shipping, etc.),
Co-Packer shall reasonably cooperate with Buyer to implement Buyer's proposal.
If Buyer's proposal is implemented, the raw material costs and/or packaging
material costs shall be reduced for any Product using such materials supplied by
Buyer by the cost of such materials so supplied, and Buyer shall be responsible
for any additional costs (or additional yield losses) incurred by Co-Packer as a
result of using such materials supplied by Buyer.
1.6 Yield losses, on a monthly basis, for raw materials shall be
maintained by Co-Packer at or below historical levels (calculated by averaging
Co-Packer's monthly loss allowances for such raw materials during the
twelve-month period immediately preceding the date of this Agreement or, if
Co-Packer is using the services of a third party co-packer, by averaging such
third party-co-packer's monthly loss allowances for such raw materials during
the twelve-month period immediately preceding the date of this Agreement),
except to the extent changes in Specifications result in higher levels.
2. [Intentionally Omitted.]
3. Estimates, Orders and Volume Requirements
3.1 Buyer shall, on a monthly basis, provide a rolling 13-week production
requirements forecast (each, a "Forecast") by SKU and distribution center. Buyer
shall be responsible for all the Product produced by Co-Packer in reasonable
reliance on each Forecast. Buyer shall place firm orders for the Product for no
less than a minimum run quantity to be reasonably agreed upon between Buyer and
Co-Packer with respect to Product under the Distribution Agreement (but not with
respect to exports to Mexico), and orders for less than such minimum run
quantity shall be treated by Co-Packer as orders for such minimum run quantity.
Exceptions to minimum run quantities shall be made only by mutual consent in
writing between Buyer and Co-Packer, and Buyer shall bear all incremental costs
associated with such exceptions to minimum run quantities. Buyer shall, in
accordance with Section 6.3 hereof, bear the cost of any unused raw materials
and packaging materials procured by Co-Packer in reliance on the Forecast in the
event that Buyer's firm orders for specific Product are lower than the Forecast
for such Product. Buyer shall provide Co-Packer reasonable notice of any
increases in any Forecast due to any material increase in demand and shall bear
the incremental costs resulting from any increase in production to meet such
demand. To the extent such increases in Forecasts exceed Co-Packer's
manufacturing capacity and/or raw or packaging material availability, Buyer and
Co-Packer shall mutually agree upon product scheduling deliver priority customer
orders.
-3-
<PAGE>
3.2 In the event of any failure by Co-Packer timely to deliver the Product
to Buyer in the quantities set forth in any Order or in compliance with the
Specifications, Buyer shall use all commercially reasonable efforts to mitigate
or eliminate any adverse impact to Buyer resulting from such failure, and
Co-Packer shall use all commercially reasonable efforts to resume full
performance of its obligations hereunder as soon as practicable following the
onset of the events or circumstances giving rise to such failure.
4. Storage and Handling, Redistribution and Delivery
4.1 [Intentionally omitted.]
4.2 Co-Packer shall load and ship the Product, with appropriate shipping
documents, to such delivery point (e.g., Buyer distribution centers or other
final destination) and in such quantities as may be designated by Buyer in its
Order for such Product. Co-Packer shall bear all responsibility for selecting
the carrier, including the scheduling of pickups and negotiating of freight
rates. The cost of such transportation services for Product, including, as
applicable, the cost of transporting Product from the Facility at which such
Product was produced to a distribution center determined by Co-Packer, between
distribution centers and to Buyer's customers (collectively, "Freight Costs"),
shall be charged to Buyer (i) where actual cost information is available, at
Co-Packer's actual cost for such services or (ii) where actual cost information
is not available, on an allocated basis consistent with Co-Packer's past custom
and practice of allocating such costs. Co-Packer shall not provide any storage,
handling or distribution services with respect to any products manufactured by
Buyer or third parties.
4.3 Co-Packer shall deliver the Product at the loading dock of the
facility at which such Product was produced, F.O.B. dock of production, and
title to and risk of loss with respect to the Product shall pass to Buyer upon
such delivery.
5. Price and Payment
5.1 In the event Co-Packer manufactures the Product itself (as opposed to
retaining a third-party co-packer to manufacture such Product), Buyer shall pay
Co-Packer for its fully allocated costs to manufacture such Product, without
margin, subject to adjustment by Co-Packer from time to time as described below,
provided that Co-Packer shall be entitled to a five (5) percent markup on
Product manufactured by Co-Packer under this Agreement for export to Mexico.
Such costs shall include the following components: (i) raw material costs, (ii)
packaging costs, (iii) manufacturing variable, labor and expense costs and (iv)
variable
-4-
<PAGE>
warehousing costs. In the event a third-party co-packer manufactures the Product
on behalf of Co-Packer, Buyer shall pay Co-Packer the amounts invoiced to
Co-Packer by such third-party co-packer for such Product (which invoice shall
reflect prices determined in substantially the same manner and on substantially
the same basis that prices for similar products manufactured for Co-Packer by
such third-party co-packer are determined), plus a fee to administer such third
party co-packing arrangement, but not including any carrying charges or margin
for the account of Co-Packer. Buyer shall also reimburse Co-Packer for all
Freight Costs.
5.2 With respect to Product manufactured by Co-Packer itself (as opposed
to a third-party co-packer retained by Co-Packer), prices charged for Product
shall be retroactively adjusted by Co-Packer from time to time to reflect the
actual raw material costs and packaging costs for such Product. An appropriate
payment shall be made to compensate for any such variance, either by Buyer to
Co-Packer or by Co-Packer to Buyer, as the case may be, within thirty (30) days
of the notification of cost changes given by Co-Packer pursuant to the following
sentence. Co-Packer shall notify Buyer in writing of all such cost changes on
Buyer's invoice. Upon Buyer's request, Co-Packer shall provide to Buyer in
writing a reasonable explanation of any Raw Material Cost and Packaging Cost
changes that resulted in the price change; provided that Co-Packer shall not be
required to describe specific prices for Raw Material Costs and Packaging Costs
where such prices are subject to confidentiality agreements with third parties.
5.3 With respect to Product manufactured by Co-Packer itself (as opposed
to a third-party co-packer retained by Co-Packer), adjustments to Co-Packer's
manufacturing variable, labor and expense costs and variable warehousing costs
(collectively, "Conversion Costs" (it being understood that such Conversion
Costs shall consist of the same cost components as those included in the
definition of "Conversion Costs" included in the Transitional Co-Pack Agreement
(as defined in the Asset Purchase Agreement)) shall be effective as of such time
as any actual increases in Conversion Costs occurred. Upon such adjustment, an
appropriate payment shall be made by Buyer to Co-Packer to compensate for such
variance within thirty (30) days of the notification of cost changes given by
Co-Packer pursuant to the following sentence. Co-Packer shall notify Buyer in
writing of all such Conversion Cost changes. All such written notices shall
contain a reasonable explanation of the Conversion Cost change that resulted in
the price change.
5.4 Buyer shall pay any amounts that are required to be paid to
Co-Packer's pallet provider in connection with the provision of pallet services
hereunder, and any amounts that are required to be paid to such pallet provider
to obtain the consent of such pallet provider to
-5-
<PAGE>
provide any such pallet services hereunder. Subject to the immediately preceding
sentence, Co-Packer shall use reasonable efforts to obtain any consents that may
be required from such pallet provider in order to obtain any such pallet
services.
5.5 Co-Packer shall invoice Buyer on a monthly basis for all shipments of
the Products made for such month, indicating on such invoice (i) a description
of all Products shipped, (ii) the quantity of Products shipped and (iii) the
total price for such Products. Notwithstanding the time at which title to and
risk of loss for the Product passes to Buyer pursuant to Section 4.3 hereof,
Buyer shall make payment to Co-Packer within thirty (30) days following the date
of such invoice.
5.6 Buyer's obligation to make payments to Co-Packer under this Agreement
shall not be subject to offset or reduction by reason of any amounts alleged to
be owing from Co-Packer to Buyer, whether pursuant to the Asset Purchase
Agreement or otherwise.
6. Term and Termination
6.1 The term of this Agreement shall commence on the date on which any
Equipment has been moved from a facility of Buyer and begins operating at a
facility of Co-Packer or of a third-party co-packer retained by Co-Packer, and
shall expire on February 13, 2000, unless terminated earlier in accordance with
the provisions of this Section 6 or by Buyer upon 60 days' prior written notice
to Co-Packer; provided that Co-Packer shall not be required without its consent
to manufacture Product under this Agreement for export to Mexico after December
31, 1998.
6.2 Either party may immediately terminate this Agreement if a Default (as
defined below) by the other party has occurred and is continuing by giving
written notice thereof to the defaulting party. The term "Default" shall mean
any of the following:
(i) failure by a party to comply with or to perform any material
provision or condition of this Agreement for ten (10) days after written
notice thereof to such party; or
(ii) a party becomes insolvent, is unable to pay its debts as they
mature or is the subject of a petition in bankruptcy, whether voluntary or
involuntary, or of any other proceeding under bankruptcy, insolvency or
similar laws; or makes an assignment for the benefit of creditors; or is
named in, or its property is subject to a suit for appointment of a
receiver; or is dissolved or liquidated; or
-6-
<PAGE>
(iii) any warranty made in this Agreement is breached, false, or
misleading in any material respect.
In the event of such termination, the non-defaulting party shall be
entitled to pursue any remedy provided in law or equity, including injunctive
relief and the right to recover any damages it may have suffered by reason of
such Default.
6.3 Upon termination or expiration of this Agreement, Buyer shall purchase
from Co-Packer any and all raw materials, packaging materials (including labels)
and work-in-process held by Co-Packer for use in production of Product and all
finished goods then held by Co-Packer at Co-Packer's costs therefor. Co-Packer
shall submit an invoice to Buyer for the costs of such materials (which invoice
shall be accompanied by the invoices or vouchers for such costs) and finished
goods, which Buyer shall pay within thirty (30) days of receipt.
6.4 Upon termination or expiration of this Agreement, all rights,
obligations, and causes of action accruing hereunder prior to such termination
shall survive and the provisions of this Agreement shall continue to be
controlling for the purpose of determining the rights of the parties hereto. The
waiver or repeated waiver by either party hereto of any breach of any provision
of this Agreement by the other party shall not be deemed a waiver of a future
breach.
6.5 The provisions of Sections 6, 7, 8 and 9 hereof shall survive any
termination or expiration of this Agreement.
7. Confidentiality
7.1 Co-Packer shall regard as confidential and proprietary all of the
information communicated to it by Buyer in connection with this Agreement (which
information shall at all times be the property of Buyer). Co-Packer shall not,
without Buyer's prior written consent, at any time (a) use such information for
any purpose other than in connection with the performance of its obligations
under this Agreement or (b) disclose any portion of such information to third
parties, excluding Co-Packer's agents or subcontractors which are directly
performing services for Co-Packer in connection with this Agreement. Co-Packer
shall at the termination or expiration of this Agreement return to Buyer all
such information which is in written or tangible form (including all copies,
summaries and notes of the contents thereof).
-7-
<PAGE>
Notwithstanding the foregoing, Co-Packer's obligations pursuant to
this Section 7.1 shall not apply to (i) information that, at the time of
disclosure, is, or after disclosure becomes part of, the public domain other
than as a consequence of Co-Packer's breach, (ii) information that was known or
otherwise available to Co-Packer prior to the disclosure by Buyer, (iii)
information disclosed by a third party to Co-Packer after the disclosure by
Buyer, if such third party's disclosure neither violates any obligation of the
third party to Buyer nor is a consequence of Co-Packer's breach, (iv)
information that Buyer authorizes in writing for release, (v) information which
is independently developed by Co-Packer or (vi) information that is acquired by
Co-Packer pursuant to the terms of the Asset Purchase Agreement.
7.2 Buyer shall regard as confidential and proprietary all of the
information communicated to it by Co-Packer in connection with this Agreement
(which information shall at all times be the property of Co-Packer). Buyer shall
not, without Co-Packer's prior written consent, at any time (a) use such
information for any purpose other than in connection with the performance of its
obligations under this Agreement or (b) disclose any portion of such information
to third parties, excluding Buyer's agents or subcontractors which are directly
performing services for Buyer in connection with this Agreement. Buyer shall at
the termination or expiration of this Agreement return to Co-Packer all such
information which is in written or tangible form (including all copies,
summaries and notes of the contents thereof).
Notwithstanding the foregoing, Buyer's obligations pursuant to this
Section 7.2 shall not apply to (i) information that, at the time of disclosure,
is, or after disclosure becomes part of, the public domain other than as a
consequence of Buyer's breach, (ii) information that was known or otherwise
available to Buyer prior to the disclosure by Co-Packer (other than as a result
of Buyer's ownership of the Business prior to the date of this Agreement), (iii)
information disclosed by a third party to Buyer after the disclosure by
Co-Packer, if such third party's disclosure neither violates any obligation of
the third party to Co-Packer nor is a consequence of Buyer's breach or (iv)
information that Co-Packer authorizes, in writing, for release.
7.3 Each of the parties hereto agrees that any breach of this Section 7 by
such party, its employees, agents or subcontractors shall cause irreparable
injury to the other party, that the other party shall be entitled to specific
performance and injunctive or other equitable relief as a remedy for any such
breach, and, further, each party agrees to waive any requirement for the
securing or posting of any bond in connection with any such remedy.
-8-
<PAGE>
8. Guarantees and Indemnifications
8.1 Co-Packer represents and warrants that it has delivered to Buyer an
executed Continuing Guaranty in the form of Exhibit B hereto for all Product
manufactured, processed and packaged for Buyer pursuant to this Agreement.
8.2 Co-Packer shall indemnify Buyer for all claims, actions and other
liabilities, including reasonable legal fees or other costs (collectively,
"Losses"), that may be claimed, asserted or recovered against Buyer (i) by any
person, firm or corporation on account of any actual or alleged damage to
property, injury or death occurring to any person arising out of any obligation
defaulted upon by Co-Packer under this Agreement (including any recalls of
products), (ii) out of actual or alleged injury to person or property or death
occurring to any Co-Packer employees, agents or any other individuals on
Co-Packer's premises and (iii) for any negligent acts or omissions of Co-Packer
employees or agents, in each case other than Losses arising from adherence to
the Specifications and other than consequential damages or lost profits. Buyer
shall indemnify Co-Packer for all Losses that arise from any complaints, claims
or legal actions (a) alleging infringement of any letters patent, trademarks,
copyrights or otherwise, resulting from the use of any packaging materials
(including labels) or new Specifications for the Product, (b) brought by any
governmental authority against or concerning the Product or (c) that in any way
arise in connection with the quality of the Product (including a defect in any
Product attributable to the Specifications relating thereto), except if such
liability arises as a result of Co-Packer's breach of any of its obligations
under this Agreement.
8.3 In order for a party (the "Indemnified Party") to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim or demand, made by any person, firm, governmental authority
or corporation against the Indemnified Party (a "Third Party Claim"), such
Indemnified Party must notify the indemnifying party in writing of the Third
Party Claim within ten (10) business days after receipt by such Indemnified
Party of written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have been actually
prejudiced as a result of such failure.
If a Third Party Claim is made against an Indemnified Party, the
indemnifying party will be entitled to participate in the defense thereof and,
upon notice to the Indemnified Party, to assume the defense thereof; provided
that (i) the indemnifying party's counsel is reasonably satisfactory to the
Indemnified Party, and (ii) the indemnifying party shall
-9-
<PAGE>
thereafter consult with the Indemnified Party upon the Indemnified Party's
reasonable request for such consultation from time to time with respect to such
suit, action or proceeding. If the indemnifying party assumes such defense, the
Indemnified Party shall have the right (but not the duty) to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the indemnifying party. The indemnifying party shall be
liable for the fees and expenses of counsel employed by the Indemnified Party
for any period during which the indemnifying party has not assumed the defense
thereof, but the indemnifying party shall not be liable to the Indemnified Party
for any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof. Whether or not the indemnifying party
chooses to defend or prosecute any Third Party 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 Indemnified Party shall not
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the indemnifying party's prior written consent, which
shall not be unreasonably withheld.
Any payment pursuant to this Section 8.3 shall be made not later than
thirty (30) days after receipt by the indemnifying party of written notice from
the Indemnified Party stating that any Third Party Claim has been paid by any
Indemnified Party and the amount thereof and the indemnity payment requested.
Any payment not made when due shall accrue interest at the rate of one and
one-half percent (1 1/2%) per month until paid in full.
8.4 Notwithstanding anything herein to the contrary, in no event shall
Co-Packer or Buyer be liable to the other party under any provision of this
Agreement for any consequential, incidental or punitive damages or lost profits;
provided, however, that Co-Packer shall be responsible for Buyer's cost of cover
and any incidental damages incurred by Buyer in connection with any Defective
Product.
8.5 Co-Packer shall promptly notify Buyer, and Buyer shall promptly notify
Co-Packer, if Co-Packer or Buyer, as the case may be, reasonably determines at
any time, or is notified orally or in writing by any public authority, that any
Product ("Designated Product") is or may be contaminated or adulterated or
otherwise poses a health risk. In any such case, Buyer shall promptly follow all
instructions delivered by Co-Packer with respect to: (i) public announcements
regarding such Designated Product, (ii) recalls, withdrawals or
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<PAGE>
seizures of such Designated Product and (iii) any other action reasonably
requested by Co-Packer in connection with such Designated Product. Buyer shall
pay all costs and expenses associated with any actions taken with respect to
Designated Product pursuant to this Section 8.5; provided that payment of such
costs and expenses by Buyer shall not be deemed to prejudice or otherwise affect
Buyer's rights under Section 8.2 hereof.
9. Miscellaneous
9.1 With reasonable prior notice to Co-Packer and to the extent reasonably
necessary to protect its rights under this Agreement, Buyer shall have the right
(a) to inspect only those areas of the Facilities where the Product is produced
and stored during hours when the Product is being manufactured and (b) to review
Co-Packer's manufacturing records pertaining to the Product during regular
business hours. Representatives of Buyer shall be allowed access only to those
areas of the Facilities where Product is situated for the purpose of inspecting
the Product prior to delivery to Buyer. In addition, Co-Packer shall provide
Buyer on a timely basis with copies of all written inspection reports relating
to the Facilities which are issued to Co-Packer by the U.S. Food and Drug
Administration or any state or local food and drug or similar agency (but only
to the extent such reports relate to the Product).
9.2 If Co-Packer is prevented from complying, either totally or in part,
with any of the terms or provisions of this Agreement by reason of fire, flood,
storm, strike, lockout or other labor trouble, any law, order, proclamation,
regulation, ordinance, demand or requirement of any governmental authority,
riot, war, rebellion, or other causes beyond the reasonable control of Co-Packer
or other acts of God, then upon written notice to Buyer, the affected provisions
and/or other requirements of this Agreement shall be suspended during the period
of such disability. Co-Packer shall make all reasonable efforts to remove such
disability within thirty (30) days of giving notice of such disability. If the
disability continues for more than ten (10) days after the cessation of the
reason for such disability, Buyer shall have the right to terminate this
Agreement, and neither party shall thereafter have any further rights or
obligations hereunder, except as set forth in Section 6. During said period,
Buyer may seek to have its needs, which would otherwise be met hereunder, met by
others without liability to Co-Packer hereunder.
9.3 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Illinois applicable to agreements made and to
be performed entirely within such State, without regard to the conflicts of law
principles of such State.
-11-
<PAGE>
9.4 Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement or the application of any such provision
to any person or circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
9.5 This Agreement and any rights and obligations hereunder shall not be
assignable or transferrable by either party (including by operation of law in
connection with a merger or sale of stock, or sale of substantially all the
assets, of either party), without the prior written consent of the other party,
provided that, without the consent of the other party, either party may assign
its rights hereunder (i) to one or more wholly owned subsidiaries of such party
upon written notice of such assignment to the other party, (ii) to either
party's secured lenders as collateral to secure indebtedness of such party or
(iii) in connection with the sale of all or substantially all of the assets of
the Business to any unaffiliated third party (regardless of the form of
transaction) (it being understood, however, that no such assignment shall limit
or otherwise affect the assigning party's obligations hereunder).
9.6 This Agreement and the Asset Purchase Agreement contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior agreements and
understandings, whether written or oral, relating to such subject matter.
9.7 No alleged waiver, modification or amendment to this Agreement or the
Exhibits hereto shall be effective against either party hereto, unless in
writing, signed by the party against which such waiver, modification or
amendment is asserted, and referring specifically the provision hereof alleged
to be waived, modified or amended.
9.8 All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent by prepaid
telex, cable or telecopy, or sent, postage prepaid, by registered, certified or
express mail, or reputable overnight courier service and shall be deemed given
when so delivered by hand, telexed, cabled or telecopied, or if mailed, three
days after mailing (one business day in the case of express mail or overnight
courier service), as follows:
-12-
<PAGE>
If to Buyer: Kraft Foods, Inc.
Three Lakes Drive
Northfield, IL 60093
Attention: General Counsel
Telecopy No.: (847) 646-2950
with a copy to: Kraft Foods, Inc.
Three Lakes Drive
Northfield, Illinois 60093
Attention: Theodore Banks
Associate General Counsel
Telecopy No.: (708) 646-4431
If to Co-Packer: Aurora Foods Inc.
445 Hutchinson Avenue, Suite 960
Columbus, Ohio 43235
Attention: President
Telecopy No.: (614) 436-6655
with a copy to: Dartford Partnership, L.L.C.
456 Montgomery Street, Suite 2200
San Francisco, California 94133
Attention: Ian Wilson
Telecopy No.: (415) 982-3023
Either party may change its mailing address by written notice to the
other party in accordance with this Section 9.8.
9.9 The failure or delay of either party to insist upon the other party's
strict performance of the provisions in this Agreement or to exercise in any
respect any right, power, privilege, or remedy provided for under this Agreement
shall not operate as a waiver or relinquishment thereof, nor shall any single or
partial exercise of any right, power, privilege, or remedy preclude other or
further exercise thereof, or the exercise of any other right, power, privilege,
or remedy; provided, however, that the obligations and duties of either party
with respect to the performance of any term or condition in this Agreement shall
continue in full force and effect.
-13-
<PAGE>
9.10 Nothing contained herein shall be deemed or construed to create any
partnership or joint venture between Buyer and Co-Packer. All activities by
Co-Packer under the terms of this Agreement shall be carried on by Co-Packer as
an independent contractor and not as an agent for or employee of Buyer. Under no
circumstances shall any employee of Co-Packer be deemed or construed to be an
employee of Buyer.
9.11 Buyer shall pay all sales, revenue, excise or other federal, state or
local taxes payable with respect to any purchase or shipment of Product
hereunder, excluding franchise, ad valorem, or income taxes of Co-Packer. In
lieu of sales taxes, Buyer may provide Co-Packer with an appropriate sales tax
exemption certificate acceptable to the relevant taxing authority.
9.12 The headings and captions contained in this Agreement and any Exhibit
hereto are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Any capitalized terms used in any
Exhibit and not otherwise defined therein shall have the meanings set forth in
this Agreement. The use of the word "including" herein shall mean "including
without limitation."
9.13 This Agreement may be executed in one or more counterparts (including
by means of telecopied signature pages), all of which shall be considered one
and same agreement, and shall become effective when one or more such
counterparts have been signed by each of the parties and delivered to the other
party.
9.14 Any dispute between the parties hereto arising under or in connection
with this Agreement shall be settled exclusively by negotiation or arbitration
in accordance with the provisions of Section 30 of the Asset Purchase Agreement.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Excluded Business Co-Pack Agreement as of the date and year first written above.
KRAFT FOODS, INC.
BY: /s/ William J. Eichar
-------------------------------
Title: Vice President
AURORA FOODS INC.
(formerly MBW FOODS INC.)
BY: /s/ James B. Ardrey
-------------------------------
Title: Executive Vice President
<PAGE>
EXHIBIT A
PRODUCT
Product Number Product Description
-------------- -------------------
- --------------------------------------------------------------------------------
06476 100/2oz Kraft Syrup SSCups
- --------------------------------------------------------------------------------
07852 4/1 gallon Kraft Syrup
- --------------------------------------------------------------------------------
06510 100/1.4oz Kraft Syrup SSCups
- --------------------------------------------------------------------------------
000360 Log Cabin Reg 24/12oz
- --------------------------------------------------------------------------------
000370 Log Cabin Reg 12/24oz
- --------------------------------------------------------------------------------
000390 Log Cabin Reg 9/36oz
- --------------------------------------------------------------------------------
000530 Log Cabin Lite 12/12oz
- --------------------------------------------------------------------------------
-16-
<PAGE>
Exhibit B
CONTINUING GUARANTY
Kraft Foods, Inc.
Gentlemen/Ladies:
The undersigned hereby guarantees the article or articles comprising each
shipment or other delivery of Product (as defined in the Excluded Business
Co-Pack Agreement, dated as of the date hereof, by and between you and the
undersigned (the "Excluded Business Co-Pack Agreement")), hereafter made by the
undersigned to you, or on your order, or to or on the order of any subsidiary or
affiliated company of yours, as of the date of each shipment or delivery, to be,
on such date, not adulterated or misbranded within the meaning of the Federal
Food, Drug and Cosmetic Act, and not an article which may not, under the
provisions of Section 404 or 505 of the Act, be introduced into the Interstate
Commerce, and to be not adulterated or misbranded within the meaning of the
statutes of any state of the United States.
The undersigned further agrees that the above guaranty shall apply to all
Product which it shall sell to you hereafter pursuant to the terms of the
Excluded Business Co-Pack Agreement.
Dated this 1st day of July, 1997.
AURORA FOODS INC.
formerly MBW FOODS INC.
445 Hutchinson Avenue, Suite 960
Columbus, Ohio 43235
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
<PAGE>
EXHIBIT 12.1
AURORA FOODS INC.
COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS OF DOLLARS EXCEPT RATIO DATA)
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1996 1997
-------------- --------------
<S> <C> <C>
Company Pro Forma:
Earnings were calculated as follows:
Income before taxes............................................................. $ 12,389 $ 5,144
Add: Fixed charges.............................................................. 27,863 6,965
-------------- --------------
Earnings........................................................................ $ 40,252 $ 12,109
-------------- --------------
-------------- --------------
Fixed charges were calculated as follows:
Interest expense(a)............................................................. $ 27,818 $ 6,954
Portion of rentals attributable to interest..................................... 45 11
-------------- --------------
Fixed charges................................................................... $ 27,863 $ 6,965
-------------- --------------
-------------- --------------
Ratio of earnings to fixed charges................................................ 1.4 1.7
-------------- --------------
-------------- --------------
</TABLE>
- ------------------------
(a) Interest expense includes commitment fee on revolving facility and
amortization of debt issuance costs.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 (File No. 333-24715) of Aurora Foods Inc. of
our report dated March 28, 1997 relating to the balance sheet of MBW Foods Inc.
and our report dated March 14, 1997 relating to the financial statements of Mrs.
Butterworth's Business, which appear in such Prospectus. We also consent to the
references to us under the headings "Experts" and "Selected Historical Financial
Data" in such Prospectus. However, it should be noted that Price Waterhouse LLP
has not prepared or certified such "Selected Historical Financial Data."
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Francisco, California
July 11, 1997
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 (File
No. 333-24715) of our report dated June 4, 1997, on our audits of the statement
of assets to be acquired of the Log Cabin Syrup Business, a component of Kraft
Foods, Inc., as of December 28, 1996, and the statements of operations for the
years ended December 28, 1996, December 30, 1995 and December 31, 1994. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Chicago, Illinois
July 11, 1997
<PAGE>
Exhibit 99.1
LETTER OF TRANSMITTAL
FOR
TENDER OF 9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
AND 9 7/8% SERIES C SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
9 7/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
AURORA FOODS INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON ___________________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE.
DELIVER TO THE EXCHANGE AGENT:
WILMINGTON TRUST COMPANY
By Registered or
Certified Mail or by
Overnight Courier: By Hand:
Wilmington Trust Company Wilmington Trust Company
Attn: Jill Rylee Attn: Corporate Trust Operations
Corporate Trust & C/O Harris Trust Co.
Administration Window of New York as Agent
1100 North Market Street 75 Water Street
Rodney Square North New York, NY 10004
Wilmington, DE 19890-0001
By Facsimile:
Wilmington Trust Company
(302) 651-1079
Confirm by Telephone:
(302) 651-8869
Jill Rylee
<PAGE>
Exhibit 99.1
Page 2
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERY OF THIS INSTRUMENT TO AN
ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A
FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned hereby acknowledges receipt and review of the Prospectus
dated ____________________, 1997 (the "Prospectus") of Aurora Foods Inc. (the
"Company") and this Letter of Transmittal (the "Letter of Transmittal"), which
together describe the Company's offer (the "Exchange Offer") to exchange its 9
7/8% Series B Senior Subordinated Notes due February 15, 2007 (the "New Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which the Prospectus
is a part, for a like principal amount of its issued and outstanding 9 7/8%
Senior Subordinated Notes due February 15, 2007 (the "Series A Notes") and a
like principal amount of its issued and outstanding 9 7/8% Series C Senior
Subordinated Notes due February 15, 2007 (the "Series C Notes," together with
the Series A Notes, "Old Notes"). Capitalized terms used but not defined herein
have the respective meaning given to them in the Prospectus.
The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest time and date in which the Exchange Offer is extended.
The Company shall notify the holders of the Old Notes 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.
This Letter of Transmittal is to be used by a Holder of Old Notes either if
original Old Notes are to be forwarded herewith or if delivery of Old Notes, if
available, is to be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in the Prospectus under the
caption "The Exchange Offer-Book-Entry Transfer." Holders of Old Notes whose
Old Notes are not immediately available, or who are unable to deliver their Old
Notes and all other documents required by this Letter of Transmittal to the
Exchange Agent on or prior to the Expiration Date, or who
<PAGE>
Exhibit 99.1
Page 3
are unable to complete the procedure for book-entry transfer on a timely
basis, must tender their Old Notes according to the guaranteed delivery
procedures set forth in the Prospectus under the caption "The Exchange
Offer-Guaranteed Delivery Procedures." See Instruction 1. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Old Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
Holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this Letter of Transmittal in its entirety.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of Transmittal relates. If
the space below is inadequate, list the registered numbers and principal amounts
on a separate signed schedule and affix the list to this Letter of Transmittal.
<PAGE>
Exhibit 99.1
Page 4
DESCRIPTION OF OLD NOTES TENDERED
NAME(S) AND ADDRESS(ES) AGGREGATE
OF REGISTERED HOLDER(S), PRINCIPAL
EXACTLY AS NAME(S) AMOUNT PRINCIPAL
APPEAR(S) ON OLD NOTES REGISTERED REPRESENTED AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBERS* BY NOTE(S) TENDERED**
TOTAL
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, any tendering Holder of Old Notes will be
deemed to have tendered the entire aggregate principal amount represented
by such Old Notes. All tenders must be in integral multiples of $1,000.
/ / CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (FOR USE BY
ELIGIBLE INSTITUTIONS ONLY):
Name of Tendering Institution:____________________________________________
Account Number:___________________________________________________________
Transaction Code Number:__________________________________________________
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING
(FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered Holder(s) of Old Notes:
_________________________________________________________________________
Date of Execution of Notice of Guaranteed Delivery:______________________
<PAGE>
Exhibit 99.1
Page 4
Window Ticket Number (if available):____________________________________
Name of Eligible Institution that Guaranteed Delivery:
________________________________________________________________________
Account Number (if delivered by book-entry transfer):
____________________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:____________________________________________________________________
Address:_________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a
distribution of New Notes. If the undersigned is a broker-dealer that
will receive New Notes for its own account in exchange for Old Notes, it
acknowledges that the Old Notes were acquired as a result of
market-making activities or other trading activities and that it will
deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act.
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to the Company for exchange the principal
amount of Old Notes indicated above. Subject to and effective upon the
acceptance for exchange of the principal amount of Old Notes tendered in
accordance with this Letter of Transmittal, the undersigned hereby
exchanges, assigns and transfers to the Company all right, title and
interest in and to the Old Notes tendered for exchange hereby. The
undersigned hereby irrevocably constitutes and appoints the Exchange
Agent, the agent and attorney-in-fact of the undersigned (with full
knowledge that the Exchange Agent also acts as the agent of the
<PAGE>
Exhibit 99.1
Page 6
Company in connection with the Exchange Offer) with respect to the tendered
Old Notes with full power of substitution to (i) deliver such Old Notes, or
transfer ownership of such Old Notes on the account books maintained by the
Book-Entry Transfer Facility, to the Company and deliver all accompanying
evidences of transfer and authenticity, and (ii) present such Old Notes for
transfer on the books of the Company and receive all benefits and otherwise
exercise all rights of beneficial ownership of such Old Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney
granted in this paragraph shall be deemed to be irrevocable and coupled with
an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby and to acquire the New Notes issuable upon the exchange of such
tendered Old Notes, and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim, when the same are accepted
for exchange by the Company.
The undersigned acknowledge(s) that this Exchange Offer is being made in
reliance upon interpretations contained in no-action letters issued to third
parties by the staff of the Securities and Exchange Commission (the
"Commission") that the New Notes issued in exchange for the Old Notes pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by Holders thereof (other than any such Holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such Holders' business and such Holders are not engaging
in and do not intend to engage in a distribution of the New Notes and have no
arrangement or understanding with any person to participate in a distribution of
such New Notes. The undersigned hereby further represent(s) to the Company that
(i) any New Notes acquired in exchange for Old Notes tendered hereby are being
acquired in the ordinary course of business of the person receiving such New
Notes, whether or not the undersigned, (ii) neither the undersigned nor any such
other person is engaging in or intends to engage in a distribution of the New
Notes, (iii) neither the undersigned nor any such other person has an
<PAGE>
Exhibit 99.1
Page 7
arrangement or understanding with any person to participate in the distribution
of such New Notes, (iv) neither the Holder nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company or,
if it is an affiliate, it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, and (v) if
the undersigned is a broker-dealer, such person has acquired the Old Notes as a
result of market-making activities or other trading activities.
If the undersigned or the person receiving the New Notes is a broker-dealer
that is receiving 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, the undersigned acknowledges that it or such other person will
deliver a prospectus in connection with any resale of such New Notes; however,
by so acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that the undersigned or such other person is an "underwriter"
within the meaning of the Securities Act. The undersigned acknowledges that if
the undersigned is participating in the Exchange Offer for the purpose of
distributing the New Notes (i) the undersigned cannot rely on the position of
the staff of the Commission in certain no-action letters and, in the absence of
an exemption therefrom, must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of the New Notes, in which case the registration statement
must contain the selling security holder information required by Item 507 or
Item 508, as applicable, of Regulation S-K of the Commission, and (ii) failure
to comply with such requirements in such instance could result in the
undersigned incurring liability under the Securities Act for which the
undersigned is not indemnified by the Company.
If the undersigned or the person receiving the New Notes is an "affiliate"
(as defined in Rule 405 under the Securities Act), the undersigned represents to
the Company that the undersigned understands and acknowledges that the New Notes
may not be offered for resale, resold or otherwise transferred by the
undersigned or such other person without registration under the Securities Act
or an exemption therefrom.
<PAGE>
Exhibit 99.1
Page 8
If the undersigned or the person receiving the New Notes is a holder of
Series A Notes, the undersigned represents to the Company that by tendering
their Series A Notes pursuant to this Letter of Transmittal, such person
understands, acknowledges and consents to the amendment of Section 4.06 of the
Series A Indenture such that the proceeds of any Asset Disposition will be
shared ratably with holders of the Series C Notes instead of such proceeds being
applied to repurchase of the Series A Notes prior to any repurchase of the
Series C Notes.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Notes
tendered hereby, including the transfer of such Old Notes on the account books
maintained by the Book-Entry Transfer Facility.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange validly tendered Old Notes when, as and if the Company
gives oral or written notice thereof to the Exchange Agent. Any tendered Old
Notes that are not accepted for exchange pursuant to the Exchange Offer for any
reason will be returned, without expense, to the undersigned at the address
shown below or at a different address as may be indicated herein under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned acknowledges that the Company's acceptance of properly
tendered Old Notes pursuant to the procedures described under the caption "The
Exchange Offer -- Procedures for Tendering" in the Prospectus and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the New Notes issued in
<PAGE>
Exhibit 99.1
Page 9
exchange for the Old Notes accepted for exchange and return any Old Notes not
tendered or not exchanged, in the name(s) of the undersigned. Similarly,
unless otherwise indicated under "Special Delivery Instructions," please mail
or deliver the New Notes issued in exchange for the Old Notes accepted for
exchange and any Old Notes not tendered or not exchanged (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature(s). In the event that both "Special Issuance
Instructions" and "Special Delivery Instructions" are completed, please issue
the New Notes issued in exchange for the Old Notes accepted for exchange in
the name(s) of, and return any Old Notes not tendered or not exchanged to,
the person(s) so indicated. The undersigned recognizes that the Company has
no obligation pursuant to the "Special Issuance Instructions" and "Special
Delivery Instructions" to transfer any Old Notes from the name of the
registered holder(s) thereof if the Company does not accept for exchange any
of the Old Notes so tendered for exchange.
<PAGE>
Exhibit 99.1
Page 10
SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY (i) if Old Notes in a principal amount not tendered,
or New Notes issued in exchange for Old Notes accepted for exchange, are to be
issued in the name of someone other than the undersigned, or (ii) if Old Notes
tendered by book-entry transfer which are not exchanged are to be returned by
credit to an account maintained at the Book-Entry Transfer Facility. Issue New
Notes and/or Old Notes to:
Name(s):_____________________________________________________________________
(Please Type or Print)
Address:
_____________________________________________________________________________
_____________________________________________________________________________
(Include Zip Code)
_____________________________________________________________________________
(Tax Identification or Social Security No.)
(Complete Substitute Form W-9)
/ / Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility set forth below:
_____________________________________________________________________________
(Book-Entry Transfer Facility
Account Number, if applicable)
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
(Complete Accompanying Substitute Form W-9 on Reverse Side)
___________________________________________ _______________________________
Date
___________________________________________ _______________________________
Date
Area Code and Telephone Number:______________________________________________
<PAGE>
Exhibit 99.1
Page 11
The above lines must be signed by the registered Holder(s) of Old Notes as
name(s) appear(s) on the Old Notes or on a security position listing, or by
person(s) authorized to become registered Holder(s) by a properly completed bond
power from the registered Holder(s), a copy of which must be transmitted with
this Letter of Transmittal. If Old Notes to which this Letter of Transmittal
relate are held of record by two or more joint Holders, then all such Holders
must sign this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, then such person must
(i) set forth his or her full title below and (ii) unless waived by the Company,
submit evidence satisfactory to the Company of such person's authority so to
act. See Instruction 5 regarding the completion of this Letter of Transmittal,
printed below.
Name(s):_______________________________________________________________________
(Please Type or Print)
Capacity:______________________________________________________________________
Address:
_______________________________________________________________________________
_______________________________________________________________________________
(Include Zip Code)
<PAGE>
Exhibit 99.1
Page 12
MEDALLION SIGNATURE GUARANTEE
(If Required by Instruction 5)
Certain signatures must be Guaranteed by an Eligible Institution.
Signature(s) Guaranteed by an Eligible Institution:
______________________________________________________________________________
(Authorized Signature)
______________________________________________________________________________
(Title)
______________________________________________________________________________
(Name of Firm)
______________________________________________________________________________
(Address, Include Zip Code)
______________________________________________________________________________
(Area Code and Telephone Number)
Dated:____________________, 19__
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY if Old Notes in a principal amount not tendered, or
New Notes issued in exchange for Old Notes accepted for exchange, are to be
mailed or delivered to someone other than the undersigned, or to the undersigned
at an address other than that shown below the undersigned's signature.
Mail or deliver New Notes and/or Old Notes to:
Name:
_____________________________________________________________________________
(Please Type or Print)
Address:
_____________________________________________________________________________
_____________________________________________________________________________
(Include Zip Code)
_____________________________________________________________________________
(Tax Identification or Social Security No.)
<PAGE>
Exhibit 99.1
Page 13
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Old Notes or Book-Entry
Confirmations. All physically delivered Old Notes or any confirmation of a
book-entry transfer to the Exchange Agent's account at the Book-Entry Transfer
Facility of Old Notes tendered by book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, 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. The method of delivery of the tendered Old Notes, this Letter
of Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the Holder and, except as otherwise provided below, the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. Instead of delivery by mail, it is recommended that the Holder
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.
No Letter of Transmittal or Old Notes should be sent to the Company.
2. Guaranteed Delivery Procedures. Holders who wish to tender their Old
Notes and (a) whose Old Notes are not immediately available, or (b) who cannot
deliver their Old Notes, this Letter of Transmittal or any other documents
required hereby to the Exchange Agent prior to the Expiration Date or (c) who
are unable to complete the procedure for book-entry transfer on a timely basis,
must tender their Old Notes according to the guaranteed delivery procedures set
forth in the Prospectus. Pursuant to such procedures: (i) such tender must be
made by or through a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers Inc. or a
commercial bank or a trust company having an office or correspondent in the
United States (an "Eligible Institution"); (ii) prior to the Expiration Date,
the Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name and address of the
<PAGE>
Exhibit 99.1
Page 14
Holder of the Old Notes, the registration number(s) of such Old Notes and the
principal amount of Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that, within three (3) New York Stock Exchange, Inc.
("NYSE") trading days after the Expiration Date, this Letter of Transmittal (or
facsimile hereof) together with the Old Notes (or a Book-Entry Confirmation) in
proper form for transfer, must be received by the Exchange Agent within three
(3) NYSE trading days after the Expiration Date; and (iii) the certificates for
all physically tendered shares of Old Notes, in proper form for transfer, or
Book-Entry Confirmation, as the case may be, and all other documents required by
this Letter are received by the Exchange Agent within three (3) NYSE trading
days after the date of execution of the Notice of Guaranteed Delivery.
Any Holder of Old Notes who wishes to tender Old Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York
City time, on the Expiration Date. Upon request of the Exchange Agent, a Notice
of Guaranteed Delivery will be sent to Holders who wish to tender their Old
Notes according to the guaranteed delivery procedures set forth above.
See "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus.
3. Tender by Holder. Only a Holder of Old Notes may tender such Old Notes
in the Exchange Offer. Any beneficial Holder of Old Notes who is not the
registered Holder and who wishes to tender should arrange with the registered
Holder to execute and deliver this Letter of Transmittal on his behalf or must,
prior to completing and executing this Letter of Transmittal and delivering his
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in such Holder's name or obtain a properly completed bond power from the
registered Holder.
4. Partial Tenders. Tenders of Old Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Old Notes is tendered, the tendering Holder should fill in the principal amount
tendered in the third column of the box entitled "Description of Old Notes"
above. The entire principal
<PAGE>
Exhibit 99.1
Page 15
amount of Old Notes delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated. If the entire principal amount of
all Old Notes is not tendered, then Old Notes for the principal amount of Old
Notes not tendered and New Notes issued in exchange for any Old Notes
accepted will be sent to the Holder at his or her registered address, unless
a different address is provided in the appropriate box on this Letter of
Transmittal, promptly after the Old Notes are accepted for exchange.
5. Signatures on this Letter of Transmittal; Bond Powers and Endorsements;
Medallion Guarantee of Signatures. If this Letter of Transmittal (or facsimile
hereof) is signed by the record Holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever. If this Letter
of Transmittal is signed by a participant in the Book-Entry Transfer Facility,
the signature must correspond with the name as it appears on the security
position listing as the Holder of the Old Notes.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder or Holders of Old Notes listed and tendered hereby and the New
Notes issued in exchange therefor is to be issued (or any untendered principal
amount of Old Notes is to be reissued) to the registered Holder, the said Holder
need not and should not endorse any tendered Old Notes, nor provide a separate
bond power. In any other case, such Holder must either properly endorse the Old
Notes tendered or transmit a properly completed separate bond power with this
Letter of Transmittal, with the signatures on the endorsement or bond power
guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder or Holders of any Old Notes listed, such Old
Notes must be endorsed or accompanied by appropriate bond powers, in each case
signed as the name of the registered Holder or Holders appears on the Old Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes of
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate
<PAGE>
Exhibit 99.1
Page 16
when signing, and, unless waived by the Company, evidence satisfactory to the
Company of their authority so to act must be submitted with this Letter of
Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 5 must be guaranteed by an Eligible Institution.
No signature guarantee is required if (i) this Letter of Transmittal is
signed by the registered holder(s) of the Old Notes tendered herewith (or by a
participant in the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of the tendered Old Notes) and the issuance of New
Notes (and any Old Notes not tendered or not accepted) are to be issued directly
to such registered holder(s) (or, if signed by a participant in the Book-Entry
Transfer Facility, any New Notes or Old Notes not tendered or not accepted are
to be deposited to such participant's account at such Book-Entry Transfer
Facility) and neither the box entitled "Special Delivery Instructions" nor the
box entitled "Special Registration Instructions" has been completed, or (ii)
such Old Notes are tendered for the account of an Eligible Institution. In all
other cases, all signatures on this Letter of Transmittal must be guaranteed by
an Eligible Institution.
6. Special Registration and Delivery Instructions. Tendering holders
should indicate, in the applicable box or boxes, the name and address (or
account at the Book-Entry Transfer Facility) to which New Notes or substitute
Old Notes for principal amounts not tendered or not accepted for exchange are to
be issued or sent, if different from the name and address of the person signing
this Letter of Transmittal. In the case of issuance in a different name, the
taxpayer identification or social security number of the person named must also
be indicated.
7. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, New Notes or Old Notes for principal amounts not tendered or accepted
for exchange are to be delivered to, or are to be registered or issued in the
name of, any person other than the registered Holder of the Old Notes tendered
hereby, or if tendered Old Notes are registered in the name of any person other
than the person signing this Letter of Transmittal, or if a transfer tax is
imposed for any reason
<PAGE>
Exhibit 99.1
Page 17
other than the exchange of Old Notes pursuant to the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the registered Holder
or any other persons) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with this Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering Holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES LISTED IN THIS LETTER OF
TRANSMITTAL.
8. Tax Identification Number. Federal income tax law required that a
holder of any Old Notes which are accepted for exchange must provide the Company
(as payor) with its correct taxpayer identification number ("TIN"), which, in
the case of a holder who is an individual in his or her social security number.
If the Company is not provided with the correct TIN, the Holder may be subject
to a $50 penalty imposed by Internal Revenue Service. (If withholding results in
an over-payment of taxes, a refund may be obtained.) Certain holders
(including, among others, all corporations and certain foreign individuals) are
not subject to these backup withholding and reporting requirements. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
If the Old Notes are registered in more than one name or are not in the name of
the actual owner, see the enclosed "Guidelines for Certification of Taxpayer
Identification Number of Substitute Form W-9 for information on which TIN to
report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
<PAGE>
Exhibit 99.1
Page 18
9. Validity of Tenders. All questions as to the validity, form,
eligibility (including time of receipt), and acceptance 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 right to reject any and all
Old Notes not validly tendered or any Old Notes, the Company's acceptance of
which would, in the opinion of the Company or its counsel, be unlawful. The
Company also reserves the right to waive any conditions of the Exchange Offer or
defects or irregularities in tenders of Old Notes as to any ineligibility of any
holder who seeks to tender Old Notes in the Exchange Offer. The interpretation
of the terms and conditions of the Exchange Offer (includes this Letter of
Transmittal and the instructions hereto) by the Company shall 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. The Company will use reasonable efforts to give
notification of defects or irregularities with respect to tenders of Old Notes,
but shall not incur any liability for failure to give such notification.
10. Waiver of Conditions. The Company reserves the absolute right to
waive, in whole or part, any of the conditions to the Exchange Offer set forth
in the Prospectus.
11. No Conditional Tender. No alternative, conditional, irregular or
contingent tender of Old Notes on transmittal of this Letter of Transmittal will
be accepted.
12. Mutilated, Lost, Stolen or Destroyed Old Notes. Any Holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
13. Requests for Assistance or Additional Copies. Requests for assistance
or for additional copies of the Prospectus or this Letter of Transmittal may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover page of this Letter of Transmittal. Holders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Exchange Offer.
<PAGE>
Exhibit 99.1
Page 19
14. Acceptance of Tendered Old Notes and Issuance of New Notes; Return of
Old Notes. Subject to the terms and conditions of the Exchange Offer, the
Company will accept for exchange all validly tendered Old Notes as soon as
practicable after the Exchange Date and will issue New Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Company shall
be deemed to have accepted tendered Old Notes when, as and if the Company has
given written and oral notice thereof to the Exchange Agent. If any tendered
Old Notes are not exchanged pursuant to the Exchange Offer for any reason, such
unexchanged Old Notes will be returned, without expense, to the undersigned at
the address shown above (or credited to the undersigned's account at the
Book-Entry Transfer Facility designated above) or at a different address as may
be indicated under the box entitled "Special Delivery Instructions."
15. Withdrawal. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer -- Withdrawal of Tenders."
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
HEREOF (TOGETHER WITH THE OLD NOTES) WHICH MUST BE DELIVERED BY BOOK-ENTRY
TRANSFER OR IN ORIGINAL HARD COPY FROM) OR THE NOTICE OF GUARANTEED DELIVERY
MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION TIME.
<PAGE>
Exhibit 99.1
Page 20
(TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 5))
PAYER'S NAME: AURORA FOODS INC.
SUBSTITUTE PART I--Taxpayer Social
FORM W-9 Identification No.--For Security
DEPARTMENT OF THE all accounts, enter your Number
TREASURY taxpayer identification _________
INTERNAL REVENUE number in the appropriate
SERVICE box. For most individuals OR
and sole proprietors,
this is your social Employer
security number. For Identifi-
other entities, it is cation
your Employer Number
Identification Number.
If you do not have a _________
number, see How to
Obtain a TIN in the
enclosed Guidelines.
Note: If the account
is in more than one
name, see Employer
Identification Number
the chart on page 2 of
the enclosed Guidelines to
determine what number
to enter.
Payer's Request for Part II--For Payees Exempt From
Taxpayer Identification Backup Withholding (see enclosed
Number Guidelines)
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and either (a) I have
mailed or delivered an application to receive a taxpayer identification
number to the appropriate Internal Revenue Service Center or Social
Security Administration Office or (b) I intend to mail or deliver an
application in the near future. I understand that if I do not provide a
taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide
a number;
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or
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Exhibit 99.1
Page 21
dividends, or (c) the IRS has notified me that I am no longer subject to
backup withholding; and
(3) Any other information provided on this form is true, correct and complete.
______________________________________________________________________________
SIGNATURE__________________________________ Date__________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO THE NEW
NOTES. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
