<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 7, 1997.
REGISTRATION STATEMENT NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
B&G FOODS, INC.
(Exact Name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2035 13-3916496
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
426 EAGLE ROCK AVENUE
ROSELAND, NJ 07068
(201) 228 2500
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
------------------------------
SEE TABLE OF ADDITIONAL REGISTRANTS BELOW
------------------------
DAVID L. WENNER
426 EAGLE ROCK AVENUE
ROSELAND, NJ 07068
(201) 228 2500
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
------------------------------
With a copy to:
GLYNDWR P. LOBO, ESQ.
DECHERT PRICE & RHOADS
30 ROCKEFELLER PLAZA
NEW YORK, NY 10112
(212) 698-3500
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------
If the securities being registered on this form are to be offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE FEE(1)
<S> <C> <C> <C> <C>
9 5/8% Senior Subordinated
Notes due 2007 $120,000,000 100% $120,000,000(2) $36,364
Subsidiary Guarantees $120,000,000 -- -- --
</TABLE>
(1) Calculated in accordance with Rule 457(o) of the Securities Act of 1933, as
amended.
(2) Estimated solely for purposes of calculating the registration fee.
------------------------------
THE REGISTRANTS HEREBY AMEND 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
B&G FOODS, INC.
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY STANDARD IRS
INDUSTRIAL EMPLOYER
STATE OF CLASSIFICATION IDENTIFICATION
NAME INCORPORATION CODE NUMBER NO.
- ------------------------------------------------------------ ------------- ---------------------- -------------
<S> <C> <C> <C>
BGH Holdings, Inc. ......................................... Delaware 6719 36-3867424
Bloch & Guggenheimer, Inc. ................................. Delaware 2035 36-1208070
BRH Holdings, Inc. ......................................... Delaware 6719 36-3867428
Burns & Ricker, Inc. ....................................... Delaware 2052 22-2780678
JEM Brands, Inc. ........................................... Delaware 6719 06-1213945
Trappey's Fine Foods, Inc. ................................. Delaware 2099, 2035, 2033 22-2934591
Roseland Distribution Company............................... Delaware 4225 22-3210182
Roseland Manufacturing, Inc. ............................... Delaware 2035 22-3213825
RWBV Acquisition Corp. ..................................... Delaware 2099 22-3518822
RWBV Brands Company......................................... Delaware 6794 Pending
</TABLE>
The address, including zip code, and telephone number, including area code,
of the principal offices of the additional registrants listed above (the
"Additional Registrants") is: 426 Eagle Rock Avenue, Roseland, NJ 07068; the
telephone number at that address is (201) 228-2500.
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 7, 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
OFFER TO EXCHANGE
9 5/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR ALL OUTSTANDING
9 5/8% SENIOR SUBORDINATED NOTES DUE 2007
OF
B&G FOODS, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED
---------------------
B&G FOODS, INC., A DELAWARE CORPORATION ("B&G" OR THE "COMPANY"), HEREBY
OFFERS TO EXCHANGE AN AGGREGATE PRINCIPAL AMOUNT OF UP TO $120,000,000 OF ITS
9 5/8% SENIOR SUBORDINATED NOTES DUE 2007 (THE "NEW NOTES") FOR A LIKE PRINCIPAL
AMOUNT OF ITS 9 5/8% SENIOR SUBORDINATED NOTES DUE 2007 (THE "EXISTING NOTES")
OUTSTANDING ON THE DATE HEREOF UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET
FORTH IN THIS PROSPECTUS AND IN THE ACCOMPANYING LETTER OF TRANSMITTAL (THE
"LETTER OF TRANSMITTAL" AND, TOGETHER WITH THIS PROSPECTUS, THE "EXCHANGE
OFFER"). THE NEW NOTES AND THE EXISTING NOTES ARE HEREINAFTER COLLECTIVELY
REFERRED TO AS THE "NOTES." THE TERMS OF THE NEW NOTES ARE IDENTICAL IN ALL
MATERIAL RESPECTS TO THOSE OF THE EXISTING NOTES, EXCEPT THAT (I) THE EXCHANGE
WILL HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND HENCE THE NEW NOTES WILL NOT BEAR LEGENDS RESTRICTING THE
TRANSFER THEREOF, AND (II) HOLDERS OF THE NEW NOTES WILL NOT BE ENTITLED TO
CERTAIN RIGHTS OF HOLDERS OF THE EXISTING NOTES UNDER THE REGISTRATION RIGHTS
AGREEMENT (AS DEFINED), WHICH RIGHTS WILL TERMINATE UPON THE CONSUMMATION OF THE
EXCHANGE OFFER. THE NEW NOTES WILL BE ISSUED PURSUANT TO, AND WILL BE ENTITLED
TO THE BENEFITS OF, THE INDENTURE (AS DEFINED) GOVERNING THE EXISTING NOTES.
THE NEW NOTES WILL BEAR INTEREST FROM AND INCLUDING THE DATE OF CONSUMMATION
OF THE EXCHANGE OFFER. INTEREST ON THE NEW NOTES WILL BE PAYABLE SEMI-ANNUALLY
ON FEBRUARY 1 AND AUGUST 1 OF EACH YEAR, COMMENCING FEBRUARY 1, 1998.
ADDITIONALLY, INTEREST ON THE NEW NOTES WILL ACCRUE FROM THE LAST INTEREST
PAYMENT DATE ON WHICH INTEREST WAS PAID ON THE EXISTING NOTES SURRENDERED IN
EXCHANGE THEREFOR OR, IF NO INTEREST HAS BEEN PAID ON THE EXISTING NOTES, FROM
THE DATE OF ORIGINAL ISSUE OF THE EXISTING NOTES. HOLDERS WHOSE EXISTING NOTES
ARE ACCEPTED FOR EXCHANGE WILL BE DEEMED TO HAVE WAIVED THE RIGHT TO RECEIVE ANY
INTEREST ACCRUED ON THE EXISTING NOTES.
THE NOTES WILL MATURE ON AUGUST 1, 2007. THE NOTES WILL BE REDEEMABLE AT THE
OPTION OF THE COMPANY, IN WHOLE OR IN PART, ON OR AFTER AUGUST 1, 2002, OR
EARLIER AT THE OPTION OF THE COMPANY UPON A CHANGE OF CONTROL (AS DEFINED) AT
THE REDEMPTION PRICES SET FORTH HEREIN, PLUS ACCRUED AND UNPAID INTEREST, IF
ANY, TO THE DATE OF REDEMPTION. IN ADDITION, AT ANY TIME PRIOR TO AUGUST 1,
2000, THE COMPANY, MAY, IN ITS DISCRETION, REDEEM UP TO 35% OF THE ORIGINAL
AGGREGATE PRINCIPAL AMOUNT OF THE NOTES AT A REDEMPTION PRICE EQUAL TO 109.625%
OF THE PRINCIPAL AMOUNT THEREOF, PLUS ACCRUED AND UNPAID INTEREST AND LIQUIDATED
DAMAGES, IF ANY, TO THE DATE OF REDEMPTION, WITH THE NET PROCEEDS OF ONE OR MORE
PUBLIC EQUITY OFFERINGS (AS DEFINED); PROVIDED THAT AT LEAST 65% OF THE ORIGINAL
AGGREGATE PRINCIPAL AMOUNT OF THE NOTES REMAINS OUTSTANDING IMMEDIATELY AFTER
EACH SUCH REDEMPTION.
UPON THE OCCURRENCE OF A CHANGE OF CONTROL, (I) THE COMPANY WILL HAVE THE
OPTION, AT ANY TIME ON OR PRIOR TO AUGUST 1, 2002, TO REDEEM THE NOTES, IN WHOLE
BUT NOT IN PART, AT A REDEMPTION PRICE EQUAL TO 100% OF THE PRINCIPAL AMOUNT
THEREOF PLUS THE APPLICABLE PREMIUM (AS DEFINED), PLUS ACCRUED AND UNPAID
INTEREST AND LIQUIDATED DAMAGES, IF ANY, TO THE DATE OF REDEMPTION AND (II) IF
THE COMPANY DOES NOT SO REDEEM THE NOTES OR IF SUCH CHANGE OF CONTROL OCCURS
AFTER AUGUST 1, 2002, THE COMPANY WILL BE REQUIRED TO MAKE AN OFFER TO
REPURCHASE THE NOTES AT A PRICE EQUAL TO 101% OF THE PRINCIPAL AMOUNT THEREOF,
TOGETHER WITH ACCRUED AND UNPAID INTEREST AND LIQUIDATED DAMAGES, IF ANY, TO THE
DATE OF REPURCHASE. SEE "DESCRIPTION OF THE NOTES."
THE NEW NOTES WILL BE GENERAL UNSECURED OBLIGATIONS OF THE COMPANY
SUBORDINATE IN RIGHT OF PAYMENT TO ALL EXISTING AND FUTURE SENIOR DEBT (AS
DEFINED) OF THE COMPANY. THE NEW NOTES WILL BE GUARANTEED ON A SENIOR
SUBORDINATED BASIS BY THE GUARANTORS (AS DEFINED). AS OF SEPTEMBER 27, 1997, THE
COMPANY HAD APPROXIMATELY $1.4 MILLION OF SENIOR DEBT OUTSTANDING (EXCLUSIVE OF
AN UNUSED COMMITMENT OF UP TO $50.0 MILLION UNDER THE NEW CREDIT FACILITY (AS
DEFINED)). SEE "DESCRIPTION OF THE NOTES-- SUBORDINATION" AND "CAPITALIZATION."
THE NEW NOTES ARE BEING OFFERED HEREUNDER IN ORDER TO SATISFY CERTAIN
OBLIGATIONS OF THE COMPANY AND THE GUARANTORS CONTAINED IN THE REGISTRATION
RIGHTS AGREEMENT, DATED AS OF AUGUST 11, 1997 (THE "REGISTRATION RIGHTS
AGREEMENT") BY AND BETWEEN THE COMPANY, THE GUARANTORS, AND LEHMAN BROTHERS AND
LAZARD FRERES & CO. INC. LLC (THE "INITIAL PURCHASERS") WITH RESPECT TO THE
INITIAL SALE OF THE EXISTING NOTES.
THE COMPANY WILL NOT RECEIVE ANY PROCEEDS FROM THE EXCHANGE OFFER. THE
COMPANY WILL PAY ALL THE EXPENSES INCIDENT TO THE EXCHANGE OFFER. TENDERS OF
EXISTING NOTES PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR
TO THE EXPIRATION DATE (AS DEFINED) FOR THE EXCHANGE OFFER. IN THE EVENT THE
COMPANY TERMINATES THE EXCHANGE OFFER AND DOES NOT ACCEPT FOR EXCHANGE ANY
EXISTING NOTES WITH RESPECT TO THE EXCHANGE OFFER, THE COMPANY WILL PROMPTLY
RETURN SUCH EXISTING NOTES TO THE HOLDERS THEREOF. SEE "THE EXCHANGE OFFER."
(CONTINUED ON FOLLOWING PAGE)
--------------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 13 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN THE NOTES.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE 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>
THE COMPANY IS OFFERING THE NEW NOTES IN RELIANCE ON CERTAIN INTERPRETIVE
LETTERS ISSUED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") TO THIRD PARTIES IN UNRELATED TRANSACTIONS. BASED ON SUCH
INTERPRETIVE LETTERS, THE COMPANY IS OF THE VIEW THAT THE NEW NOTES ISSUED
PURSUANT TO THIS EXCHANGE OFFER IN EXCHANGE FOR EXISTING NOTES MAY BE OFFERED
FOR RESALE, RESOLD AND OTHERWISE TRANSFERRED BY A HOLDER THEREOF (OTHER THAN (I)
A BROKER-DEALER WHO PURCHASES SUCH NEW NOTES DIRECTLY FROM THE COMPANY TO RESELL
PURSUANT TO RULE 144A OR ANY OTHER AVAILABLE EXEMPTION UNDER THE SECURITIES ACT
OR (II) A PERSON THAT IS AN AFFILIATE OF THE COMPANY WITHIN THE MEANING OF RULE
405 UNDER THE SECURITIES ACT), WITHOUT COMPLIANCE WITH THE REGISTRATION AND
PROSPECTUS DELIVERY PROVISIONS OF THE SECURITIES ACT, PROVIDED THAT THE HOLDER
IS ACQUIRING THE NEW NOTES IN THE ORDINARY COURSE OF ITS BUSINESS AND IS NOT
PARTICIPATING, AND HAD NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO
PARTICIPATE, IN THE DISTRIBUTION OF THE NEW NOTES. HOLDERS OF EXISTING NOTES
WISHING TO ACCEPT THE EXCHANGE OFFER MUST REPRESENT TO THE COMPANY, AS REQUIRED
BY THE REGISTRATION RIGHTS AGREEMENT, THAT SUCH CONDITIONS HAVE BEEN MET. EACH
BROKER-DEALER THAT RECEIVES THE NEW NOTES FOR ITS OWN ACCOUNT IN EXCHANGE FOR
THE EXISTING NOTES, WHERE SUCH EXISTING 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. THE COMPANY BELIEVES THAT NONE OF THE
REGISTERED HOLDERS OF THE EXISTING NOTES IS AN AFFILIATE (AS SUCH TERM IS
DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF THE COMPANY.
THE EXISTING NOTES ARE CURRENTLY ELIGIBLE FOR TRADING IN THE PRIVATE
OFFERINGS, RESALES AND TRADING THROUGH AUTOMATED LINKAGES ("PORTAL") MARKET.
FOLLOWING COMMENCEMENT OF THE EXCHANGE OFFER BUT PRIOR TO ITS CONSUMMATION, THE
EXISTING NOTES MAY CONTINUE TO BE TRADED IN THE PORTAL MARKET. FOLLOWING
CONSUMMATION OF THE EXCHANGE OFFER, THE NEW NOTES WILL NOT BE ELIGIBLE FOR
PORTAL TRADING. THE COMPANY CURRENTLY DOES NOT INTEND TO LIST THE NEW NOTES ON
ANY SECURITIES EXCHANGE OR TO SEEK APPROVAL FOR QUOTATION THROUGH ANY AUTOMATED
QUOTATION SYSTEM, AND NO ACTIVE PUBLIC MARKET FOR THE NEW NOTES IS CURRENTLY
ANTICIPATED. THERE CAN BE NO ASSURANCE THAT AN ACTIVE PUBLIC MARKET FOR THE NEW
NOTES WILL DEVELOP. SEE "RISK FACTORS--ABSENCE OF PUBLIC MARKET FOR THE NOTES."
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 NEW NOTES
RECEIVED IN EXCHANGE FOR EXISTING NOTES WHERE SUCH EXISTING NOTES WERE ACQUIRED
BY SUCH BROKER-DEALER AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING
ACTIVITIES. THE COMPANY HAS INDICATED ITS INTENTION TO MAKE THIS PROSPECTUS (AS
IT MAY BE AMENDED OR SUPPLEMENTED) AVAILABLE TO ANY BROKER-DEALER FOR USE IN
CONNECTION WITH ANY SUCH RESALE FOR A PERIOD OF ONE YEAR FOLLOWING THE EFFECTIVE
DATE (AS DEFINED). SEE "PLAN OF DISTRIBUTION."
THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM PRINCIPAL AMOUNT OF
EXISTING NOTES BEING TENDERED FOR EXCHANGE PURSUANT TO THE EXCHANGE OFFER.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF EXISTING NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act with respect to the New Notes offered hereby (the
"Registration Statement"). As permitted by the rules and regulations of the
Commission, this Prospectus omits certain information, exhibits and undertakings
contained in the Registration Statement. For further information with respect to
the Company and the New Notes offered hereby, reference is made to the
Registration Statement, including the exhibits thereto and the financial
statements, notes and schedules filed as a part thereof. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference. The
Registration Statement, including the exhibits thereto, and other information
filed by the Company and the Guarantors can be inspected and copied at the
public reference facilities maintained by the Commission at, 450 Fifth Street,
N.W., Washington D.C. 20549, and at the Regional Offices of the Commission at
Seven World Trade Center, Suite 1300, New York, New York 10048 and at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such materials can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed
rates. In addition, the Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of such Web site is:
http://www.sec.gov.
As a result of the Exchange Offer, the Company will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith will be required to file
periodic reports and other information with the Commission. In the event the
Company ceases to be subject to the informational requirements of the Exchange
Act, the Company has agreed that, so long as any Notes remain outstanding, it
will file with the Commission (but only if the Commission at such time is
accepting such voluntary filings) and distribute to holders of the Notes, copies
of the financial information that would have been contained in such annual
reports and quarterly reports, including management's discussion and analysis of
financial condition and results of operations, that would have been required to
be filed with the Commission pursuant to the Exchange Act. The Company will also
furnish such other reports as it may determine or as may be required by law.
------------------------
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included in this
Prospectus, including, without limitation, the statements under "Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" and located elsewhere herein regarding industry
prospects and the Company's financial position are forward-looking statements.
Although the Company believes that the expectations reflected in such forward-
looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed in the Prospectus, including, without limitation, in
conjunction with the forward-looking statements in this Prospectus under "Risk
Factors."
All subsequent written and oral forward-looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements.
i
<PAGE>
CERTAIN DEFINITIONS AND MARKET SHARE DATA
Unless the context otherwise requires, (i) the term "Management" refers to
the management team of the Company and (ii) references to a "product" mean a
specific stock keeping unit. Market category and segment data reflect grocery
sales as gathered by A.C. Nielson & Co. for the U.S. markets for the 52-week
periods ended March or, where available, June 1997. While Management believes
that such data are reliable, no assurance can be given that such data are
accurate in all material respects.
B&G-REGISTERED TRADEMARK-, B&G SANDWICH TOPPERS-REGISTERED TRADEMARK-, BRER
RABBIT-REGISTERED TRADEMARK-, BURNS & RICKER-REGISTERED TRADEMARK-, NEW YORK
STYLE-REGISTERED TRADEMARK-, REGINA-REGISTERED TRADEMARK-, VERMONT
MAID-REGISTERED TRADEMARK- and WRIGHT'S-REGISTERED TRADEMARK- are registered
trademarks of the Company. BAGEL CHIPMIX-TM-, BLOCH & GUGGENHEIMER-TM-,
SAN-DEL-TM- and SANDWICH TOPPERS-TM- are trademarks of the Company. BULL'S-TM-,
DULCITO-REGISTERED TRADEMARK-, RED DEVIL-TM-, TRAPPEY'S-REGISTERED TRADEMARK-
and TRAPPEY'S LOUISIANA HOT SAUCE-TM- are trademarks or registered trademarks of
Trappey's Fine Foods, Inc. POLANER-REGISTERED TRADEMARK- and POLANER
ALL-FRUIT-REGISTERED TRADEMARK- are registered trademarks of International Home
Foods, Inc.
ii
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS
(INCLUDING NOTES THERETO) INCLUDED ELSEWHERE IN THIS PROSPECTUS. UNLESS
OTHERWISE INDICATED OR THE CONTEXT OTHERWISE REQUIRES, REFERENCES TO THE
"COMPANY" ARE TO B&G FOODS, INC. AND ITS SUBSIDIARIES. THIS PROSPECTUS CONTAINS
FORWARD-LOOKING INFORMATION THAT INVOLVES RISKS AND UNCERTAINTIES, AND SUCH
INFORMATION IS SUBJECT TO THE ASSUMPTIONS SET FORTH IN CONNECTION THEREWITH AND
THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN. HOLDERS OF
EXISTING NOTES SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH UNDER THE
HEADING "RISK FACTORS."
THE COMPANY
OVERVIEW
The Company manufactures, markets and distributes a diversified portfolio of
shelf-stable branded food products with leading regional or national retail
market positions. In general, the Company positions its retail branded products
to appeal to the consumer desiring a high quality and reasonably priced branded
product. In its relevant regional or national retail markets, the Company holds
the number one position in six of its eight branded product categories. The
Company's sales of branded retail products are complemented by growing food
service sales with strong brand identity. For the fiscal year ended December 28,
1996, the Company's Pro Forma 1996 (as defined in "--Summary Pro Forma Condensed
Consolidated Financial Data") net sales and EBITDA would have been $175.7
million and $23.4 million, respectively.
The Company groups its products as follows: (i) pickles, relishes, peppers,
olives and other specialty products under the BLOCH & GUGGENHEIMER, SAN-DEL and
private label brands (collectively, "B&G Pickle and Pepper Products") (28% of
Pro Forma 1996 net sales); (ii) bagel chips and other baked snack products under
the BURNS & RICKER and NEW YORK STYLE brands (collectively, "Baked Snack
Products") (17% of Pro Forma 1996 net sales); (iii) the REGINA wine vinegars and
cooking wines, WRIGHT'S liquid smoke hickory flavoring, BRER RABBIT molasses and
VERMONT MAID syrup brands acquired from Nabisco, Inc. (collectively, the
"Nabisco Brands") (16% of Pro Forma 1996 net sales); (iv) TRAPPEY'S shelf-stable
peppers and RED DEVIL and other branded hot sauce products (collectively, the
"Trappey's Brands" and, together with the Nabisco Brands, the "Acquired Brands")
acquired from E. McIlhenny's Son Corporation ("McIlhenny"), the maker of
TABASCO-Registered Trademark- pepper sauce (10% of Pro Forma 1996 net sales);
and (v) POLANER and other products (collectively, "IHF Products") produced
and/or distributed for International Home Foods, Inc. ("IHF") (29% of Pro Forma
1996 net sales).
The Company manages its sales and distribution systems based upon the
channels through which its products are sold. The Company's Direct-Store-Door
("DSD") sales and distribution system sells and distributes the B&G Pickle and
Pepper Products and the IHF Products to over 2,200 store locations throughout
the Northeast, with heavy concentration in the greater New York metropolitan
area. The Company's national sales and distribution system markets (i) the Baked
Snack Products to deli wholesalers and distributors through a nationwide deli
broker network and (ii) the Nabisco Brands and certain of the B&G Pickle and
Pepper Products through a national grocery broker network. The Company's food
service business sells and distributes branded food service products through
national and regional wholesalers and distributors which serve national and
regional food service customers.
COMPETITIVE STRENGTHS
Management believes that the following factors contribute to the Company's
position as a market leader in its competitive areas and will be the foundation
for the Company's strategy:
LEADING MARKET POSITIONS. In its relevant regional or national retail
markets, the Company holds the number one position in six of its eight branded
product categories. The B&G branded pickle and pepper
<PAGE>
products are the market leaders in the greater New York metropolitan area. The
Company's BURNS & RICKER and NEW YORK STYLE brands have a combined 86% national
retail market share of the bagel chip category. REGINA wine vinegars are the
national leader in the retail wine and flavored vinegar category. WRIGHT'S holds
the number one national retail market position in the liquid smoke flavoring
category. VERMONT MAID is the number one brand of maple syrup in the greater
Boston area.
RETAIL MARKET POSITION OF THE COMPANY'S BRANDS
<TABLE>
<CAPTION>
RETAIL MARKET SHARE
----------------------------------------
<S> <C> <C> <C>
BRAND CATEGORY SHARE POSITION PERCENTAGE
- ------------------------------------- ------------------------------------- ----------------------- ---------------
B&G PICKLE AND PEPPER PRODUCTS:
Bloch & Guggenheimer................. Shelf-stable Pickles................. #1 Greater NY Metro 32%
Bloch & Guggenheimer................. Shelf-stable Peppers................. #1 Greater NY Metro 35%
#2 National 10%
BAKED SNACK PRODUCTS:
Burns & Ricker....................... Bagel Chips.......................... #1 National 45%
New York Style....................... Bagel Chips.......................... #2 National 41%
Combined brands.................... Bagel Chips.......................... #1 National 86%
NABISCO BRANDS:
Regina............................... Wine and Flavored Vinegar............ #1 National 11%
Wright's............................. Liquid Smoke......................... #1 National 45%
Vermont Maid......................... Syrup................................ #1 Greater Boston 16%
Brer Rabbit.......................... Molasses............................. #2 National 21%
TRAPPEY'S BRANDS:
Red Devil and other.................. Hot Sauce............................ #5 National 6%
Trappey's............................ Shelf-stable Peppers................. #3 National 6%
</TABLE>
STRONG REGIONAL SALES AND DISTRIBUTION SYSTEM. The Company's DSD system of
selling and distributing products has allowed it to achieve leading retail
market shares in its core regional market for both the B&G Pickle and Pepper
Products and the IHF Products. Management believes that the DSD sales and
distribution system provides a competitive advantage compared to the other food
producers which market through independent brokers. Management believes that the
DSD sales and distribution system is highly customer-focused and
service-oriented, providing value-added delivery and inventory services and more
frequent interaction at the retail store level, resulting in improved store
relations, improved shelf space and lower slotting fees (up-front payments to
grocers for shelf space) for new products. Management believes the DSD system's
ability to gain distribution of new products, and then support that distribution
with effective promotions, significant display activity and superior shelf
management, provides the Company with a strong competitive advantage.
EXPERIENCED MANAGEMENT TEAM. The Company's management team has demonstrated
its ability to (i) operate successfully in a leveraged environment as part of
Specialty Foods (as defined, see "--Company History"), (ii) grow the core pickle
and pepper products business with 6.4% compounded annual growth in net sales and
8.5% compounded annual growth in Adjusted EBITDA (as defined, see "Selected
Historical Financial and Other Data") over the period from 1992 to 1996, (iii)
assume control of and restructure the BURNS & RICKER bagel chip business and
acquire and consolidate the NEW YORK STYLE bagel chip business, increasing
Adjusted EBITDA for the Baked Snack Products business from $1.0 million in 1993
to $4.5 million in 1996, and (iv) develop and expand successfully the POLANER
ALL-FRUIT products into national
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distribution, achieving sales of $29.6 million in 1992, and subsequently
realizing significant value through the sale of the POLANER business to IHF in
1993.
BUSINESS STRATEGY
The Company's goal is to increase its sales and profitability by enhancing
its portfolio of branded shelf-stable products and by capitalizing on its
competitive strengths to realize the benefits of combining the B&G products with
the Acquired Brands. The Company intends to implement its strategy through the
following initiatives:
ENHANCE OPERATION OF THE ACQUIRED BRANDS. The Company's objective is to
renew the growth and enhance the profitability of the Acquired Brands.
Management believes there is significant growth potential in the Acquired Brands
due to a lack of focused management and marketing support from their prior
corporate owners who concentrated their resources on dominant national brands.
Management plans to enhance the operations of the Acquired Brands by providing
increased management attention as part of a portfolio of related products of
comparable size, with dedicated sales personnel, focused marketing programs and
strategically timed new product initiatives.
LEVERAGE DSD SALES AND DISTRIBUTION SYSTEM. The Company's extensive and
focused DSD sales and distribution system, concentrated in the greater New York
metropolitan area, is one of its primary competitive strengths, providing it
with strong relationships at the food retailer level, superior store penetration
and preferred shelf product placement. This sales and distribution system also
enables the Company to introduce and sell new products effectively to its
existing grocery customers at a lower cost of introduction to the Company. The
Company intends to leverage this competitive strength by selling and
distributing the Acquired Brands in the greater New York metropolitan area
through its existing DSD sales and distribution system. Similarly, the Company
is also in the process of moving its Baked Snack Products into the DSD sales and
distribution system. Management believes that the competitive strengths of the
DSD sales and distribution system, as compared with typical warehouse
distribution systems, position the Acquired Brands and the Company's Baked Snack
Products to realize improved store penetration, promotional support and shelf
placement in the market, without incurring significant additional slotting fees.
For example, the recently acquired VERMONT MAID brand syrup is available in the
greater New York metropolitan area but has inconsistent shelf presence
throughout this region. Management believes that VERMONT MAID brand syrup sales
and store penetration can be increased significantly by distributing the product
through the DSD sales and distribution system. Additionally, distributing the
other Acquired Brands and Baked Snack Products, and any future products, through
the DSD sales and distribution system would, in turn, enhance the total DSD
system by distributing costs over increased product volume.
NATIONAL DISTRIBUTION OPPORTUNITIES. The Acquired Brands give the Company a
portfolio of branded, national shelf-stable food products supported by a
national sales and distribution network. The combination of the Nabisco Brands
and the Trappey's Brands with B&G's existing products is expected to allow the
Company to distribute the costs of a national sales force and broker network
over increased product volume, reducing costs as a percentage of sales, and to
realize distribution economies of scale and provide a national platform for new
products and product line extensions. The Company believes that it will continue
to increase the sales and expand the geographic presence of certain of its
regional branded products through its national sales and distribution network,
as evidenced by recent experience with its SANDWICH TOPPERS line. Utilizing the
regional sales managers for this brand, the Company has expanded the
distribution for all or part of the SANDWICH TOPPERS line into 16 grocery chains
outside of its traditional regional market. These chains are comprised of over
2,700 individual stores, representing a sizable growth opportunity for the
SANDWICH TOPPERS line.
NEW PRODUCT INTRODUCTIONS AND LINE EXTENSIONS. Management believes that the
Company's leading market positions, combined with the competitive strengths of
its regional DSD sales and distribution
3
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system and national sales and distribution network, provide a strong platform
for new product introductions and product line extensions. Management has
demonstrated its prior experience in successfully introducing new products and
product line extensions, including SANDWICH TOPPERS, the BURNS & RICKER fat-free
products and the POLANER ALL-FRUIT line which was sold in 1993. Management has
identified certain immediate product line extensions which are expected to
benefit from the Company's competitive strengths and enhance its existing
product offerings. For example, the REGINA brand's leadership position in the
wine and flavored vinegar category provides opportunities for product line
extensions in flavored vinegars including balsamic vinegar, the fastest growing
segment of the vinegar market. Additionally, the Company is considering
expanding its WRIGHT'S product line to include a mesquite-flavored liquid smoke.
EXPAND PRESENCE WITH MASS MERCHANTS AND OTHER NON-GROCERY MARKETS. Grocery
retailers have been the traditional market for the Company's products.
Management believes that there are certain non-grocery retail markets that have
the potential to grow faster than the grocery retail industry as a whole and
that these non-grocery markets present considerable growth opportunities for the
Company's brands. These non-grocery retail markets include mass merchants,
warehouse and club stores, convenience stores, drug stores and vending machines.
For example, the Company recently launched a new line of NEW YORK STYLE bagel
chips in distinctive pillow-pack bags for distribution in these alternative
channels. The Company sells these products to the Sam's Club division of
Wal-Mart, Wal-Mart Supercenters, and the eastern region of Price/Costco. To
date, the Company has also successfully completed trials of these products in
Wal-Mart discount stores in three regions. The pillow-pack product has also been
well received by national and regional drugstore and discount chains.
COMPLETE SELECT ACQUISITIONS. Management believes that the Company's
portfolio of branded food products, its highly effective DSD sales and
distribution system and its experienced management team provide an attractive
platform upon which to build a larger company focused on shelf-stable food
products. The Company believes that many diversified food companies have
undermanaged certain non-core or smaller brands, like the Nabisco Brands, as
they have focused on their larger national brands. Similarly, many closely held
or family owned food businesses lack the resources or the economies of scale to
realize the growth potential of their brands. The Company plans to pursue select
acquisitions of such brands when it believes it has an opportunity to enhance
sales growth and operating performance through increased management focus and
integration into the Company's administrative, manufacturing and distribution
infrastructure (in particular, its DSD sales and distribution system and/or its
national broker network). Management further believes that successful future
acquisitions will, in turn, enhance the Company's portfolio of existing
businesses by broadening the Company's product offerings. Furthermore, the
Company believes that its existing DSD sales and distribution system can be
enhanced through certain select acquisitions that include existing distribution
networks that are contiguous or complementary with the Company's existing DSD
markets, thereby expanding the geographic coverage of the Company's DSD sales
and distribution organization.
OWNERSHIP AND MANAGEMENT
The Company is indirectly owned by Bruckmann, Rosser, Sherrill & Co., L.P.
("BRS") and certain members of the Company's management. The Company is managed
by an operating team led by Leonard S. Polaner, the Company's Chairman of the
Board, and David L. Wenner, the Company's President and Chief Executive Officer.
BRS is a private equity investment firm with approximately $400 million of
committed capital. The principals of BRS--Bruce C. Bruckmann, Harold O. Rosser
II, Stephen C. Sherrill and Stephen F. Edwards--are former senior officers of
Citicorp Venture Capital, Ltd. ("Citicorp Venture Capital") where they worked
from the mid 1980s until forming BRS in 1995. At Citicorp Venture Capital they
were primarily responsible for 25 acquisitions. Since its inception, BRS has
completed eight transactions including: B&G and the Nabisco Brands; Windy Hill
Pet Food Company, Inc., a leading manufacturer of branded and private label dry
pet food, and Windy Hill's acquisition of the pet food business of Hubbard
4
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Milling Company; and Jitney-Jungle Stores of America, Inc., the largest
supermarket chain in Mississippi, which acquired Delchamps, Inc.
Leonard S. Polaner, the Company's Chairman, has managed the Polaner family's
fruit spread and wet spice business since 1956, overseeing the substantial
growth of his namesake brand and its successful sale to American Home Food
Products (now IHF). He has over 40 years of experience in the food industry and
has headed B&G's management team since 1986. David L. Wenner, B&G's President
and Chief Executive Officer, has over eight years of food industry experience.
Since 1993, he has led and overseen all of the Company's growth, new product,
cost reduction and acquisition initiatives. Members of the Company's senior
management team all have extensive experience in operating consumer packaged
food businesses in a leveraged environment.
COMPANY HISTORY
The Company was organized by BRS in November 1996 to acquire Bloch &
Guggenheimer, Inc., Burns & Ricker, Inc. and certain related entities (the "B&G
and B&R Acquisition") from Specialty Foods Corporation ("Specialty Foods"). The
B&G and B&R Acquisition was consummated on December 27, 1996 as a stock
purchase.
On June 17, 1997, the Company acquired certain assets relating to the
Nabisco Brands (the "Nabisco Brands Acquisition"), including trademarks,
inventory and certain equipment used to bottle the REGINA wine vinegars and
cooking wines. The Company also entered into a co-packing agreement with Nabisco
under which Nabisco will continue to bottle the REGINA products until March
1998, and assumed certain co-packing contracts relating to the other Nabisco
Brands. In addition, the Company entered into a transition services agreement
with Nabisco, under which Nabisco provided certain sales and distribution
support for the Nabisco Brands on a national basis through August 31, 1997. See
"Business--Production and Facilities."
Financing for the Nabisco Brands Acquisition, the refinancing of the
indebtedness relating to the B&G and B&R Acquisition and certain related
transaction fees and expenses was provided by borrowings under an $85.0 million
Senior Secured Credit Facility among the Company, certain lenders and Heller
Financial, Inc., as administrative agent (the "Prior Credit Facility"), and
certain proceeds from the issuance by the Company of $23.0 million of 12% Senior
Subordinated Notes (the "Interim Notes").
On August 15, 1997, the Company's subsidiary BGH Holdings, Inc. ("BGH")
acquired from McIlhenny (the "Trappey's Acquisition") all of the outstanding
capital stock of JEM Brands, Inc. ("JEM"), the holding company of Trappey's Fine
Foods, Inc. (together with JEM, "Trappey's"). As consideration for the
outstanding capital stock of JEM, BGH paid to McIlhenny approximately $12.3
million in cash (the "Trappey's Purchase Price").
THE FINANCING
The Existing Notes were issued on August 11, 1997. The net proceeds from the
sale of the Existing Notes were $116.4 million and were used (i) to repay a
total of approximately $100.0 million of indebtedness (the "Prior
Indebtedness"), consisting of approximately $76.5 million of outstanding
indebtedness under the Prior Credit Facility and approximately $23.0 million of
outstanding Interim Notes, together with accrued and unpaid interest of
approximately $0.5 million with respect to Prior Indebtedness being repaid, (ii)
to consummate the Trappey's Acquisition for consideration of $12.3 million, and
(iii) to pay certain fees and expenses incurred in connection with the sale of
the Existing Notes and the Trappey's Acquisition (the application of the
proceeds in accordance with the foregoing, the issuance and sale of the Existing
Notes, and the replacement of the Prior Credit Facility with a new $50.0 million
revolving credit facility maturing in 2002 (the "New Credit Facility") are
collectively the "Financing"). The Company intends to use the balance of the net
proceeds for general corporate purposes.
5
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THE EXCHANGE OFFER
<TABLE>
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SECURITIES OFFERED................ Up to $120,000,000 aggregate principal amount of 9 5/8%
Senior Subordinated Notes due 2007. The terms of the New
Notes and Existing Notes are identical in all material
respects, except for certain transfer restrictions and
registration rights relating to the Existing Notes.
THE EXCHANGE OFFER................ The New Notes are being offered in exchange for a like
principal amount of Existing Notes. Existing Notes may
be exchanged only in integral multiples of $1,000. The
issuance of the New Notes is intended to satisfy
obligations of the Company contained in the Registration
Rights Agreement.
EXPIRATION DATE; WITHDRAWAL
TENDER.......................... The Exchange Offer will expire at 5:00 p.m. New York
City time, on , 1997, or such later date and time
to which it may be extended by the Company. The tender
of Existing Notes pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date. Any
Existing 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.
ACCRUED INTEREST ON THE NEW NOTES
AND THE EXISTING NOTES.......... The New Notes will bear interest from and including the
date of consummation of the Exchange Offer.
Additionally, interest on the New Notes will accrue from
the last interest payment date on which interest was
paid on the Existing Notes surrendered in exchange
therefor or, if no interest has been paid on the
Existing Notes, from the date of original issue of the
Existing Notes. Holders whose Existing Notes are
accepted for exchange will be deemed to have waived the
right to receive any interest accrued on the Existing
Notes.
CERTAIN CONDITIONS TO THE EXCHANGE
OFFER........................... The Company's obligation to accept for exchange, or to
issue New Notes in exchange for, any Existing Notes is
subject to certain customary conditions relating to
compliance with any applicable law or any applicable
interpretation by the staff of the Commission, the
receipt of any applicable governmental approvals and the
absence of any actions or proceedings of any
governmental agency or court which could materially
impair the Company's ability to consummate the Exchange
Offer. The Company currently expects that each of the
conditions will be satisfied and that no waivers will be
necessary. See "The Exchange Offer--Certain Conditions
to the Exchange Offer."
</TABLE>
6
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<TABLE>
<S> <C>
PROCEDURES FOR TENDERING
EXISTING NOTES.................. Each holder of Existing Notes wishing to accept the
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 Existing Notes and
any other required documentation, to the Exchange Agent
(as defined) at the address set forth herein. Subject to
the satisfaction or waiver of the conditions to the
Exchange Offer, the Company will accept for exchange any
and all Existing Notes which are properly tendered in
the Exchange Offer prior to the Expiration Date. See
"The Exchange Offer-- Procedures for Tendering Existing
Notes."
SPECIAL PROCEDURES FOR BENEFICIAL
OWNERS.......................... Any beneficial owner whose Existing Notes are registered
in the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender such
Existing Notes in the Exchange Offer should contact such
registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf. See
"The Exchange Offer-- Procedures for Tendering Existing
Notes." 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 Existing Notes, either make
appropriate arrangements to register ownership of the
Existing 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 PROCEDURES.... Holders of Existing Notes who wish to tender their
Existing Notes and whose Existing Notes are not
immediately available or who cannot deliver their
Existing Notes, the Letter of Transmittal or any other
document required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date, must tender
their Existing Notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures."
WITHDRAWAL RIGHTS................. Tenders of Existing Notes may be withdrawn at any time
prior to the Expiration Date. See "The Exchange
Offer--Withdrawal of Tenders."
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS.................. For a discussion of certain federal income tax
considerations relating to the exchange of the Notes,
see "Certain Federal Income Tax Considerations."
USE OF PROCEEDS................... The Company will not receive any proceeds from the
Exchange Offer.
EXCHANGE AGENT.................... (the "Exchange Agent") is serving as the Exchange Agent
in connection with Exchange Offer.
</TABLE>
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CONSEQUENCES OF EXCHANGING EXISTING NOTES PURSUANT TO THE EXCHANGE OFFER
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company is of the view that the
New Notes issued pursuant to this Exchange Offer in exchange for Existing Notes
may be offered for resale, resold and otherwise transferred by a holder thereof
(other than (i) a broker-dealer who purchases such New Notes directly from the
Company to resell pursuant to Rule 144A or any other available exemption under
the Securities Act or (ii) a person that is an affiliate of the Company within
the meaning of Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the holder is acquiring the New Notes in the ordinary course of its
business and is not participating, and had no arrangement or understanding with
any person to participate, in the distribution of the New Notes. Holders of
Existing Notes wishing to accept the Exchange Offer must represent to the
Company, as required by the Registration Rights Agreement, that such conditions
have been met. Each broker-dealer that receives the New Notes for its own
account in exchange for the Existing Notes, where such Existing 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. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Existing Notes where such Existing Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities. The Company has indicated its intention to make this Prospectus (as
it may be amended or supplemented) available to any broker-dealer for use in
connection with any such resale for a period of one year following the date the
Registration Statement is declared effective by the Commission (the "Effective
Date"). See "Plan of Distribution."
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 qualified for sale in such jurisdictions or in compliance with an
available exemption from registration or qualification. The Company has agreed,
pursuant to the 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 are necessary to
permit consummation of the Exchange Offer. If a holder of Existing Notes does
not exchange such Existing Notes for New Notes pursuant to the Exchange Offer,
such Existing Notes will continue to be subject to the restrictions on transfer
contained in the legend thereon. In general, the Existing 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. Holders of Existing Notes do not have any
appraisal or dissenters' rights in connection with the Exchange Offer. See "The
Exchange Offer--Consequences of Failure to Exchange; Resales of New Notes."
The Existing Notes are currently eligible for trading in the PORTAL market.
Following commencement of the Exchange Offer but prior to its consummation, the
Existing Notes may continue to be traded in the PORTAL market. Following
consummation of the Exchange Offer, the New Notes will not be eligible for
PORTAL trading.
8
<PAGE>
THE NEW NOTES
The terms of the New Notes are identical in all material respects to the
Existing Notes, except for certain transfer restrictions and registration rights
relating to the Existing Notes.
<TABLE>
<S> <C>
SECURITIES OFFERED:............... $120,000,000 in aggregate principal amount of 9 5/8%
Senior Subordinated Notes due 2007.
INTEREST PAYMENT DATES:........... February 1 and August 1, commencing February 1, 1998.
MATURITY DATE:.................... August 1, 2007.
SINKING FUND PROVISION:........... None.
OPTIONAL REDEMPTION:.............. The Notes will not be redeemable at the Company's option
prior to August 1, 2002, except under the circumstances
set forth below under "Change of Control." Thereafter,
the Notes will be subject to redemption at any time at
the option of the Company, in whole or in part, at the
redemption prices set forth herein plus accrued and
unpaid interest and Liquidated Damages, if any, thereon
to the applicable redemption date. In addition, at any
time prior to August 1, 2000, the Company may on any one
or more occasions redeem up to 35% of the original
aggregate principal amount of Notes at a redemption
price of 109.625% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if
any, thereon to the date of redemption, with the net
cash proceeds of any Public Equity Offering of common
stock of the Company or a capital contribution to the
Company's common equity of the net cash proceeds of a
concurrent Public Equity Offering of common stock by the
Company's direct parent, provided that at least 65% of
the original aggregate principal amount of Notes remains
outstanding immediately after each occurrence of such
redemption. See "Description of the Notes--Optional
Redemption."
RANKING:.......................... The New Notes will be general unsecured obligations of
the Company subordinate in right of payment to all
existing and future Senior Debt (as defined) of the
Company, and senior in right of payment to or PARI PASSU
with all other indebtedness of the Company. As of
September 27, 1997, the Company had approximately $1.4
million of Senior Debt outstanding (exclusive of an
unused commitment of up to $50.0 million under the New
Credit Facility). See "Description of the Notes--
Subordination" and "Capitalization."
SUBSIDIARY GUARANTEES:............ The Company's payment obligations under the New Notes
will be jointly and severally guaranteed on a senior
subordinated basis (the "Subsidiary Guarantees") by all
current and future Subsidiaries (as defined) of the
Company. See "Description of the Notes--Subsidiary
Guarantees."
CHANGE OF CONTROL:................ Upon the occurrence of a Change of Control, (i) the
Company will have the option, at any time prior to
August 1, 2002, to
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9
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<S> <C>
redeem the Notes, in whole but not in part, at a
redemption price equal to 100% of the principal amount
thereof plus the Applicable Premium set forth herein,
plus accrued and unpaid interest and Liquidated Damages,
if any, to the date of redemption and (ii) if the
Company does not so redeem the New Notes or if such
Change of Control occurs after August 1, 2002, the
Company will be required to make an offer to repurchase
the Notes at a price equal to 101% of the principal
amount thereof, together with accrued and unpaid
interest and Liquidated Damages, if any, to the date of
purchase. See "Description of the Notes--Optional
Redemption" and "--Repurchase at the Option of
Holders--Change of Control."
CERTAIN COVENANTS:................ The indenture pursuant to which the Existing Notes were
issued and the New Notes will be issued (the
"Indenture") contains certain covenants that, among
other things, limit the ability of the Company and its
Subsidiaries to (i) incur additional indebtedness and
issue preferred stock, (ii) pay dividends or make
certain other restricted payments, (iii) enter into
transactions with affiliates, (iv) make certain asset
dispositions, (v) merge or consolidate with, or transfer
substantially all of its assets to, another Person (as
defined), (vi) encumber assets under certain
circumstances, (vii) restrict dividends and other
payments from subsidiaries, (viii) engage in sale and
leaseback transactions, (ix) issue Capital Stock (as
defined) of wholly owned subsidiaries or (x) engage in
certain business activities. See "Description of the
Notes--Certain Covenants." In addition, under certain
circumstances, the Company will be required to offer to
purchase the Notes at a price equal to 100% of the
principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of
purchase, with the proceeds of certain Asset Sales (as
defined). See "Description of the Notes--Repurchase at
the Option of Holders--Asset Sales."
</TABLE>
RISK FACTORS
Holders of Existing Notes should carefully consider all of the information
set forth in this Prospectus and, in particular, should evaluate the specific
factors under "Risk Factors" beginning on page 13 in connection with the
Exchange Offer.
10
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SUMMARY PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The unaudited Summary Pro Forma Condensed Consolidated Financial Data set
forth below should be read in conjunction with the unaudited Pro Forma Condensed
Consolidated Financial Information included elsewhere herein, and is based on
the historical consolidated financial statements of the Company, the Nabisco
Brands and Trappey's. The unaudited pro forma summary statement of operations
data give effect to (i) the B&G and B&R Acquisition, (ii) the Nabisco Brands
Acquisition, (iii) the Trappey's Acquisition, and (iv) the Financing as if such
transactions had occurred on December 30, 1995 for the fiscal year ended
December 28, 1996 ("Pro Forma 1996") and on December 28, 1996 for the 39-week
period ended September 27, 1997. See "--Company History" and "--The Financing."
The unaudited Summary Pro Forma Condensed Consolidated Financial Data is
intended for informational purposes only and is not necessarily indicative of
the future results of operations of the Company had the transactions described
above occurred on the indicated dates or been in effect for the period
presented. The unaudited Summary Pro Forma Condensed Consolidated Financial Data
should be read in conjunction with, and is qualified in its entirety by, the Pro
Forma Condensed Consolidated Financial Information, the historical consolidated
financial statements of the Company, the Nabisco Brands and Trappey's,
including, in each case, the related notes thereto included elsewhere herein,
and with "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
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<CAPTION>
FISCAL YEAR 39-WEEK PERIOD
ENDED ENDED
DEC. 28, SEPT. 27,
1996 1997
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(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net sales.......................................................................... $ 175,708 $ 124,841
Cost of goods sold................................................................. 111,386 80,239
----------- --------------
Gross profit....................................................................... 64,322 44,602
Sales, general and administrative expenses and management fees..................... 47,242 33,899
----------- --------------
Operating income................................................................... $ 17,080 $ 10,703
----------- --------------
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OTHER DATA:
EBITDA(1).......................................................................... $ 23,366 $ 15,768
EBITDA as a % of net sales......................................................... 13.3% 12.6%
Depreciation and amortization...................................................... $ 6,286 $ 5,065
Capital expenditures............................................................... 2,869 2,985
Ratio of earnings to fixed charges(2).............................................. 1.4 1.2
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- ------------------------
(1) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. EBITDA should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of profitability or
liquidity.
(2) For purpose of this computation, earnings consist of income before taxes
plus fixed charges. Fixed charges consist of interest on indebtedness plus
that portion of lease rental expense representative of the interest factor.
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RISK FACTORS
HOLDERS OF EXISTING NOTES SHOULD GIVE CAREFUL CONSIDERATION TO THE SPECIFIC
FACTORS SET FORTH BELOW AND THE OTHER INFORMATION SET FORTH HEREIN IN CONNECTION
WITH THE EXCHANGE OFFER. THE RISK FACTORS SET FORTH BELOW ARE GENERALLY
APPLICABLE TO THE NEW NOTES.
SUBSTANTIAL LEVERAGE AND DEBT SERVICE
The Company is highly leveraged. On September 27, 1997, the Company's total
debt and stockholder's equity was $121.1 million and $18.2 million,
respectively. See "Capitalization" and "Selected Historical Financial and Other
Data." The Company had borrowing availability under the New Credit Facility of
$50.0 million, subject to the borrowing conditions contained therein. For the
year ended December 28, 1996 and the 39-week period ended September 27, 1997,
the ratio of earnings to fixed charges would have been 1.4 to 1.0 and 1.2 to
1.0, respectively, after giving pro forma effect to the B&G and B&R Acquisition,
the Nabisco Brands Acquisition, the Trappey's Acquisition and the Financing as
if they had occurred on December 30, 1995.
The Company's ability to make scheduled payments of principal of, or to pay
the interest or Liquidated Damages, if any, on, or to refinance, its
indebtedness (including the Notes), or to fund planned capital expenditures,
will depend upon its future performance, which, in turn, is subject to general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond its control. Based upon current levels of operations and anticipated
growth in revenues and cost savings, Management believes that the Company's cash
flow from operations, amounts available under the New Credit Facility and
available cash will be adequate to meet its anticipated future requirements for
working capital, capital expenditures, and scheduled payments of principal and
interest on its indebtedness, including the Notes. There can be no assurance,
however, that the Company's business will generate cash flow at or above
anticipated levels or that the Company will be able to borrow funds under the
New Credit Facility in an amount sufficient to enable the Company to service its
indebtedness, including the Notes, or make anticipated capital expenditures. In
particular, there can be no assurance that anticipated revenue growth will be
achieved at the levels currently anticipated or at all. If the Company is unable
to generate sufficient cash flow from operations or to borrow sufficient funds
in the future to service its debt, it may be required to sell assets, reduce
capital expenditures, refinance all or a portion of its existing debt (including
the Notes) or obtain additional financing. There can be no assurance that any
such refinancing would be available on commercially reasonable terms, or at all,
or that any additional financing could be obtained, particularly in view of the
Company's high level of debt, the restrictions on the Company's ability to incur
additional debt under the New Credit Facility and the Indenture, and the fact
that substantially all of the Company's assets will be pledged to secure
obligations under the New Credit Facility.
The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including but not limited to (i) making it
more difficult for the Company to satisfy its obligations with respect to the
Notes, (ii) increasing the Company's vulnerability to general adverse economic
and industry conditions, (iii) limiting the Company's ability to obtain
additional financing to fund future working capital, capital expenditures and
other general corporate purpose requirements, (iv) requiring the dedication of a
substantial portion of the Company's cash flow from operations to the payment of
principal of, and interest on, its indebtedness, thereby reducing the
availability of such cash flow to fund working capital, capital expenditures or
other general corporate purposes, (v) limiting the Company's flexibility in
planning for, or reacting to, changes in its business and the industry and (vi)
placing the Company at a competitive disadvantage vis-a-vis less leveraged
competitors. In addition, the Indenture and the New Credit Facility contain
financial and other restrictive covenants that limit the ability of the Company,
among other things, to borrow additional funds. Failure by the Company to comply
with such covenants could result in an event of default which, if not cured or
waived, could have a material adverse effect on the Company's business,
financial condition or results of operations. In addition, the degree to which
the Company is leveraged could prevent it from repurchasing all of the Notes
tendered to it upon the
13
<PAGE>
occurrence of a Change of Control. See "Description of the Notes--Repurchase at
the Option of Holders--Change of Control" and "Description of Certain
Indebtedness--New Credit Facility."
SUBORDINATION AND RANKING OF THE NOTES
The Existing Notes are, and the New Notes will be, general unsecured
obligations of the Company, subordinate in right of payment to all current and
future Senior Debt of the Company, including all indebtedness under the New
Credit Facility and effectively subordinate to all secured indebtedness of the
Company and its Subsidiaries. By reason of such subordination, in the event of
an insolvency, liquidation, reorganization, dissolution or other winding-up of
the Company, the Senior Debt must be paid in full before the principal of,
premium, if any, and interest or Liquidated Damages, if any, on the Notes may be
paid. In the event of a bankruptcy, liquidation or reorganization of the
Company, holders of the Notes will participate ratably with all holders of
subordinated indebtedness of the Company that is deemed to be of the same class
as the Notes, based upon respective amounts owed to each holder or creditor, in
the remaining assets of the Company. If any of the foregoing events should
occur, there can be no assurance that there would be sufficient assets to pay
amounts due on the Notes. In addition, the Indenture provides that no
distribution with respect to the Notes may be made in the event of a payment
default with respect to Designated Senior Debt (as defined) under certain
circumstances and the holders of Designated Senior Debt will be entitled to
block payments with respect to the Notes in the event of a nonpayment default on
Designated Senior Debt. At September 27, 1997, the Company had approximately
$1.4 million of Senior Debt outstanding (exclusive of an unused commitment of up
to $50.0 million under the New Credit Facility). The Indenture permits the
Company to incur additional indebtedness if certain conditions are met. See
"Capitalization," "Description of Certain Indebtedness--New Credit Facility" and
"Description of the Notes--Certain Covenants."
HOLDING COMPANY STRUCTURE; EFFECTIVE SUBORDINATION
The Company has no operations of its own and derives substantially all of
its revenues from its subsidiaries. Holders of indebtedness of subsidiaries of
the Company would be entitled to repayment of such indebtedness from the assets
of the affected subsidiaries before such assets were made available for
distribution within the limits set forth in the Indenture to the Company. The
Indenture permits the incurrence of substantial additional indebtedness by the
Company and its subsidiaries within the limits set forth in the Indenture,
permits significant investments by the Company in subsidiaries and requires all
of the Company's current and future subsidiaries to guarantee the Notes. See
"Description of the Notes-- Certain Covenants--Additional Subsidiary
Guarantees." As of September 27, 1997, the aggregate amount of indebtedness and
other liabilities (including trade payables, accrued expenses, amounts due to
related parties, deferred income taxes and other liabilities) of the Company's
subsidiaries was approximately $42.8 million.
RESTRICTIVE LOAN COVENANTS
The Indenture contains covenants that restrict, among other things, the
ability of the Company to incur additional indebtedness, pay dividends or make
certain other Restricted Payments (as defined therein), enter into transactions
with affiliates, allow its subsidiaries to make certain payments, make certain
asset dispositions, merge or consolidate with, or transfer substantially all of
its assets to, another person, encumber assets under certain circumstances,
restrict dividends and other payments from subsidiaries, engage in sale and
leaseback transactions, issue Capital Stock of wholly-owned subsidiaries, engage
in certain business activities, or engage in certain change of control
transactions. In addition, the New Credit Facility contains other and more
restrictive covenants and prohibits the Company from prepaying certain of its
indebtedness, including the Notes. Under the New Credit Facility, the Company is
required to maintain specified financial ratios, including maximum capital
expenditure limits, a minimum total interest coverage ratio, a minimum fixed
charge coverage ratio and a maximum leverage ratio (each as defined in
14
<PAGE>
the New Credit Facility). The failure by the Company to maintain such financial
ratios or to comply with the restrictions contained in the New Credit Facility
or the Indenture could result in a default thereunder, which in turn could cause
such indebtedness (and by reason of cross-default provisions, other
indebtedness) to become immediately due and payable. No assurance can be given
that the Company's future operating results will be sufficient to enable
compliance with such covenants, or in the event of a default, to remedy such
default. See "Description of Certain Indebtedness--New Credit Facility" and
"Description of the Notes--Certain Covenants."
RISKS RELATING TO FUTURE ACQUISITIONS
The Company plans to continue to pursue additional acquisitions of food
businesses. 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. Moreover, future acquisitions
by the Company could result in the incurrence of substantial additional
indebtedness, exposure to contingent liabilities and the amortization of
expenses related to goodwill and other intangible assets, all of which could
adversely affect the Company's financial condition and results of operations.
Acquisitions involve numerous risks, including difficulties in the assimilation
of the operations, technologies, services and products of the acquired companies
and the diversion of Management's attention from other business concerns. In the
event that any such acquisition were to occur, there can be no assurance that
the Company's business, financial condition or results of operations would not
be materially adversely affected.
COMPETITION
The Company operates in markets that are highly competitive, and the Company
faces competition in each of its product lines. The Company competes with a
significant number of companies of varying sizes, including divisions or
subsidiaries of larger companies. Many 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.
There can be no assurance that the Company will be able to continue to compete
successfully or that such competition will not have a material adverse effect on
the Company's business, financial condition or results of operations. See
"Business--Competition."
GOVERNMENTAL REGULATION
The operations of the Company are subject to extensive regulation by the
United States Food and Drug Administration ("FDA"), the United States Department
of Agriculture and other state and local authorities regarding the processing,
packaging, storage, distribution and labeling of the Company's products. The
Company's processing facilities and products are subject to periodic inspection
by federal, state and local authorities. The Company believes that it is
currently in substantial compliance with all material governmental laws and
regulations and maintains all material permits and licenses relating to its
operations. Nevertheless, there can be no assurance that the Company is in
compliance with such laws and regulations or that it will be able to comply with
any future laws and regulations. Failure by the Company to comply with
applicable laws and regulations could have a material adverse effect on the
Company's business, financial condition or results of operations. See
"Business--Governmental Regulation."
PUBLIC HEALTH REGULATORY MATTERS
As described above, the Company is subject to the Food, Drug and Cosmetic
Act and regulations promulgated thereunder by the FDA. This comprehensive
regulatory program governs, among other things, the manufacturing, composition
and ingredients, labeling, packaging and safety of food. For example, the FDA
regulates manufacturing practices for foods through its current "good
manufacturing practices" regulations and specifies the recipes for certain
foods. In addition, the Nutrition Labeling and Education Act of 1990 prescribes
the format and content of certain information required to appear on the labels
of food products. The Company is subject to regulation by certain other
governmental agencies,
15
<PAGE>
including the U.S. Department of Agriculture. 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. See "Business--Governmental Regulation."
RAW MATERIALS
The Company purchases agricultural products, other raw materials and
packaging supplies from growers, commodity processors, other food companies and
packaging manufacturers. While all such materials are available from numerous
independent suppliers, raw materials are subject to fluctuations in price
attributable to a number of factors, including changes in crop size, federal and
state agricultural programs, export demand and weather conditions during the
growing and harvesting seasons. Although the Company enters into advance
commodities purchase agreements from time to time, increases in raw material
costs could have a material adverse effect on the Company's business, financial
condition or results of operations. See "Business--Raw Materials."
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant degree upon the continued
contributions of senior management, certain of whom would be difficult to
replace. The loss of the services of certain of these executives could have a
material adverse effect on the Company's business, financial condition or
results of operations. There can be no assurance that the services of such
personnel will continue to be available to the Company. See "Management."
LABOR RELATIONS
As of September 27, 1997, approximately 65 of the Company's employees at its
Roseland, New Jersey facility were represented by a collective bargaining
agreement with the International Brotherhood of Teamsters, Chauffeurs,
Warehousemen & Helpers of America (Local No. 863). This collective bargaining
agreement expires in March 1999. Although the Company considers its employee
relations generally to be good, a prolonged work stoppage or strike at any
facility with union employees could have a material adverse effect on the
business, financial condition or results of operations of the Company. In
addition, there can be no assurance that upon the expiration of existing
collective bargaining agreements new agreements will be reached without union
action or that any such new agreements will be on terms satisfactory to the
Company. See "Business--Employees."
POTENTIAL LOSS OF IHF CONTRACTS
The Company has three contracts (the "IHF Contracts") with IHF to produce
and distribute certain IHF Products. The IHF Contracts, which arose from the
sale of the POLANER business to a predecessor of IHF in 1993, pertain to (i) the
sale and distribution of IHF's POLANER fruit spreads and wet spices through the
Company's DSD system, (ii) the production of POLANER wet spices at the Company's
Hurlock, Maryland facility and (iii) the production of POLANER fruit spreads at
the Company's Roseland, New Jersey facility. See "Business--Production and
Facilities." The IHF Contracts accounted for $47.4 million, $50.8 million and
$31.5 million of net sales during fiscal 1995, fiscal 1996 and the 39-week
period ended September 27, 1997, respectively, although contribution to EBITDA
for such contracts during these periods was significantly lower than
contribution from the Company's other product lines. The IHF Contracts for
production of fruit spreads and wet spices expire in March 1999 and March 1998,
respectively, and the contract for distribution of IHF products is terminable on
12 months notice. There can be no assurance that upon the expiration of these
contracts new agreements will be reached or that any such new agreements will be
on terms satisfactory to the Company. In addition, there can be no assurance
that a failure to reach new agreements will not have a material adverse effect
on the Company's business, financial conditions or results of operations.
16
<PAGE>
ENVIRONMENTAL MATTERS
The Company is subject to various federal, state and local environmental
laws and regulations relating to the discharge, storage, treatment, handling,
disposal and remediation of certain materials, substances and wastes used in or
resulting from its operations. The Company's operations are also governed by
laws and regulations relating to workplace safety and worker health which, among
other things, regulate employee exposure to hazardous chemicals in the
workplace. Pursuant to the B&G and B&R Acquisition agreement, Specialty Foods is
obligated to indemnify the Company for certain environmental liabilities related
to events or activities prior to the consummation of the B&G and B&R
Acquisition. See "Summary" and "Business--Environmental Matters." As with other
companies engaged in like businesses, the nature of the Company's operations
expose it to the risk of liabilities or claims with respect to environmental
matters, including those relating to the disposal and release of hazardous
substances, and there can be no assurance that material costs will not be
incurred in connection with such liabilities or claims.
Based on the Company's experience to date, the Company believes that the
future cost of compliance with existing environmental laws and regulations (and
liability for known environmental conditions) will not have a material adverse
effect on the Company's business, financial condition or results of operations.
However, the Company cannot predict what environmental or health and safety
legislation or regulations will be enacted in the future or how existing or
future laws or regulations will be enforced, administered or interpreted, nor
can it predict the amount of future expenditures which may be required in order
to comply with such environmental or health and safety laws or regulations or to
respond to such environmental claims. See "Business--Environmental Matters."
TRADEMARKS AND PATENTS
The Company owns 66 trademarks which are registered in the United States and
23 trademarks which are registered in foreign countries including Canada, the
Dominican Republic, Japan, South Korea, the Philippines and Thailand. In
addition, the Company has seven trademark applications pending in the United
States and one trademark application pending in Mexico. The Company considers
its trademarks to be of significant importance in the Company's business.
Although the Company is not aware of any circumstances that would negatively
impact its trademarks, there can be no assurance that future litigation by the
Company will not be necessary to enforce its trademark rights or to defend the
Company against claimed infringement of the rights of others, adverse
determinations in which could have a material adverse effect on the Company's
business, financial condition or results of operations.
FRAUDULENT CONVEYANCE CONSIDERATIONS
Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer law, if, among other things, the Company
or any Guarantor, at the time it incurred the indebtedness evidenced by the
Notes or its Subsidiary Guarantee, as the case may be, (i)(a) was or is
insolvent or rendered insolvent by reason of such occurrence or (b) was or is
engaged in a business or transaction for which the assets remaining with the
Company or such Guarantor constituted unreasonably small capital or (c) intended
or intends to incur, or believed or believes that it would incur, debts beyond
its ability to pay such debts as they mature and (ii) the Company or such
Guarantor received or receives less than reasonably equivalent value or fair
consideration for the incurrence of such indebtedness, then the Notes and the
Subsidiary Guarantees, and any pledge or other security interest securing such
indebtedness, could be voided, or claims in respect of the Notes or the
Subsidiary Guarantees could be subordinated to all other debts of the Company or
such Guarantor, as the case may be. In addition, the payment of interest and
principal by the Company pursuant to the Notes or the payment of amounts by a
Guarantor pursuant to a Subsidiary Guarantee could be voided and required to be
returned to the person making such payment, or to a fund for the credit of the
creditors of the Company or such Guarantor, as the case may be.
17
<PAGE>
The measures of insolvency for purposes of the foregoing considerations will
vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, the Company or a Guarantor would be considered
insolvent if (i) the sum of its debts, including contingent liabilities, were
greater than the saleable value of all of its assets at a fair valuation or if
the present fair saleable value of its assets were less than the amount that
would be required to pay its probable liability on its existing debts, including
contingent liabilities, as they become absolute and mature or (ii) it could not
pay its debts as they become due.
On the basis of historical financial information, recent operating history
as discussed in "Pro Forma Condensed Consolidated Financial Information,"
"Selected Historical Financial and Other Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and other factors,
the Company and each Guarantor believe that, after giving effect to the
indebtedness incurred in connection with the Financing, it will not be
insolvent, will not have unreasonably small capital for the business in which it
is engaged and will not incur debts beyond its ability to pay such debts as they
mature. There can be no assurance, however, as to what standard a court would
apply in making such determinations or that a court would agree with the
Company's or such Guarantors' conclusions.
VOTING CONTROL OF THE COMPANY
BRS owns 85% of the outstanding voting stock of B&G Foods Holdings Corp.
("Holdings"), which owns all of the outstanding capital stock of the Company.
Accordingly, BRS has the ability to elect a majority of the Board of Directors
of the Company and to determine the outcome of any other matter submitted to the
stockholders for approval, including the power to determine the outcome of all
corporate transactions, such as mergers, consolidations and the sale of all or
substantially all of the assets of the Company. See "Ownership of Capital
Stock."
CHANGE OF CONTROL
The Indenture provides that, upon the occurrence of a Change of Control, the
Company must make an offer to repurchase all of the Notes issued and then
outstanding under the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of repurchase. See "Description of the
Notes--Repurchase at the Option of Holders--Change of Control." Any Change of
Control under the Indenture would constitute a default under the New Credit
Facility. Therefore, upon the occurrence of a Change of Control, the lenders
under the New Credit Facility would have the right to accelerate their loans and
the holders of the Notes would have the right to require the Company to
repurchase their Notes. Upon such event, such lenders would be entitled to
receive payment of all outstanding obligations under the New Credit Facility
before the Company may repurchase any of the Notes tendered pursuant to such an
offer. See "Description of Certain Indebtedness--New Credit Facility." If a
Change of Control were to occur, it is unlikely that the Company would be able
to repay all of its obligations under the New Credit Facility and the Notes
unless it could obtain alternate financing. There can be no assurance that the
Company would be able to obtain any such financing on commercially reasonable
terms, or at all, and consequently no assurance can be given that the Company
would be able to repurchase any of the Notes tendered pursuant to such an offer.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
The Existing Notes are currently eligible for trading in the PORTAL market.
The New Notes are a new issue of securities for which there is currently no
established trading market. The Company does not intend to apply for listing of
the New Notes on any securities exchange or the Nasdaq National Market. The
Initial Purchasers have advised the Company that they currently intend to make a
market in the New Notes; however, the Initial Purchasers are not obligated to do
so and any market making may be discontinued at any time without notice. There
can be no assurance as to the liquidity of any markets that
18
<PAGE>
may develop for the New Notes, the ability of holders of the New Notes to sell
their New Notes, or the prices at which holders would be able to sell their New
Notes.
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer. The net
proceeds to the Company from the sale of the Existing Notes, after deducting the
Initial Purchasers' discount and estimated fees and expenses, were approximately
$116.4 million. The Company used the proceeds of the sale of the Existing Notes
as follows: (i) approximately $76.5 million was applied to repay the outstanding
indebtedness under the Prior Credit Facility; (ii) approximately $23.0 million
was applied to repay the outstanding indebtedness under the Interim Notes; (iii)
approximately $0.5 million was applied to repay accrued and unpaid interest on
the Prior Indebtedness being repaid; (iv) approximately $12.3 million was used
to consummate the Trappey's Acquisition; and (v) approximately $1.5 million was
used to pay certain fees and expenses. The Company intends to use the balance of
the net proceeds for general corporate purposes. See "Summary--The Financing,"
"Description of Certain Indebtedness--New Credit Facility," "Capitalization" and
"Pro Forma Condensed Consolidated Financial Information."
19
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 27, 1997. This table should be read in conjunction with the financial
statements, and the related notes thereto, included elsewhere herein. See "Use
of Proceeds," "Pro Forma Condensed Consolidated Financial Information" and
"Ownership of Capital Stock."
<TABLE>
<CAPTION>
AT SEPTEMBER 27,
1997
--------------------
<S> <C>
(DOLLARS IN
THOUSANDS)
Cash and cash equivalents................................................................... $ 3,699
--------
--------
Total debt (including current maturities):
Other................................................................................... $ 1,401
New Credit Facility(1).................................................................. --
9 5/8% Senior Subordinated Notes due 2007............................................... 120,000
--------
Total debt.............................................................................. 121,401
--------
Total stockholder's equity.............................................................. 18,229
--------
Total capitalization........................................................................ $ 139,630
--------
--------
</TABLE>
- ------------------------
(1) Represents an unused commitment of up to $50.0 million under the New Credit
Facility.
20
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following presents certain unaudited pro forma condensed consolidated
financial information of the Company for the periods ended as indicated. The
unaudited pro forma condensed consolidated statements of operations data give
effect to (i) the B&G and B&R Acquisition, (ii) the Nabisco Brands Acquisition,
(iii) the Trappey's Acquisition and (iv) the Financing, in each case, as if such
transaction had occurred on December 30, 1995 for the fiscal year ended December
28, 1996 and on December 28, 1996 for the 39-week period ended September 27,
1997. In addition, the unaudited pro forma condensed consolidated statements of
operations give effect to certain incremental manufacturing, selling and general
and administrative expenses related to the Nabisco Brands Acquisition as such
costs were not allocated to the Nabisco Brands by Nabisco. The unaudited pro
forma condensed consolidated statements of operations also give effect to
certain reductions in selling and general administrative expenses related to
Trappey's. The prior owner of Trappey's has allocated certain of such costs on a
basis that is higher than Management of the Company believes necessary now that
Trappey's is managed as part of the Company.
The unaudited pro forma condensed consolidated financial information set
forth below reflects pro forma adjustments that are based upon available
information and certain assumptions that the Company believes are reasonable.
The pro forma financial information does not purport to represent the Company's
results of operations or financial position that would have resulted had the
transactions to which pro forma effect is given been consummated as of the dates
or for the periods indicated. In preparing the pro forma financial information,
the Company believes it has utilized reasonable methods to conform the basis of
presentation. The B&G and B&R Acquisition, the Nabisco Brands Acquisition and
the Trappey's Acquisition have been accounted for herein by the purchase method
of accounting. The pro forma information reflects preliminary estimates of the
allocation of the purchase price and is subject to final determination.
The pro forma financial statements and accompanying notes should be read in
conjunction with the historical financial statements of B&G, the Nabisco Brands,
and Trappey's and with other financial information pertaining to the Company
including "Use of Proceeds," "Capitalization" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus.
21
<PAGE>
B&G FOODS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------
NABISCO PRO FORMA PRO FORMA
B&G(1) BRANDS(2) TRAPPEY'S(3) ADJUSTMENTS CONSOLIDATED
---------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales.......................................... $ 129,307 $ 27,718 $ 18,683 $ -- $ 175,708
Cost of goods sold................................. 91,187 8,782 11,712 (295)(4) 111,386
---------- ----------- ----------- ----------- ------------
Gross profit..................................... 38,120 18,936 6,971 295 64,322
Sales, general and administrative expenses......... 31,355 7,301 5,805 2,531(5) 46,992
Management fees.................................... 1,249 -- -- (999)(6) 250
---------- ----------- ----------- ----------- ------------
Operating income................................. 5,516 11,635 1,166 (1,237) 17,080
Other (income) expense:
Interest and other income........................ -- -- (180) 180(7) --
Interest expense--related parties................ 4,452 -- -- (4,452)(8) --
Interest expense................................. 197 -- 9 11,978(9) 12,184
---------- ----------- ----------- ----------- ------------
Income before income tax expense................. 867 11,635 1,337 (8,943) 4,896
Income tax expense................................. 591 -- 565 1,094 (10 2,250
---------- ----------- ----------- ----------- ------------
Net income....................................... $ 276 $ 11,635 $ 772 $ (10,037) $ 2,646
---------- ----------- ----------- ----------- ------------
---------- ----------- ----------- ----------- ------------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
22
<PAGE>
B&G FOODS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 39-WEEK PERIOD ENDED SEPTEMBER 27, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------
NABISCO PRO FORMA PRO FORMA
B&G(1) BRANDS(2) TRAPPEY'S(3) ADJUSTMENTS CONSOLIDATED
---------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales.......................................... $ 104,337 $ 9,916 $ 10,588 $ -- $ 124,841
Cost of goods sold................................. 70,064 3,531 6,668 (24)(4) 80,239
---------- ----------- ----------- ----------- ------------
Gross profit..................................... 34,273 6,385 3,920 24 44,602
Sales, general and administrative expenses......... 27,515 2,304 3,484 405(5) 33,708
Management fees.................................... 191 -- -- -- 191
---------- ----------- ----------- ----------- ------------
Operating income................................. 6,567 4,081 436 (381) 10,703
Other (income) expense:
Interest and other income........................ -- -- (151) 151(7) --
Interest expense--related parties................ 788 -- -- (788)(8) --
Interest expense................................. 5,320 -- 4 3,815(9) 9,139
---------- ----------- ----------- ----------- ------------
Income before income tax expense and
extraordinary item............................. 459 4,081 583 (3,559) 1,564
Income tax expense................................. 426 -- 282 87 (10 795
---------- ----------- ----------- ----------- ------------
Income before extraordinary item................... $ 33 $ 4,081 $ 301 $ (3,646) $ 769
---------- ----------- ----------- ----------- ------------
---------- ----------- ----------- ----------- ------------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
23
<PAGE>
B&G FOODS, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The following pro forma adjustments give effect to (i) the B&G and B&R
Acquisition, (ii) the Nabisco Brands Acquisition, (iii) the Trappey's
Acquisition, and (iv) the Financing. The above acquisitions have been accounted
for using the purchase method of accounting.
The unaudited pro forma condensed consolidated financial statements have
been adjusted for the items set forth below. Such adjustments reflect
Management's preliminary estimates of the fair value of the assets acquired and
the liabilities assumed relating to the B&G and B&R Acquisition, the Nabisco
Brands Acquisition and the Trappey's Acquisition.
1. Represents the historical results of operations of B&G for the fiscal year
ended December 28, 1996 and the 39-week period ended September 27, 1997.
B&G's results of operations for the 39-week period ended September 27, 1997
include the results of operations of the Acquired Brands since their
respective dates of acquisition.
2. Represents the historical combined statements of product contribution for
the year ended December 31, 1996 and for the 24-week period ended June 17,
1997. Full financial statements, including complete historical balance sheet
and statements of operations, of the Nabisco Brands have not been presented
as Nabisco did not operate the Nabisco Brands as a separate division.
Accordingly, it is not practical to separate other components of assets,
liabilities, certain statement of operations data and cash flows related
specifically to the Nabisco Brands.
3. Represents the historical consolidated statements of earnings of Trappey's
for the year ended December 28, 1996 and for the 33-week period ended August
15, 1997.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FISCAL
YEAR ENDED 39-WEEK
DEC. 28, PERIOD ENDED
1996 SEPT. 27, 1997
------------ ------------------
<S> <C> <C> <C>
4. Adjustment to depreciation and amortization expense relating to
estimated fair values of property, plant and equipment as follows:
-- B&G and B&R Acquisition............................................. $ (255) $ --
-- Nabisco Brands Acquisition.......................................... (22) (10)
-- Trappey's Acquisition............................................... (18) (14)
------------ -------
$ (295) $ (24)
------------ -------
------------ -------
5. Adjustment to amortization expense for the excess cost over fair value
of net assets acquired and other intangible assets as follows:
-- B&G and B&R Acquisition............................................. $ 628 $ --
-- Nabisco Brands Acquisition.......................................... 1,220 915
-- Trappey's Acquisition............................................... (160) (67)
------------ -------
1,688 848
</TABLE>
24
<PAGE>
B&G FOODS, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL
YEAR ENDED 39-WEEK
DEC. 28, PERIOD ENDED
1996 SEPT. 27, 1997
------------ ------------------
<S> <C> <C> <C>
Adjustment to expense packaging design costs in the period the costs
are incurred........................................................... 392 --
Elimination of certain non-recurring costs related to the B&G and B&R
Acquisition............................................................ (129) --
Adjustment to record additional selling commissions, product management
costs and administrative costs relating to the Nabisco Brands
Acquisition. The seller did not allocate sales commissions to the
Nabisco Brands. The Company is adjusting to record a 5% commission on
net sales and to include costs relating to two new incremental sales
managers. The Company is also including costs related to an incremental
product manager and two incremental administrative staff members as
well as incremental insurance and professional expenses. Such
incremental costs are as follows:
Adjustments for additional costs of Nabisco Brands:
--Sales commissions and sales managers................................. $ 1,280 $ 324
-- Product manager..................................................... 125 57
-- Administrative costs................................................ 175 81
------------ -------
1,580 462
Adjustment to eliminate certain allocated historical sales, general and
administrative expenses allocated by McIlhenny to Trappey's and the
recording of incremental selling, general and administrative expenses
that the Company has estimated will be necessary to operate Trappey's.
The Company is adjusting to include two new sales manager, one
incremental administrative staff member as well as incremental
insurance and professional expenses. Such adjustments are as follows:
-- Historical allocated costs.......................................... $ (1,446) $ (1,176)
-- Sales manager....................................................... 250 146
-- Administrative staff................................................ 50 32
-- Insurance and professional expenses................................. 146 93
------------ -------
(1,000) (905)
------------ -------
$ 2,531 $ 405
------------ -------
------------ -------
</TABLE>
25
<PAGE>
B&G FOODS, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL
YEAR ENDED 39-WEEK
DEC. 28, PERIOD ENDED
1996 SEPT. 27, 1997
------------ ------------------
<S> <C> <C> <C>
6. Adjustment to eliminate historical management fee paid by the Company
to Specialty Foods and to include the management fee that will be paid
to BRS as follows:
-- Historical management fee........................................... $ (1,249) $ --
-- BRS management fee.................................................. 250 --
------------ -------
$ (999) $ --
------------ -------
------------ -------
7. Adjustment to eliminate Trappey's historical interest and other
income................................................................. $ 180 $ 151
------------ -------
------------ -------
8. Adjustment to eliminate B&G historical interest expense with related
parties................................................................ $ (4,452) $ (788)
------------ -------
------------ -------
9. Adjustment to eliminate historical interest expense and to reflect pro
forma interest expense and amortization of deferred financing expense
as shown below. The net proceeds from the sale of the Existing Notes
were used to repay approximately $100,000 of historical long-term debt
incurred in conjunction with the B&G and B&R Acquisition and the
Nabisco Brands Acquisition.
-- Historical interest expense......................................... $ (197) $ (5,320)
-- Other debt.......................................................... 110 83
-- Existing Notes (9.625%)............................................. 11,550 8,663
------------ -------
11,463 3,426
-- Amortization of deferred financing costs............................ 524 393
------------ -------
11,987 3,819
------------ -------
Adjustment to eliminate Trappey's historical interest expense.......... (9) (4)
------------ -------
$ 11,978 $ 3,815
------------ -------
------------ -------
10. Adjustment to income tax expense to reflect the Company's effective tax
rate................................................................... $ 1,094 $ 87
------------ -------
------------ -------
</TABLE>
26
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OTHER DATA
B&G FOODS, INC. AND SUBSIDIARIES(1)
The following selected historical financial and other data of B&G Foods,
Inc. and subsidiaries as of December 28, 1996 and September 27, 1997 and for the
years ended December 30, 1995 and December 28, 1996 and for the 39-week period
ended September 27, 1997 have been derived from, and should be read in
conjunction with, the financial statements of B&G Foods, Inc. and subsidiaries,
including the respective notes thereto, included elsewhere in this Prospectus,
which have been audited by KPMG Peat Marwick LLP. The selected historical
financial and other data of B&G Foods, Inc. and subsidiaries set forth below as
of and for the years ended January 2, 1993, January 1, 1994, December 31, 1994,
and as of December 30, 1995, and as of and for the 39-week period ended
September 28, 1996 have been derived from the unaudited financial statements of
B&G Foods, Inc. and subsidiaries, which are not included elsewhere in this
Prospectus and which, in the opinion of Management, include all adjustments
necessary for a fair presentation. The results of operations for the 39-week
period ended September 27, 1997 are not necessarily indicative of results to be
expected for the full year. All of the following information is qualified in its
entirety by, and should be read in conjunction with "Pro Forma Condensed
Consolidated Financial Information," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the financial statements of
B&G Foods, Inc. and subsidiaries, including the respective notes thereto,
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
39-WEEK
FISCAL YEAR ENDED PERIOD ENDED
--------------------------------------------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
JAN. 2, JAN. 1, DEC. 31, DEC. 30, DEC. 28, SEPT. 28, SEPT. 27,
1993 1994 1994 1995 1996 1996 1997
--------- ---------- ---------- ---------- ---------- --------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales (2)............................ $ 54,295 $ 102,629 $ 113,812 $ 112,245 $ 129,307 $ 97,067 $ 104,337
Cost of goods sold....................... 33,386 73,222 82,833 79,293 91,187 68,873 70,064
--------- ---------- ---------- ---------- ---------- --------- ----------
Gross profit........................... 20,909 29,407 30,979 32,952 38,120 28,194 34,273
Sales, marketing and distribution
expenses............................... 18,507 24,124 23,336 23,863 28,414 21,555 24,350
General and administrative expenses...... 3,939 4,545 2,589 2,598 2,941 2,000 3,165
Management fees.......................... 155 -- -- 1,097 1,249 939 191
--------- ---------- ---------- ---------- ---------- --------- ----------
Operating (loss) income................ (1,692) 738 5,054 5,394 5,516 3,700 6,567
Interest expense......................... 1,577 1,769 2,394 3,780 4,649 3,460 6,108
--------- ---------- ---------- ---------- ---------- --------- ----------
(Loss) income before income tax expense
and extraordinary item............... (3,269) (1,031) 2,660 1,614 867 240 459
Income tax expense (3)................... 143 116 1,458 896 591 35 426
--------- ---------- ---------- ---------- ---------- --------- ----------
(Loss) income before extraordinary
item................................. (3,412) (1,147) 1,202 718 276 205 33
--------- ---------- ---------- ---------- ---------- --------- ----------
Extraordinary item, net of income tax
benefit................................ -- -- -- -- -- -- (1,804)
--------- ---------- ---------- ---------- ---------- --------- ----------
Net (loss) income...................... $ (3,412) $ (1,147) $ 1,202 $ 718 $ 276 $ 205 $ (1,771)
--------- ---------- ---------- ---------- ---------- --------- ----------
--------- ---------- ---------- ---------- ---------- --------- ----------
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
39-WEEK
FISCAL YEAR ENDED PERIOD ENDED
--------------------------------------------------------- ---------------------
JAN. 2, JAN. 1, DEC. 31, DEC. 30, DEC. 28, SEPT. 28, SEPT. 27,
1993 1994 1994 1995 1996 1996 1997
--------- ---------- ---------- ---------- ---------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDA (2)(4)............................ $ 1,470 $ 3,939 $ 8,452 $ 8,905 $ 9,621 $ 6,690 $ 10,323
EBITDA as a % of net sales............... 2.7% 3.8% 7.4% 7.9% 7.4% 6.9% 9.9%
Adjusted EBITDA (5)...................... $ 1,625 $ 5,173 $ 8,452 $ 10,002 $ 10,999 $ 7,629 $ 10,514
Adjusted EBITDA as a % of net sales...... 3.0% 5.0% 7.4% 8.9% 8.5% 7.9% 10.1%
Depreciation and amortization............ $ 3,162 $ 3,201 $ 3,398 $ 3,511 $ 4,105 $ 2,990 $ 3,756
Capital expenditures..................... 1,977 1,789 1,770 2,571 2,573 2,209 2,976
Ratio of earnings to fixed charges (6)... 1.9x 1.4x 1.2x 1.1x 1.1x
BALANCE SHEET DATA (AT PERIOD END):
Total assets............................. $ 48,960 $ 80,469 $ 69,936 $ 82,012 $ 103,412 $ 77,345 $ 181,019
Total liabilities........................ 31,669 52,387 40,675 52,033 90,912 47,161 162,790
Total stockholder's equity............... 17,291 28,082 29,261 29,979 12,500 30,184 18,229
</TABLE>
- ------------------------
(1) The B&G and B&R Acquisition was consummated on December 27, 1996 and was
accounted for using the purchase method of accounting. The selected
historical financial and other data set forth above as of December 28, 1996
and as of and for the 39-week period ended September 27, 1997 (the
"Successor") is presented on a consolidated basis. The selected historical
financial and other data set forth above as of all periods ending prior to
December 28, 1996 and for each of the years in the five-year period ended
December 28, 1996, and for the 39-week period ended September 28, 1996 (the
"Predecessor") is presented on a combined basis because the Predecessor
companies were under common control. As a result of the B&G and B&R
Acquisition, the selected historical financial and other data subsequent to
the acquisition is presented on a different cost basis and uses certain
different accounting policies than the selected historical financial and
other data prior to the acquisition and, therefore, is not comparable.
Further, related party transactions affect the comparability of the selected
historical financial and other data. Additionally, the comparability of the
data presented above is affected by the acquisition of the Predecessor by
Specialty Foods in August 1993 and the acquisition by the Predecessor of the
NEW YORK STYLE brand in September 1995, both of which were accounted for
using the purchase method of accounting.
(2) B&G's net sales increased dramatically in 1993 due to the commencement of
co-packing and distribution agreements with American Home Food Products,
Inc. ("AHFP") upon the sale to AHFP of the POLANER business by Artal
International, the common corporate parent of the Company and the POLANER
business. The AHFP co-packing and distribution arrangements are now
conducted for IHF, the successor to AHFP, under the IHF Contracts. The
co-packing and distribution relationships under the IHF Contracts are
provided on a significantly lower profit margin level than B&G's base
businesses. As a result, the IHF Contract business did not increase EBITDA
to the same degree as net sales.
(3) The Company was part of the consolidated federal income tax returns of its
parents during 1992 and through March 1993, and from August 1993 through
December 27, 1996. Income tax expense has been computed as if the Company
filed a separate federal income tax return for each period presented.
(4) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and extraordinary item and is presented because it is commonly
used by certain investors and analysts to analyze and compare companies on
the basis of operating performance and to determine a company's ability to
service and incur debt. EBITDA should not be considered in isolation from or
as a substitute for
28
<PAGE>
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.
(5) The Company's financial statements reflect various ownership changes and
management fee structures during the periods covered thereby. To provide a
better comparison of historical results of operations, the Company has
adjusted historical EBITDA to exclude historical management fees. Adjusted
EBITDA excludes management fees and nonrecurring expenses incurred by the
Company in connection with the sale of the Company in 1993 and 1996.
(6) For purposes of this computation, earnings consist of income before income
taxes and extraordinary item plus fixed charges. Fixed charges consist of
interest on indebtedness plus that portion of lease rental expense
representative of the interest factor. For the years ended January 2, 1993
and January 1, 1994, the Company's earnings were insufficient to cover its
fixed charges by $3,269 and $1,031, respectively.
29
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OTHER DATA
THE NABISCO BRANDS(1)
The following selected historical financial and other data with respect to
the Nabisco Brands for the years ended December 31, 1995 and December 31, 1996
and the 24-week period ended June 17, 1997 have been derived from, and should be
read in conjunction with, the combined financial statements of the Nabisco
Brands, including the respective notes thereto, included elsewhere in this
Prospectus, which have been audited by KPMG Peat Marwick LLP. The selected
historical financial and other data for the 26-week period ended June 29, 1996
have been derived from the unaudited combined financial statements of the
Nabisco Brands, which are not included elsewhere in this Prospectus and which,
in the opinion of Management, include all adjustments necessary for a fair
presentation. The results of operations for the 24-week period ended June 17,
1997 are not necessarily indicative of results to be expected for the full year.
All of the following information is qualified in its entirety by, and should be
read in conjunction with "Pro Forma Condensed Consolidated Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the combined financial statements of the Nabisco
Brands, including the respective notes thereto, appearing elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
26-WEEK 24-WEEK
YEAR ENDED PERIOD PERIOD
-------------------- ENDED ENDED
DEC. 31, DEC. 31, JUNE 29, JUNE 17,
1995 1996 1996 1997
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net sales.............................................................. $ 28,937 $ 27,718 $ 12,335 $ 9,916
Cost of goods sold..................................................... 9,121 8,782 3,910 3,531
--------- --------- --------- -----------
Gross profit........................................................... 19,816 18,936 8,425 6,385
Sales and distribution expenses........................................ 3,753 3,572 1,804 1,350
Trade promotions and other marketing expenses.......................... 3,478 3,729 1,626 954
--------- --------- --------- -----------
Product contribution................................................... $ 12,585 $ 11,635 $ 4,995 $ 4,081
--------- --------- --------- -----------
--------- --------- --------- -----------
OTHER DATA:
Product contribution as a % of net sales............................... 43.5% 42.0% 40.5% 41.2%
Adjusted product contribution(2)....................................... $ 12,649 $ 11,699 $ 5,027 $ 4,111
Adjusted product contribution as a % of net sales...................... 43.7% 42.2% 40.8% 41.5%
Depreciation and amortization.......................................... $ 64 $ 64 $ 32 $ 30
</TABLE>
- ------------------------
(1) Reflects only assets acquired pursuant to the Nabisco Brands Acquisition.
Net sales represent net sales directly attributable to the Nabisco Brands.
Costs of goods sold and sales, distribution, trade promotions and other
marketing expenses in the selected historical financial and other data
represent direct costs and expenses related to the Nabisco Brands. Costs for
certain functions and services performed by centralized Nabisco, Inc.
organizations outside the defined scope of the Nabisco Brands are not
included. Items such as general and administrative expenses, interest
expense and income taxes were not allocated to the Nabisco Brands.
(2) Adjusted product contribution represents product contribution plus
depreciation expense.
30
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OTHER DATA
TRAPPEY'S
The following selected historical financial and other data of JEM Brands,
Inc. and its subsidiary, Trappey's Fine Foods, Inc., as of December 28, 1996 and
August 15, 1997 and for the years ended December 31, 1995 and December 28, 1996
and the 33-week period ended August 15, 1997 have been derived from, and should
be read in conjunction with, the consolidated financial statements of JEM
Brands, Inc. and subsidiary, including the respective notes thereto, included
elsewhere in this Prospectus, which have been audited by KPMG Peat Marwick LLP.
The selected historical financial and other data of JEM Brands, Inc. and
subsidiary set forth below as of December 31, 1995 and as of and for the 34-week
period ended August 24, 1996 have been derived from the unaudited consolidated
financial statements of JEM Brands, Inc. and subsidiary, which are not included
elsewhere in this Prospectus and which, in the opinion of Management, include
all adjustments necessary for a fair presentation. The results of operations for
the 33-week period ended August 15, 1997 are not necessarily indicative of
results to be expected for the full year. All of the following information is
qualified in its entirety by, and should be read in conjunction with, "Pro Forma
Condensed Consolidated Financial Information," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and the consolidated
financial statements of JEM Brands, Inc. and subsidiary, including the
respective notes thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
<S> <C> <C> <C> <C>
34-WEEK 33-WEEK
PERIOD PERIOD
ENDED ENDED
DEC. 31, DEC. 28, AUG. 24, AUG.15,
1995 1996 1996 1997(1)
--------- --------- --------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................................................ $ 16,945 $ 18,683 $ 12,559 $ 10,588
Cost of goods sold............................................... 9,827 11,712 7,516 6,668
--------- --------- --------- ---------
Gross profit................................................... 7,118 6,971 5,043 3,920
Sales, marketing and distribution expenses....................... 4,685 4,784 3,244 2,687
General and administrative expenses.............................. 1,011 1,021 750 797
--------- --------- --------- ---------
Operating income............................................... 1,422 1,166 1,049 436
Interest income, net............................................. 77 156 99 138
Other (expense) income........................................... (51) 15 15 9
--------- --------- --------- ---------
Earnings before income tax expense............................. 1,448 1,337 1,163 583
Income tax expense............................................... 636 565 492 282
--------- --------- --------- ---------
Net earnings................................................... $ 812 $ 772 $ 671 $ 301
--------- --------- --------- ---------
--------- --------- --------- ---------
OTHER DATA:
EBITDA(2)........................................................ $ 2,087 $ 1,905 $ 1,551 $ 900
EBITDA as a % of net sales....................................... 12.3% 10.2% 12.3% 8.5%
Depreciation and amortization.................................... $ 716 $ 724 $ 487 $ 455
Capital expenditures............................................. 994 296 461 9
Ratio of earnings to fixed charges(3)............................ 56.7x 100.7x 97.9x 65.8x
BALANCE SHEET DATA (AT PERIOD END):
Total assets..................................................... $ 18,661 $ 19,081 $ 20,909 $ 16,107
Total liabilities................................................ 516 864 2,443 591
Total stockholder's equity....................................... 18,145 18,217 18,466 15,516
</TABLE>
31
<PAGE>
- ------------------------
(1) The Statement of Operations data for the period ended August 15, 1997
includes 32 weeks and 6 days; however, this period is referred to as the
33-week period ended August 15, 1997.
(2) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. EBITDA should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of profitability or
liquidity.
(3) For the purposes of this calculation, earnings consist of income before
income taxes plus fixed charges. Fixed charges consist of interest on
indebtedness plus that portion of lease rental expense representative of the
interest factor.
32
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements and related notes, and the other financial information, included
elsewhere in this Prospectus.
GENERAL
The Company, a manufacturer, marketer and distributor of shelf-stable food
products, was organized by BRS in November 1996 to acquire Bloch & Guggenheimer,
Inc., Burns & Ricker, Inc. and certain related entities from Specialty Foods,
which businesses had been acquired by Specialty Foods from Artal International
in 1993.
The Company's financial statements reflect various ownership changes and
management fee structures during the periods covered thereby. To provide a
better comparison of historical results of operations, the Company has adjusted
historical EBITDA to exclude historical management fees. Adjusted EBITDA
excludes management fees and nonrecurring expenses incurred by the Company in
connection with the sale of the Company in 1993 and 1996. From 1992 to 1996,
B&G's sales and Adjusted EBITDA increased at compounded annual rates of 24.2%
and 61.3% respectively. This growth in sales and Adjusted EBITDA resulted from
the acquisition of new businesses, increased sales from existing and new
products, and cost reductions in the base B&G business and acquired businesses.
The Company's sales increased dramatically in 1993 due to the commencement of
co-packing and distribution agreements with American Home Food Products, Inc.
("AHFP") upon the sale to AHFP of the POLANER business by Artal International,
the common corporate parent of the Company and the POLANER business. The AHFP
co-packing and distribution arrangements are now conducted under the IHF
Contracts for IHF, the successor to AHFP, which is referred to in the following
discussion as IHF. The co-packing and distribution services provided under the
IHF Contracts are on a significantly lower profit margin level than the
Company's base businesses. As a result, the IHF Contracts business did not
increase EBITDA to the same degree as net sales.
In late 1995, the Company acquired the NEW YORK STYLE brand from Nabisco and
integrated it into the existing BURNS & RICKER bagel chip business. The NEW YORK
STYLE brand acquisition and higher B&G Pickle and Pepper Products sales in 1995
partially offset reduced sales of POLANER products to IHF in that year. During
such period, IHF significantly reduced marketing support and promotions for the
POLANER line and other IHF products, impacting the Company's sales of IHF
products both as a co-packer and distributor. Despite the decrease in sales,
Adjusted EBITDA grew by 18.3% in 1995 due to the NEW YORK STYLE brand
acquisition and continued growth in the Company's base B&G Pickle and Pepper
Products business. Upon the acquisition of the NEW YORK STYLE brands, Management
immediately focused on cost reductions. In 1996, the Company experienced the
first full year of NEW YORK STYLE sales and Adjusted EBITDA contribution. This,
plus B&G's Pickle and Pepper Products sales growth, increased net sales by 15.2%
and Adjusted EBITDA by 10.0%.
On June 17, 1997, the Company acquired certain assets relating to the
Nabisco Brands. The collective sales of the Nabisco Brands represented less than
1.0% of Nabisco's aggregate U.S. food sales in 1996. As such, Management
believes the Nabisco Brands were not considered part of Nabisco's core business.
Management further believes the Nabisco Brands did not receive a sufficient
level of management, marketing and promotional resources from Nabisco, which
resulted in a deterioration in the sales and operating performance of such
brands. Additionally, in 1996, Nabisco altered and restructured its sales and
marketing procedures, moving from a national network of independent brokers to
an in-house direct selling organization. Management believes this sales and
marketing policy change further reduced the level of management, marketing and
promotional resources available to the Nabisco Brands and further negatively
impacted their sales and operating performance.
33
<PAGE>
The Nabisco Brands generally lost sales from 1992 through 1996. Retail sales
of REGINA, VERMONT MAID and BRER RABBIT products declined 20.3%, 18.0% and
16.2%, respectively, over that four-year period while WRIGHT'S sales remained
relatively flat. Despite deterioration of sales at retail, the food service
sales component of the Nabisco Brands increased by 18.0% over the same four-year
period, limiting the overall sales decrease of the Nabisco Brands to 7.1% from
1992 to 1996. Management believes that there is significant growth potential in
the Nabisco Brands, especially through the Company's DSD sales and distribution
system, given proper management attention and sales and marketing support. The
Company has demonstrated its ability to provide such management focus and sales
and marketing support in its prior acquisition of the BURNS & RICKER and NEW
YORK STYLE product lines. Efforts are underway to broaden the distribution of
the Nabisco Brands and increase marketing support in an attempt to recover the
sales lost in the past four years. New products are planned in the REGINA and
WRIGHT'S lines to meet consumer needs that have not been addressed to date. In
addition, the Company has recently introduced modern packaging for the VERMONT
MAID product line to enhance its brand image.
Management believes that the Trappey's Brands were not part of McIlhenny's
branded product focus and, in recent periods, have not received adequate
management focus and sales and marketing support. Management believes that there
is significant growth potential in the Trappey's Brands if sold through the DSD
system and its national retail grocery and food service systems.
B&G FOODS, INC.
39-WEEKS ENDED SEPTEMBER 27, 1997 COMPARED TO 39-WEEKS ENDED SEPTEMBER 28,
1996
NET SALES. Net sales increased by $7.2 million, or 7.5%, to $104.3 million
for the 39-weeks ended September 27, 1997 (the "1997 Period") from $97.1 million
for the 39-weeks ended September 28, 1996 (the "1996 Period"). The net sales
increase included $8.6 million of sales from the Acquired Brands. Sales of B&G
Pickle and Pepper Products increased by $3.1 million, or 8.6%, from the 1996
Period, largely reflecting increased sales of food service products and the
SANDWICH TOPPERS line. Sales of food service products increased in the 1997
Period by $2.5 million, or 16.7%, reflecting a higher unit volume. Sales of
retail B&G Pickle and Pepper Products increased by $0.6 million, or 3.0%,
reflecting the successful introduction of six new SANDWICH TOPPERS products and
generally higher retail unit volume. These sales increases were offset by a
decrease of $4.5 million, or 11.8%, in sales of co-packed POLANER products to
IHF and sales of POLANER products distributed by the Company in the northeastern
U.S.
GROSS PROFIT. Gross profit increased by $6.1 million, or 21.6%, to $34.3
million for the 1997 Period from $28.2 million in the 1996 Period. Gross profit
expressed as a percentage of net sales increased to 32.8% in the 1997 Period
from 29.0% in the 1996 Period due to a favorable shift in the sales mix to
higher gross profit margin B&G Pickle and Pepper Products sales and Acquired
Brands sales from lower gross profit margin POLANER co-packing sales.
SALES, MARKETING AND DISTRIBUTION EXPENSES. Sales, marketing and
distribution expenses increased by $2.8 million, or 13.0%, to $24.4 million for
the 1997 Period from $21.6 million for the 1996 Period. Such expenses expressed
as a percentage of net sales increased to 23.3% in the 1997 Period from 22.2% in
the 1996 Period due to the addition of the Acquired Brands.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
(including amortization of intangibles and management fees) increased by $0.4
million, or 14.2%, primarily due to increased amortization of goodwill
associated with the B&G and B&R Acquisition in December 1996, the Nabisco Brands
Acquisition and the Trappey's Acquisition and other expenses, which were
partially offset by lower management fees in the 1997 Period. General and
administrative expenses expressed as a percentage of net sales remained
relatively constant at 3.2% in the 1997 Period and 3.0% in the 1996 Period.
34
<PAGE>
OPERATING INCOME. As a result of the foregoing, operating income increased
by $2.9 million, or 77.5%, to $6.6 million for the 1997 Period from $3.7 million
for the 1996 Period. Operating income expressed as a percentage of net sales
increased to 6.3% in the 1997 Period from 3.8% in the 1996 Period.
YEAR ENDED DECEMBER 28, 1996 COMPARED TO YEAR ENDED DECEMBER 30, 1995
NET SALES. Net sales increased by $17.1 million, or 15.2%, to $129.3
million in the year ended December 28, 1996 ("Fiscal 1996") from $112.2 million
in the year ended December 30, 1995 ("Fiscal 1995") as all of the Company's
product lines experienced increased sales. The sales increase primarily reflects
higher sales of Baked Snack Products of $8.2 million, or 38.1%, in Fiscal 1996,
resulting from the full year effect of the acquisition and integration of the
NEW YORK STYLE brand, which was acquired in September 1995 from Nabisco. Sales
of B&G Pickle and Pepper Products increased by $5.5 million, or 12.6%, in Fiscal
1996 due to the introduction of the SANDWICH TOPPERS line in the territory
covered by the DSD sales and distribution system and increased sales of food
service products to national fast food sandwich chains. Additionally, sales of
the co-packed Polaner line of products increased by $3.4 million, or 7.2%, in
Fiscal 1996 reflecting increased marketing and promotional support for POLANER
products by IHF.
GROSS PROFIT. Gross profit increased by $5.1 million, or 15.7%, to $38.1
million in Fiscal 1996 from $33.0 million in Fiscal 1995. Gross profit expressed
as a percentage of net sales increased slightly to 29.5% in Fiscal 1996 from
29.4% in Fiscal 1995. The increase reflects the effect of a shift in the sales
mix to higher gross profit margin B&G Pickle and Pepper Products in Fiscal 1996
which were partially offset by increased sales of the lower gross profit margin
POLANER products.
SALES, MARKETING AND DISTRIBUTION EXPENSES. Sales, marketing and
distribution expenses increased by $4.5 million, or 19.1%, to $28.4 million in
Fiscal 1996 from $23.9 million in Fiscal 1995. Such expenses expressed as a
percentage of net sales increased to 22.0% in Fiscal 1996 from 21.3% in Fiscal
1995, primarily as a result of higher marketing expenditures to support the
introduction of the SANDWICH TOPPERS line in the territory covered by the DSD
sales and distribution system. The introduction of new products in the Baked
Snack Products line and the acquisition of the NEW YORK STYLE brand also
increased sales, marketing and distribution expenses during Fiscal 1996.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expense
(including amortization of intangibles and management fees) increased by $0.5
million, or 13.4%, to $4.2 million in Fiscal 1996 from $3.7 million in Fiscal
1995. General and administrative expenses expressed as a percentage of net sales
decreased to 3.2% in Fiscal 1996 from 3.3% in Fiscal 1995. This decline reflects
the Company's ability to integrate acquisitions efficiently and introduce new
products into its existing infrastructure without proportionately increasing
operating costs.
OPERATING INCOME. As a result of the foregoing, operating income increased
by $0.1 million, or 2.3%, to $5.5 million in Fiscal 1996 from $5.4 million in
Fiscal 1995. Operating income as a percentage of net sales decreased to 4.3% in
Fiscal 1996 from 4.8% in Fiscal 1995.
YEAR ENDED DECEMBER 30, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
NET SALES. Net sales declined by $1.6 million, or 1.4%, to $112.2 million
in Fiscal 1995 from $113.8 million in the year ended December 31, 1994 ("Fiscal
1994"). The decline in Fiscal 1995 was primarily due to a $8.6 million, or
15.3%, decrease in sales of POLANER products. Sales of POLANER products are
largely dependent on IHF's success in marketing and selling the POLANER brand.
In Fiscal 1995, IHF substantially reduced marketing and promotional support for
the POLANER brand and the resultant reduction in consumer demand impacted the
co-packing and distribution sales volume of B&G. The loss of low margin POLANER
sales was partially mitigated by increased sales in the Company's other
businesses. Sales of Baked Snack Products increased by $4.9 million, or 29.4%,
in Fiscal 1995 compared to Fiscal 1994 largely reflecting the sales contribution
of the NEW YORK STYLE brand that was acquired from Nabisco in September 1995.
Sales of BURNS & RICKER brand Baked Snack Products in Fiscal 1995 were
essentially flat from Fiscal 1994 reflecting
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the discontinuation in Fiscal 1995 of certain low margin Baked Snack Products
which represented approximately $1.0 million of sales in Fiscal 1994. Sales of
the B&G Pickle and Pepper Products increased by $2.1 million, or 5.1%, in Fiscal
1995 compared to Fiscal 1994 based on strong sales in the food service and wet
spice businesses.
GROSS PROFIT. Gross profit increased by $2.0 million, or 6.4%, to $33.0
million in Fiscal 1995 from $31.0 million in Fiscal 1994. Gross profit expressed
as a percentage of net sales increased to 29.4% in Fiscal 1995 from 27.2% in
Fiscal 1994. The increase resulted from a favorable shift in the sales mix to
higher gross profit margin B&G Pickle and Pepper Products and Baked Snack
Products from lower gross profit margin POLANER products.
SALES, MARKETING AND DISTRIBUTION EXPENSES. Sales, marketing and
distribution expenses increased by $0.6 million, or 2.3%, to $23.9 million in
Fiscal 1995 from $23.3 million in Fiscal 1994. Such expenses expressed as a
percentage of net sales increased to 21.3% in Fiscal 1995 from 20.5% in Fiscal
1994, primarily as a result of reduced sales of POLANER products in Fiscal 1995.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
(including amortization of intangibles and management fees) increased by $1.1
million, or 42.7%, to $3.7 million in Fiscal 1995 from $2.6 million in Fiscal
1994. This increase reflects the introduction of a $1.1 million management fee
charge from the Company's prior corporate owner that was not charged in Fiscal
1994. General and administrative expenses expressed as a percentage of net sales
increased to 3.3% in Fiscal 1995 from 2.3% in Fiscal 1994. This increase
principally reflects the introduction of the $1.1 million management fee as well
as lower POLANER product- related sales.
OPERATING INCOME. As a result of the foregoing, operating income increased
by $0.3 million, or 6.7%, to $5.4 million in Fiscal 1995 from $5.1 million in
Fiscal 1994. Operating income as a percentage of net sales increased to 4.8% in
Fiscal 1995 from 4.4% in Fiscal 1994.
NABISCO BRANDS
24-WEEKS ENDED JUNE 17, 1997 COMPARED TO 26-WEEKS ENDED JUNE 29, 1996
NET SALES. Net sales decreased by $2.4 million, or 19.6%, to $9.9 million
for the 24-weeks ended June 17, 1997 (the "1997 Period") from $12.3 million for
the 26-weeks ended June 29, 1996 (the "1996 Period"). Retail sales decreased by
$2.0 million, or 27.3%, and food service sales decreased by $0.4 million, or
8.8%, from the 1996 Period. Retail sales decreased $0.8 million due to the short
period in 1997. Regina, Wright's and Brer Rabbit accounted for $0.6 million,
$0.4 million and $0.2 million, respectively of the remaining retail shortfall
which was due to a lack of promotional activity and reduced emphasis on
marketing the Nabisco Brands following the announcement of their sale. Food
service sales decreased $0.7 million due to the short period in 1997, offset by
continued growth in the base food service without any additional promotional
activity.
GROSS PROFIT. Gross profit decreased by $2.0 million, or 24.2%, to $6.4
million for the 1997 Period from $8.4 million in the 1996 Period. The short
period in 1997 accounted for $0.9 million of the gross profit shortfall. Gross
profit expressed as a percentage of net sales decreased to 64.4% in the 1997
Period from 68.3% in the 1996 Period due to the change in sales mix from higher
gross profit margin retail sales to lower gross profit margin food service sales
and increased costs of production of REGINA products due to start-up
inefficiencies at the new REGINA retail production facility.
PRODUCT CONTRIBUTION. Product contribution decreased by $0.9 million, or
18.3%, to $4.1 million for the 1997 Period from $5.0 million in the 1996 Period
as a result of the decline in net sales. While the lower net sales led to the
decrease in product contribution, however, product contribution expressed as a
percentage of net sales increased to 41.2% in the 1997 Period from 40.5% in the
1996 Period. This was
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achieved by $0.7 million of reductions in expenses related to trade promotions,
consumer advertising and brokerage.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
NET SALES. Net sales decreased by $1.2 million, or 4.2%, to $27.7 million
in the year ended December 31, 1996 ("Fiscal 1996") from $28.9 million in the
year ended December 31, 1995 ("Fiscal 1995") due to a shortfall in retail sales
across all brands with the exception of WRIGHT'S. Retail sales declined $1.3
million, or 6.9%, while food service sales increased $0.1 million or 1.0%.
REGINA retail sales declined $0.7 million due to a shift from brokered retail
sales to a consolidated direct internal sales force, whose priority was
Nabisco's larger national brands.
GROSS PROFIT. Gross profit declined by $0.9 million, or 4.4%, to $18.9
million in Fiscal 1996 from $19.8 million in Fiscal 1995 as a result of the
decline in net sales. Gross profit expressed as a percentage of net sales
decreased slightly to 68.3% in Fiscal 1996 from 68.5% in Fiscal 1995. This
slight decrease in profit margin was as a result of the change in sales mix from
higher gross profit margin retail sales to lower gross profit margin food
service sales.
PRODUCT CONTRIBUTION. Product contribution decreased by $1.0 million, or
7.5%, to $11.6 million in Fiscal 1996 from $12.6 million in Fiscal 1995. Lower
net sales led to the decrease in product contribution margin. Similarly, product
contribution expressed as a percentage of net sales also decreased to 42.0% in
Fiscal 1996 from 43.5% in Fiscal 1995.
TRAPPEY'S
33-WEEKS ENDED AUGUST 15, 1997 COMPARED TO 34-WEEKS ENDED AUGUST 24, 1996
NET SALES. Net sales decreased by $2.0 million, or 15.7%, to $10.6 million
for the 33-weeks ended August 15, 1997 (the "1997 Period") from $12.6 million
for the 34-weeks ended August 24, 1996 (the "1996 Period"). This decrease was
due primarily to a $1.2 million decrease in sales of branded hot sauces and
retail peppers caused by a reduction in marketing and advertising efforts for
the 1997 Period and the elimination of certain unprofitable food service
products. The remaining $0.8 million is attributable to lower sales to an
affiliate of McIlhenny.
GROSS PROFIT. Gross profit decreased by $1.1 million, or 22.3%, to $3.9
million for the 1997 Period from $5.0 million in the 1996 Period. Gross profit
expressed as a percentage of net sales decreased to 37.0% in the 1997 Period
from 40.2% in the 1996 Period primarily due to the elimination of markups on
intercompany sales.
SALES, MARKETING AND DISTRIBUTION EXPENSES. Sales, marketing and
distribution expenses decreased by $0.6 million, or 17.2%, to $2.7 million for
the 1997 Period from $3.2 million for the 1996 Period. Such expenses expressed
as a percentage of net sales decreased to 25.4% in the 1997 Period from 25.8% in
the 1996 Period. The decrease was primarily the result of lower advertising
costs due to a reduction in management's advertising efforts in the 1997 Period.
The impact of lower advertising costs was partially offset by an increase in the
sales expense allocation from an affiliate as a percentage of net sales and by
an increase in freight and commissions expenses as a percentage of net sales.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
(including amortization of goodwill and intangibles) increased $0.1 million, or
6.3%, to $0.8 million in the 1997 Period from $0.7 million in the 1996 Period.
General and administrative expenses expressed as a percentage of net sales
increased to 7.5% in the 1997 Period from 6.0% in the 1996 Period. This increase
is attributable to an increase in the general and administrative expense
allocations from an affiliate as a percentage of net sales which were partially
offset by reductions in amortization expense for intangibles as a percentage of
net sales which were fully amortized in the 1996 Period.
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OPERATING INCOME. As a result of the foregoing, operating income decreased
by $0.6 million, or 58.4%, to $0.4 million for the 1997 Period from $1.0 million
for the 1996 Period. Operating income expressed as a percentage of net sales,
however, decreased to 4.1% in the 1997 Period from 8.4% in the 1996 Period.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
NET SALES. Net sales increased by $1.7 million, or 10.3%, to $18.7 million
in the year ended December 31, 1996 ("Fiscal 1996") from $17.0 million in the
year ended December 31, 1995 ("Fiscal 1995"). This increase was primarily a
result of a $1.0 million increase in affiliate sales. The remaining increase of
$0.7 million is attributable to increases in sales of RED DEVIL brand hot sauces
and increases in branded retail sliced and whole jalapeno peppers.
GROSS PROFIT. Gross profit decreased by $0.1 million, or 2.1%, to $7.0
million in Fiscal 1996 from $7.1 million in Fiscal 1995. Gross profit expressed
as a percentage of net sales decreased to 37.3% in Fiscal 1996 from 42.0% in
Fiscal 1995. Cost increases in ingredients and packaging resulting from changes
in product mix and an increase in general labor costs contributed to the
declining gross profit.
SALES, MARKETING AND DISTRIBUTION EXPENSES. Sales, marketing and
distribution expenses increased by $0.1 million, or 2.1%, to $4.8 million in
Fiscal 1996 from $4.7 million in Fiscal 1995. However, sales, marketing and
distribution expenses expressed as a percentage of net sales decreased 25.6% in
Fiscal 1996 from 27.6% in Fiscal 1995. This decrease is primarily a result of
lower advertising costs as a percentage of net sales due to a reduction in
management's advertising efforts during Fiscal 1996.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
(including amortization of goodwill and intangibles) remained relatively
unchanged at $1.0 million in Fiscal 1996 and Fiscal 1995. General and
administrative expenses expressed as a percentage of net sales decreased to 5.5%
in Fiscal 1996 from 6.0% in Fiscal 1995. This decline is attributable to
reductions in amortization expense for intangibles as a percentage of net sales
which were fully amortized in Fiscal 1996.
OPERATING INCOME. As a result of the foregoing, operating income decreased
by $0.2 million, or 18.0%, to $1.2 million in Fiscal 1996 from $1.4 million in
Fiscal 1995. Operating income as a percentage of net sales decreased to 6.2% in
Fiscal 1996 from 8.4% in Fiscal 1995.
LIQUIDITY, SEASONALITY AND CAPITAL RESOURCES
The Company's primary sources of capital are cash flow from operations and
borrowings under the New Credit Facility. The Company's primary capital
requirements include debt service, capital expenditures, working capital needs
and financing acquisitions. The Company's ability to make scheduled payments of
principal of, or to pay the interest or Liquidated Damages, if any, on, or to
refinance, its indebtedness (including the Notes), or to fund planned capital
expenditures, will depend upon its future performance, which, in turn, is
subject to general economic, financial, competitive, legislative, regulatory and
other factors that are beyond its control. Based upon current levels of
operations and anticipated growth in revenues and cost savings, Management
believes that the Company's cash flow from operations, amounts available under
the New Credit Facility and available cash will be adequate to meet its
anticipated future requirements for working capital, capital expenditures, and
scheduled payments of principal and interest on its indebtedness, including the
Notes. There can be no assurance, however, that the Company's business will
generate cash flow at or above anticipated levels or that the Company will be
able to borrow funds under the New Credit Facility in an amount sufficient to
enable the Company to service its indebtedness, including the Notes, or make
anticipated capital expenditures. In particular, there can be no assurance that
anticipated revenue growth will be achieved at the levels currently anticipated
or at all. If the Company is unable to generate sufficient cash flow from
operations or to borrow sufficient funds in the future to service its debt, it
may be required to sell assets, reduce capital expenditures, refinance all or a
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portion of its existing debt (including the Notes) or obtain additional
financing. There can be no assurance that any such refinancing would be
available on commercially reasonable terms, or at all, or that any additional
financing could be obtained, particularly in view of the Company's high level of
debt, the restrictions on the Company's ability to incur additional debt under
the New Credit Facility and the Indenture, and the fact that substantially all
of the Company's assets are pledged to secure obligations under the New Credit
Facility.
At September 27, 1997, the Company's total debt and stockholder's equity was
$121.1 million and $18.2 million, respectively. At September 27, 1997, the
Company also had borrowing availability under the New Credit Facility of an
additional $50.0 million for working capital and capital expenditure
requirements, subject to the borrowing conditions contained therein. See "Risk
Factors--Substantial Leverage and Debt Service."
Sales of a number of the Company's products tend to be seasonal, but the
effect of seasonality on the Company's liquidity is tempered by the Company's
relatively varied product mix. The Company purchases most of the produce used to
make the B&G Pickle and Pepper Products during the period from July 1 to October
31 and, consequently, its liquidity needs are greatest during this period.
If the Company consummates additional acquisitions in the future, it may be
required to raise additional debt or equity capital. The New Credit Facility and
the Notes will, and other debt instruments of the Company may, pose various
restrictions and covenants on the Company which could potentially limit the
Company's ability to respond to market conditions, to provide for unanticipated
capital investments, to raise additional debt or equity capital, or to take
advantage of business opportunities, including future acquisitions. See
"Description of Certain Indebtedness--New Credit Facility" and "Description of
the Notes."
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, Statement of Financial Accounting Standards (SFAS) No. 130
(SFAS 130), "Reporting Comprehensive Income," was issued to establish standards
for reporting and displaying of comprehensive income and its components in a
full set of general-purpose financial statements. This statement requires
disclosure of the components of comprehensive income including, among other
things, foreign currency translation adjustments, minimum pension liability
items and unrealized gains and losses on certain investments in debt and equity
securities. The Company would be required to show components of comprehensive
income in a financial statement displayed as prominently as the other required
financial statements. The statement is effective for fiscal years beginning
after December 15, 1997. The Company anticipates adopting this Statement in
1998.
In June 1997, SFAS 131 "Disclosures About Segments of an Enterprise and
Related Information", was issued to establish standards for public business
enterprises reporting information regarding operating segments in annual and
interim financial statements issued to shareholders. It also establishes
standards for related disclosures about products and services, geographic areas
and major customers. This statement is effective for financial statements for
periods beginning after December 15, 1997. In the initial year of application,
comparative information for earlier years is to be restated. The Company
operates in one business segment which manufactures and markets a diversified
portfolio of food products, and accordingly, does not believe the segment
reporting aspect of this statement will impact their financial statements. The
Company anticipates adopting this Statement in 1998.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Existing Notes were sold by the Company on August 11, 1997 (the "Closing
Date") to the Initial Purchasers pursuant to the Purchase Agreement. The Initial
Purchasers subsequently resold the Existing Notes to qualified institutional
buyers in reliance on Rule 144A under the Securities Act and a limited number of
institutional accredited investors within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act. As a condition to the sale of the Existing
Notes, the Company and the Guarantors were required to enter into the
Registration Rights Agreement. Pursuant to the Registration Rights Agreement,
the Company agreed that, unless the Exchange Offer is not permitted by
applicable law or Commission policy, it would (i) file with the Commission a
Registration Statement under the Securities Act with respect to the New Notes no
later than 90 days after the Closing Date, (ii) use its reasonable best efforts
to cause such Registration Statement to become effective under the Securities
Act no later than 150 days after the Closing Date and (iii) upon effectiveness
of the Registration Statement, to commence the Exchange Offer, maintain the
effectiveness of the Registration Statement for at least 20 business days (or a
longer period if required by law) and deliver to the Exchange Agent New Notes in
the same aggregate principal amount as the Existing Notes that were tendered by
holders thereof pursuant to the Exchange Offer. A copy of the Registration
Rights Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part. The Exchange Offer is intended to satisfy
certain of the Company's and the Restricted Subsidiaries' obligations under the
Registration Rights Agreement and the Purchase Agreement.
The terms of the New Notes are identical in all material respects to those
of the Existing Notes, except that (i) the exchange will have been registered
under the Securities Act and hence the New Notes will not bear legends
restricting the transfer thereof, and (ii) holders of the New Notes will not be
entitled to certain rights of holders of the Existing Notes under the
Registration Rights Agreement, which rights will terminate upon the consummation
of the Exchange Offer. The New Notes will be issued pursuant to, and will be
entitled to the benefits of, the Indenture governing the Existing Notes.
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING EXISTING NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Existing Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on , 1997; provided, however, that if the Company has
extended the period of time for which the Exchange Offer is open, the term
"Expiration Date" means the latest time and date to which the Exchange Offer is
extended.
As of the date of this Prospectus, $120,000,000 aggregate principal amount
of the Existing Notes are outstanding. Only a registered holder of the Existing
Notes (or such holder's legal representative or attorney-in-fact) as reflected
on the records of the Trustee under the Indenture may participate in the
Exchange Offer. There will be no fixed record date for determining registered
holders of the Existing Notes entitled to participate in the Exchange Offer. The
Existing Notes may be tendered only in integral multiples of $1,000. This
Prospectus, together with the Letter of Transmittal, is first being sent on or
about , 1997 to all holders of Existing Notes known to the Company. The
Company's obligation to accept Existing Notes for exchange pursuant to the
Exchange Offer is subject to certain conditions as set forth under "-- Certain
Conditions to the Exchange Offer" below.
The Company shall be deemed to have accepted validly tendered Existing Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Existing Notes for the purposes of receiving the New Notes from the Company.
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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 any exchange of any Existing Notes, by giving
notice of such extension to the Exchange Agent and the holders thereof. During
any such extension, all Existing Notes previously tendered will remain subject
to the Exchange Offer and may be accepted for exchange by the Company. Any
Existing 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 reserves the right, in its sole discretion, (i) to delay
accepting any Existing Notes, (ii) to extend the Exchange Offer, or (iii) if any
conditions set forth below under "The Exchange Offer-- Certain Conditions to the
Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer
by giving oral or written notice of such delay, extension or termination to the
Exchange Agent. 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. 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 for a period of five to 10 business days, 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 five to 10
business day period.
Holders of Existing Notes do not have any appraisal or dissenters' rights
under the Delaware Corporation Law in connection with the Exchange Offer. The
Company intends to conduct the Exchange Offer in accordance with the provisions
of the Registration Rights Agreement and the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations of the Commission
thereunder.
PROCEDURES FOR TENDERING EXISTING NOTES
Only a registered holder of Existing Notes may tender such Existing 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
signatures 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 at the address set forth below under "The Exchange
Offer--Exchange Agent" for receipt prior to the Expiration Date. In addition,
either (i) certificates for such Existing Notes must be received by the Exchange
Agent along with the Letter of Transmittal, or (ii) a timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Existing Notes, if
such procedure is available, into the Exchange Agent's account at the Depositary
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date, or (iii) the holder
must comply with the guaranteed delivery procedures described below.
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 in herein and in the
Letter of Transmittal.
THE METHOD OF DELIVERY OF EXISTING NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR EXISTING NOTES SHOULD BE
SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
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Any beneficial owner(s) of the Existing Notes whose Existing 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 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 Existing Notes, either make appropriate
arrangements to register ownership of the Existing 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.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "The Exchange Offer--Withdrawal of Tenders"), as the case may be,
must be guaranteed by an Eligible Institution (as defined below) unless the
Existing Notes tendered pursuant thereto are tendered (i) by a registered holder
who has not completed the box entitled "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 guarantee must be made by 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 Existing Notes listed therein, such Existing 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 Existing
Notes.
If the Letter of Transmittal or any Existing 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,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Exchange Agent and the Depositary have confirmed that any financial
institution that is a participant in the Depositary's system may utilize the
Depositary's Automated Tender Offer Program to tender Existing Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Existing 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
Existing Notes not properly tendered or any Existing 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 Existing 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 Existing 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 Existing Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Existing Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived.
While the Company has no present plan to acquire any Existing Notes which
are not tendered in the Exchange Offer or to file a registration statement to
permit resales of any Existing Notes which are not tendered pursuant to the
Exchange Offer, the Company reserves the right in its sole discretion to
purchase or make offers for any Existing Notes that remain outstanding
subsequent to the Expiration Date or, as set forth below under "-- Certain
Conditions to the Exchange Offer," to terminate the Exchange Offer and,
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to the extent permitted by applicable law, purchase Existing Notes in the open
market, in privately negotiated transactions or otherwise. The terms of any such
purchases or offers could differ from the terms of the Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, (i) the New Notes to be acquired by the holder of the Existing Notes in
connection with the Exchange Offer are being acquired by the holder in the
ordinary course of business of the holder, (ii) the holder has no arrangement or
understanding with any person to participate in the distribution of New Notes,
(iii) the holder acknowledges and agrees that any person who is a broker-dealer
registered under the Exchange Act or is participating in the Exchange Offer for
the purposes of distributing the New Notes must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the New Notes acquired by such person and cannot
rely on the position of the staff of the Commission set forth in certain
no-action letters, (iv) the holder understands that a secondary resale
transaction described in clause (iii) above and any resales of New Notes
obtained by such holder in exchange for Existing Notes acquired by such holder
directly from the Company should be covered by an effective registration
statement containing the selling securityholder information required by Item 507
or Item 508, as applicable, of Regulation S-K of the Commission, and (v) the
holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of
the Company. If the holder is a broker-dealer that will receive New Notes for
its own account in exchange for Existing Notes that were acquired as a result of
market-making activities or other trading activities, the holder is required to
acknowledge in the Letter of Transmittal 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 holder will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
RETURN OF EXISTING NOTES
If any tendered Existing Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Existing Notes are
withdrawn or are submitted for a greater principal amount than the holders
desire to exchange, such unaccepted, withdrawn or non-exchanged Existing Notes
will be returned without expense to the tendering holder thereof (or, in the
case of Existing Notes tendered by book-entry transfer into the Exchange Agent's
account at the Depositary pursuant to the book-entry transfer procedures
described below, such Existing Notes will be credited to an account maintained
with the Depositary) as promptly as practicable.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Existing Notes at the Depositary 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 Depositary's systems may make book-
entry delivery of Existing Notes by causing the Depositary to transfer such
Existing Notes into the Exchange Agent's account at the Depositary in accordance
with the Depositary's procedures for transfer. However, although delivery of
Existing Notes may be effected through book-entry transfer at the Depositary,
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 "The
Exchange Offer--Exchange Agent" on or prior to the Expiration Date or pursuant
to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Existing Notes and (i) whose Existing Notes
are not immediately available or (ii) who cannot deliver their Existing Notes,
the Letter of Transmittal or any other required documents to the Exchange Agent
prior to the Expiration Date, may effect a tender if:
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(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 substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery) setting forth the name and
address of the holder, the certificate number(s) of such Existing Notes and
the principal amount of Existing Notes tendered, stating that the tender is
being made thereby and guaranteeing that, within five New York Stock
Exchange trading days after the Expiration Date, the Letter of Transmittal
(or a facsimile thereof) together with the certificate(s) representing the
Existing Notes in proper form for transfer or a Book-Entry Confirmation, as
the case may be, and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent; and
(c) Such properly executed Letter of Transmittal (or facsimile thereof),
as well as the certificate(s) representing all tendered Existing Notes in
proper form for transfer and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five 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 Existing Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Existing Notes may be
withdrawn at any time prior to the Expiration Date.
To withdraw a tender of Existing Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Existing Notes to be withdrawn (the "Depositor"), (ii) identify the Existing
Notes to be withdrawn (including the certificate number or numbers and aggregate
principal amount of such Existing Notes), and (iii) be signed by the holder in
the same manner as the original signature on the Letter of Transmittal by which
such Existing Notes were tendered (including any required signature guarantees).
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company in its sole
discretion, whose determination shall be final and binding on all parties. Any
Existing Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no New Notes will be issued with respect
thereto unless the Existing Notes so withdrawn are validly retendered. Properly
withdrawn Existing Notes may be retendered by following one of the procedures
described above under "The Exchange Offer--Procedures for Tendering Existing
Notes" at any time prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Existing Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Existing Notes for exchange or the exchange of New
Notes for such Existing Notes, the Company determines that the Exchange Offer
violates applicable law, rule or regulation, any applicable interpretation of
the staff of the Commission or any order of any governmental agency or court of
competent jurisdiction.
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 reasonable discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
such right
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<PAGE>
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 Existing Notes
tendered, and no New Notes will be issued in exchange for any such Existing
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 Indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). In any such event the Company is
required to use every reasonable effort to obtain the withdrawal of any stop
order at the earliest possible time.
EXCHANGE AGENT
has been appointed as the Exchange Agent for the Exchange Offer. All
executed Letters of Transmittal should be directed to the Exchange Agent at one
of the addresses set forth below. Questions and requests for assistance,
requests for additional copies of this Prospectus or of the Letter of
Transmittal and requests for Notices of Guaranteed Delivery should be directed
to the Exchange Agent addressed as follows:
<TABLE>
<S> <C> <C>
BY HAND: BY REGISTERED OR CERTIFIED BY OVERNIGHT COURIER:
MAIL:
BY FACSIMILE:
CONFIRM BY TELEPHONE:
</TABLE>
Delivery other than as set forth above will not constitute a valid delivery.
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 facsimile, 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 brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$ . Such expenses include registration fees, fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs, among
others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Existing Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the Existing 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
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<PAGE>
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.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Existing
Notes, which is the principal amount as reflected in the Company's accounting
records on the date of the exchange. Accordingly, no gain or loss for accounting
purposes will be recognized. The debt issuance costs will be capitalized for
accounting purposes and will be amortized over the term of the debt.
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES
Participation in the Exchange Offer is voluntary. Holders of the Existing
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
The Existing Notes which are not exchanged for the New Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Existing
Notes may be resold only (i) to a person whom the seller reasonably believes is
a qualified institutional buyer (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, (ii) in a
transaction meeting the requirements of Rule 144 under the Securities Act, (iii)
outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act or (iv) in accordance with
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if the Company so requests), (v) to the Company
or (vi) pursuant to an effective registration statement and, in each case, in
accordance with any applicable securities laws of any state of the United States
or any other applicable jurisdiction
With respect to the New Notes, based upon an interpretation by the staff of
the Commission set forth in certain no-action letters issued to third parties,
the Company believes that a holder (other than (i) a broker-dealer who purchases
such New Notes directly from the Company to resell pursuant to Rule 144A or any
other available exemption under the Securities Act or (ii) any such holder which
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) who exchanges the Existing Notes for the New Notes in the
ordinary course of business and who is not participating, does not intend to
participate, and has no arrangement with any person to participate, in the
distribution of the New Notes, will be allowed to resell the New Notes to the
public without further registration under the Securities Act and without
delivering to the purchasers of the New Notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act. However, if any holder
acquires the New Notes in the Exchange Offer for the purpose of distributing or
participating in the distribution of the New Notes or is a broker-dealer, such
holder cannot rely on the position of the staff of the Commission enumerated in
certain no-action letters issued to third parties and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Each broker-dealer that receives New Notes for its own
account in exchange for Existing Notes, where such Existing 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. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Existing Notes where such Existing Notes were acquired by such
broker-dealer as a result of market-making or other trading activities. Pursuant
to the Registration Rights Agreement, the Company has agreed to make this
Prospectus, as it may be amended or supplemented from time to time, available to
broker-dealers for use in connection with any resale for a period of one year
following the Effective Date. See "Plan of Distribution."
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material United States federal
income tax consequences of the Exchange Offer to a holder of Existing Notes that
is an individual citizen or resident of the United States or a United States
corporation that purchased the Existing Notes pursuant to their original issue
(a "U.S. Holder"). It is based on the Internal Revenue Code of 1986, as amended
to the date hereof (the "Code"), existing and proposed Treasury regulations, and
judicial and administrative determinations, all of which are subject to change
at any time, possibly on a retroactive basis. The following relates only to the
Existing Notes, and the New Notes received therefor, that are held as "capital
assets" within the meaning of Section 1221 of the Code by U.S. Holders. It does
not discuss state, local, or foreign tax consequences, nor does it discuss tax
consequences to subsequent purchasers (persons who did not purchase the Existing
Notes pursuant to their original issue), or to categories of holders that are
subject to special rules, such as foreign persons, tax-exempt organizations,
insurance companies, banks, and dealers in stocks and securities. Tax
consequences may vary depending on the particular status of an investor. No
rulings will be sought from the Internal Revenue Service with respect to the
federal income tax consequences of the Exchange Offer.
In the opinion of Dechert Price & Rhoads, counsel to the Company, (a) the
exchange of Notes pursuant to the Exchange Offer should not be a taxable event
for a U.S. Holder as set forth below under the caption "-- The Exchange Offer",
and (b) the summary of the United States federal income tax consequences to a
U.S. Holder that appears below under the captions "--Stated Interest", "--Sale,
Exchange or Retirement of the Notes" and "--Backup Withholding" is accurate in
all material respects.
THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO EXCHANGE EXISTING
NOTES FOR NEW NOTES. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR
CONCERNING THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO
ITS PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO EXCHANGE EXISTING NOTES
FOR NEW NOTES.
THE EXCHANGE OFFER
In the opinion of Dechert Price & Rhoads, counsel to the Company, the
exchange of Existing Notes pursuant to the Exchange Offer should be treated as a
continuation of the corresponding Existing Notes because the terms of the New
Notes are not materially different from the terms of the Existing Notes, and
accordingly (i) such exchange should not constitute a taxable event to a U.S.
Holder, (ii) no gain or loss should be realized by a U.S. Holder upon receipt of
a New Note, (iii) the holding period of the New Note should include the holding
period of the Existing Note exchanged therefor and (iv) the adjusted tax basis
of the New Note should be the same as the adjusted tax basis of the Existing
Note exchanged therefor immediately before the exchange.
STATED INTEREST
Stated interest on a Note will be taxable to a U.S. Holder as ordinary
interest income at the time that such interest accrues or is received, in
accordance with the U.S. Holder's regular method of accounting for federal
income tax purposes. The Notes are not considered to have been issued with
original issue discount for federal income tax purposes.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
A U.S. Holder's tax basis in a Note generally will be its cost. A U.S.
Holder generally will recognize gain or loss on the sale, exchange or retirement
of a Note in an amount equal to the difference between the amount realized on
the sale, exchange or retirement and the tax basis of the Note. Gain or loss
recognized on the sale, exchange or retirement of a Note (excluding amounts
received in respect of accrued interest,
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<PAGE>
which will be taxable as ordinary interest income) generally will be capital
gain or loss. A U.S. Holder who is an individual or other person not taxable as
a corporation for federal income tax purposes who has held a Note for more than
18 months is subject to a maximum rate of tax of 20% on any capital gain
recognized upon its disposition. A noncorporate U.S. Holder who has held a Note
for more than 12 months but not more than 18 months is subject to a maximum rate
of tax of 28% on any capital gain recognized upon its disposition. Gain
recognized by a noncorporate U.S. Holder who has held a Note for 12 months or
less may be taxed at ordinary income rates. Capital losses of noncorporate U.S.
Holders in excess of capital gains may be offset against ordinary income up to
$3000; excess capital losses may be carried forward to subsequent years. Capital
gains of a U.S. Holder taxable as a corporation for federal income tax purposes
is classified as long or short term depending upon whether the Note has been
held for more than 12 months.
BACKUP WITHHOLDING
Under certain circumstances, a U.S. Holder of a Note may be subject to
"backup withholding" at a 31% rate with respect to payments of interest thereon
or the gross proceeds from the disposition thereof. This withholding generally
applies if the U.S. Holder fails to furnish his or her social security number or
other taxpayer identification number in the specified manner and in certain
other circumstances. 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 IRS. Corporations and certain other entities described in the Code and
Treasury regulations are exempt from backup withholding if their exempt status
is properly established.
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BUSINESS
COMPANY OVERVIEW
The Company manufactures, markets and distributes a diversified portfolio of
shelf-stable branded food products with leading regional or national retail
market positions. In general, the Company positions its retail branded products
to appeal to the consumer desiring a high quality and reasonably priced branded
product. In its relevant regional or national retail markets, the Company holds
the number one position in five of its seven branded product categories and
strong number two positions in the remaining two categories. The Company's sales
of branded retail products are complemented by growing food service sales with
strong brand identity. For the fiscal year ended December 28, 1996, the
Company's Pro Forma 1996 net sales and EBITDA would have been $175.7 million and
$23.4 million, respectively.
The Company groups its products as follows: (i) the B&G Pickles and Peppers
Products, which consist of pickles, relishes, peppers, olives and other
specialty products under the BLOCH & GUGGENHEIMER, SAN-DEL and private label
brands (28% of Pro Forma 1996 net sales); (ii) the Baked Snack Products, which
consist of bagel chips and other baked snack products under the BURNS & RICKER
and NEW YORK STYLE brands (17% of Pro Forma 1996 net sales); (iii) the Nabisco
Brands, which consist of the REGINA wine vinegars and cooking wines, WRIGHT'S
liquid smoke hickory flavoring, BRER RABBIT molasses and VERMONT MAID syrup
brands acquired from Nabisco, Inc. (16% of Pro Forma 1996 net sales); (iv) the
Trappey's Brands, which include TRAPPEY'S shelf-stable peppers and RED DEVIL and
other branded hot sauce products acquired from McIlhenny (10% of Pro Forma 1996
net sales); and (v) POLANER and other IHF Products produced and/or distributed
for IHF (29% of Pro Forma 1996 net sales).
The Company manages its sales and distribution systems based upon the
channels through which its products are sold. The Company's DSD sales and
distribution system sells and distributes the B&G Pickle and Pepper Products and
the IHF Products to over 2,200 store locations throughout the Northeast, with
heavy concentration in the New York metropolitan area. The Company's national
sales and distribution system markets (i) the Baked Snack Products to deli
wholesalers and distributors through a nationwide deli broker network and (ii)
the Nabisco Brands and certain of the B&G Pickle and Pepper Products through a
national grocery broker network. The Company's food service business sells and
distributes branded food service products through national and regional
wholesalers and distributors which serve national and regional food service
customers.
COMPETITIVE STRENGTHS
Management believes that the following factors contribute to the Company's
position as a market leader in its competitive areas and will be the foundation
for the Company's strategy:
LEADING MARKET POSITIONS. In its relevant regional or national retail
markets, the Company holds the number one position in six of its eight branded
product categories. The B&G branded pickle and pepper products are the market
leaders in the greater New York metropolitan area. The Company's BURNS & RICKER
and NEW YORK STYLE brands have a combined 86% national retail market share of
the bagel chip category. REGINA wine vinegars are the national leader in the
retail wine and flavored vinegar category. WRIGHT'S holds the number one
national retail market position in the liquid smoke flavoring category. VERMONT
MAID is the number one brand of maple syrup in the greater Boston area.
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RETAIL MARKET POSITION OF THE COMPANY'S BRANDS
<TABLE>
<CAPTION>
RETAIL MARKET SHARE
------------------------------------------
<S> <C> <C> <C>
BRAND CATEGORY SHARE POSITION PERCENTAGE
- ------------------------------------ ------------------------------------ ------------------------- ---------------
B&G PICKLE AND PEPPER PRODUCTS:
Bloch & Guggenheimer................ Shelf-stable Pickles................ #1 Greater NY Metro 32%
Bloch & Guggenheimer................ Shelf-stable Peppers................ #1 Greater NY Metro 35%
#2 National 10%
BAKED SNACK PRODUCTS:
Burns & Ricker...................... Bagel Chips......................... #1 National 45%
New York Style...................... Bagel Chips......................... #2 National 41%
Combined brands..................... Bagel Chips......................... #1 National 86%
NABISCO BRANDS:
Regina.............................. Wine and Flavored Vinegar........... #1 National 11%
Wright's............................ Liquid Smoke........................ #1 National 45%
Vermont Maid........................ Syrup............................... #1 Greater Boston 16%
Brer Rabbit......................... Molasses............................ #2 National 21%
TRAPPEY'S BRANDS:
Red Devil and other................. Hot Sauce........................... #5 National 6%
Trappey's........................... Shelf-stable Peppers................ #3 National 6%
</TABLE>
STRONG REGIONAL SALES AND DISTRIBUTION SYSTEM. The Company's DSD system of
selling and distributing products has allowed it to achieve leading retail
market shares in its core regional market for both the B&G Pickle and Pepper
Products and the IHF Products. Management believes that the DSD sales and
distribution system provides a competitive advantage compared to the other food
producers which market through independent brokers. Management believes that the
DSD sales and distribution system is highly customer-focused and
service-oriented, providing value-added delivery and inventory services and more
frequent interaction at the retail store level, resulting in improved store
relations, improved shelf space and lower slotting fees (up-front payments to
grocers for shelf space) for new products. Management believes the DSD system's
ability to gain distribution of new products, and then support that distribution
with effective promotions, significant display activity and superior shelf
management, provides the Company with a strong competitive advantage.
EXPERIENCED MANAGEMENT TEAM. The B&G management team has demonstrated its
ability to (i) operate successfully in a leveraged environment as part of
Specialty Foods, (ii) grow the core pickle and pepper products business with
6.4% compounded annual growth in net sales and 8.5% compounded annual growth in
Adjusted EBITDA (as defined, see "Selected Historical Financial and Other Data")
over the period from 1992 to 1996, (iii) assume control of and restructure the
BURNS & RICKER bagel chip business and acquire and consolidate the NEW YORK
STYLE bagel chip business, increasing Adjusted EBITDA for the Baked Snack
Products business from $1.0 million in 1993 to $4.5 million in 1996, and (iv)
develop and expand successfully the POLANER ALL-FRUIT products into national
distribution, achieving sales of $29.6 million in 1992, and subsequently
realizing significant value through the sale of the Polaner business to IHF in
1993.
BUSINESS STRATEGY
The Company's goal is to increase its sales and profitability by enhancing
its portfolio of branded shelf-stable products and by capitalizing on its
competitive strengths to realize the benefits of combining
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the B&G products with the Acquired Brands. The Company intends to implement its
strategy through the following initiatives:
ENHANCE OPERATION OF THE ACQUIRED BRANDS. The Company's objective is to
renew the growth and enhance the profitability of the Acquired Brands.
Management believes there is significant growth potential in the Acquired Brands
due to a lack of focused management and marketing support from their prior
corporate owners who concentrated their resources on dominant national brands.
Management plans to enhance the operations of the Acquired Brands by providing
increased management attention as part of a portfolio of related products of
comparable size, with dedicated sales personnel, focused marketing programs and
strategically timed new product initiatives.
LEVERAGE DSD SALES AND DISTRIBUTION SYSTEM. The Company's extensive and
focused DSD sales and distribution system, concentrated in the greater New York
metropolitan area, is one of its primary competitive strengths, providing it
with strong relationships at the food retailer level, superior store penetration
and preferred shelf product placement. This sales and distribution system also
enables the Company to introduce and sell new products effectively to its
existing grocery customers at a lower cost of introduction to the Company. The
Company intends to leverage this competitive strength by selling and
distributing the Acquired Brands in the greater New York metropolitan area
through its existing DSD sales and distribution system. Similarly, the Company
is also in the process of moving its Baked Snack Products into the DSD sales and
distribution system. Management believes that the competitive strengths of the
DSD sales and distribution system, as compared with typical warehouse
distribution systems, position the Acquired Brands and the Company's Baked Snack
Products to realize improved store penetration, promotional support and shelf
placement in the market, without incurring significant additional slotting fees.
For example, the recently acquired VERMONT MAID brand syrup is available in the
greater New York metropolitan area but has inconsistent shelf presence
throughout this region. Management believes that VERMONT MAID brand syrup sales
and store penetration can be increased significantly by distributing the product
through the DSD sales and distribution system. Additionally, distributing the
other Acquired Brands and Baked Snack Products, and any future products, through
the DSD sales and distribution system would, in turn, enhance the total DSD
system by distributing costs over increased product volume.
NATIONAL DISTRIBUTION OPPORTUNITIES. The Acquired Brands give the Company a
portfolio of branded, national shelf-stable food products supported by a
national sales and distribution network. The combination of the Nabisco Brands
and the Trappey's Brands with B&G's existing products is expected to allow the
Company to distribute the costs of a national sales force and broker network
over increased product volume, reducing costs as a percentage of sales, and to
realize distribution economies of scale and provide a national platform for new
products and product line extensions. The Company believes that it will continue
to increase the sales and expand the geographic presence of certain of its
regional branded products through its national sales and distribution network,
as evidenced by recent experience with its SANDWICH TOPPERS line. Utilizing the
regional sales managers for this brand, the Company has expanded the
distribution for all or part of the SANDWICH TOPPERS line into 16 grocery chains
outside of its traditional regional market. These chains are comprised of over
2,700 individual stores, representing a sizable growth opportunity for the
SANDWICH TOPPERS line.
NEW PRODUCT INTRODUCTIONS AND LINE EXTENSIONS. Management believes that the
Company's leading market positions, combined with the competitive strengths of
its regional DSD sales and distribution system and national sales and
distribution network, provide a strong platform for new product introductions
and product line extensions. Management has demonstrated its prior experience in
successfully introducing new products and product line extensions, including
SANDWICH TOPPERS, the BURNS & RICKER fat-free products and the POLANER ALL-FRUIT
line which was sold in 1993. Management has identified certain immediate product
line extensions which are expected to benefit from the Company's competitive
strengths and enhance its existing product offerings. For example, the REGINA
brand's leadership position in the wine and flavored vinegar category provides
opportunities for product line extensions in flavored
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vinegars including balsamic vinegar, the fastest growing segment of the vinegar
market. Additionally, the Company is considering expanding its WRIGHT'S product
line to include a mesquite-flavored liquid smoke.
EXPAND PRESENCE WITH MASS MERCHANTS AND OTHER NON-GROCERY MARKETS. Grocery
retailers have been the traditional market for the Company's products.
Management believes that there are certain non-grocery retail markets that have
the potential to grow faster than the grocery retail industry as a whole and
that these non-grocery markets present considerable growth opportunities for the
Company's brands. These non-grocery retail markets include mass merchants,
warehouse and club stores, convenience stores, drug stores and vending machines.
For example, the Company recently launched a new line of NEW YORK STYLE bagel
chips in distinctive pillow-pack bags for distribution in these alternative
channels. The Company sells these products to the Sam's Club division of
Wal-Mart, Wal-Mart Supercenters, and the eastern region of Price/Costco. To
date, the Company has also successfully completed trials of these products in
Wal-Mart discount stores in three regions. The pillow-pack product has also been
well received by national and regional drugstore and discount chains.
COMPLETE SELECT ACQUISITIONS. Management believes that the Company's
portfolio of branded food products, its highly effective DSD sales and
distribution system and its experienced management team provide an attractive
platform upon which to build a larger company focused on shelf-stable food
products. The Company believes that many diversified food companies have
undermanaged certain non-core or smaller brands, like the Nabisco Brands, as
they have focused on their larger national brands. Similarly, many closely held
or family owned food businesses lack the resources or the economies of scale to
realize the growth potential of their brands. The Company plans to pursue select
acquisitions of such brands when it believes it has an opportunity to enhance
sales growth and operating performance through increased management focus and
integration into the Company's administrative, manufacturing and distribution
infrastructure (in particular, its DSD sales and distribution system and/or its
national broker network). Management further believes that successful future
acquisitions will, in turn, enhance the Company's portfolio of existing
businesses by broadening the Company's product offerings. Furthermore, the
Company believes that its existing DSD sales and distribution system can be
enhanced through certain select acquisitions that include existing distribution
networks that are contiguous or complementary with the Company's existing DSD
markets, thereby expanding the geographic coverage of the Company's DSD sales
and distribution organization.
INDUSTRY
The U.S. food industry as a whole is characterized by relatively stable
growth based on modest price and population increases. Over the last ten years,
the industry has experienced consolidation as competitors have shed non-core
business lines and made strategic acquisitions to complement category positions,
maximize economies of scale in raw material sourcing and production and expand
retail distribution. The importance of sustaining strong relationships with
retailers has become a critical success factor for food companies and is driving
many initiatives such as Category Management and Efficient Consumer Response.
These two initiatives focus on retailers' need to minimize inventory investment
and maximize dollar sales returns from store shelf space. Food companies with
category leadership positions, value-added distribution and strong retail
relationships have increasingly benefited from these initiatives as a way to
maintain shelf space and maximize distribution efficiencies. In addition, the
food service and private label markets provide alternative opportunities for
growth by branded food companies.
PRODUCTS AND MARKETS
The Company manufactures, markets and distributes a diversified portfolio of
shelf-stable branded food products with leading regional or national retail
market positions. The Company's sales of branded retail products are
complemented by growing food service sales with strong brand identity. Each of
the Company's products are distributed through one or more of its three distinct
sales and distribution channels.
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BLOCH & GUGGENHEIMER. BLOCH & GUGGENHEIMER, in existence since 1889,
produces a product line ("B&G products") consisting primarily of pickles,
relishes, peppers, olives and other related specialty items. The B&G products
are positioned to appeal to the consumer who values a high quality and
reasonably priced branded product. Management believes that the DSD sales and
distribution system allows it to bring the products to market more effectively
and offer superior value to the consumer.
B&G is the market leader in the greater New York metropolitan area retail
market in pickles and relishes, with a 32% market share of an approximately
$29.4 million shelf-stable pickle and relish market, which excludes refrigerated
pickles. This success has been based on the ability to place a wider variety of
products in retail stores and to achieve a higher rate of promotion and display
activity. Management believes B&G pickles offer the consumer quality products at
value prices. B&G currently offers 77 distinct pickle products, far more than
its national or regional competitors. Recent growth in the pickle line has been
driven by the introduction of the SANDWICH TOPPERS line in 1995. This concept,
reinforced by fast food sandwich franchises, encourages consumers to "top" their
sandwiches with pickles, peppers and other produce condiments.
B&G peppers are the market leader in the greater New York metropolitan area
retail market for peppers, with a 35% market share of an approximately $11.5
million market, a higher market share than the next three competitors combined.
B&G offers the consumer a wide variety of pepper products in most stores and
currently offers 41 distinct pepper products, a greater variety than all other
competitors in such market. The pepper line includes Italian and Hispanic style
peppers, which Management believes are growing in use and popularity. Management
believes that new products such as roasted peppers have significantly aided
B&G's sales and market share growth in the past five years. B&G has extended its
SANDWICH TOPPERS concept to include peppers and onions as well as pickles,
launching six new products (four pepper products and two onion products) in the
past six months. These products are unique in the sandwich category and have
been fundamental to extending the distribution of the SANDWICH TOPPERS line
beyond B&G's traditional regional area of distribution.
BAKED SNACK PRODUCTS. The Baked Snack Products are comprised of the BURNS &
RICKER and NEW YORK STYLE brands of bagel chips and other baked specialty
products. Bagel chips were created in 1982 by Jim Burns and Gary Ricker, with a
competing product line, NEW YORK STYLE, created shortly thereafter. In 1993,
BURNS & RICKER was acquired by Specialty Foods and was placed under the
management of B&G in 1994. In 1995, the Company acquired the NEW YORK STYLE
brand from Nabisco and consolidated the two brands.
With the acquisition of the NEW YORK STYLE brand, BURNS & RICKER became a
national business, with the leading market share of the bagel chip category.
Presently, the BURNS & RICKER and NEW YORK STYLE brands represent 86% of the
national retail bagel chip category. Management believes that bagel chips appeal
to upscale consumers and are positioned well given the recent growth in bagel
consumption and the general impression that bagels and baked snacks are healthy
foods.
B&G has continued to introduce new products such as additional bagel chip
flavors and fat-free bagel chips and BAGEL CHIPMIX. To broaden product exposure,
distribution and sales, the Company recently introduced a 7.5 oz. pillow-pack
bag line of NEW YORK STYLE products for the non-grocery store distribution
channel. This line is positioned for distribution through mass merchants such as
Wal-Mart, where, Management believes, sales growth potential is significantly
higher than the existing supermarket deli department business. Management
believes the snack mix category is five times as large as the bagel chip
category and has placed particular emphasis on introducing the NEW YORK STYLE
BAGEL CHIPMIX products into these distribution channels. The new pillow-pack bag
line is gaining sales momentum, with placement in a number of mass merchants,
including the Sam's Club division of Wal-Mart, Wal-Mart Supercenters and
Price/Costco. To date, the Company has also successfully completed trials of
these products in Wal-Mart discount stores in three regions. The pillow-pack
product has also been well received by national and regional drug store and
discount chains. Management believes that this initiative has the ability to
significantly enlarge the Company's snack business over the next five years.
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NABISCO BRANDS. The Nabisco Brands represent established businesses with
national or regional aspects of distribution, and include the REGINA wine
vinegars and cooking wines, WRIGHT'S liquid smoke hickory flavoring, BRER RABBIT
molasses and VERMONT MAID syrup brands. The acquisitions of the Acquired Brands
return the Company to national distribution of grocery products. The Company had
previously managed a similar national business in its POLANER brand, which was
sold to IHF in 1993. While the Company's retail pickle and pepper products have
had some distribution outside the traditional DSD region, the acquisition of the
Nabisco Brands affords the opportunity for significant additional growth of B&G
Pickle and Pepper Products as part of a portfolio of national brands.
REGINA. REGINA wine vinegar is the number one brand of wine vinegar
nationally, with an 11% market share of an approximately $63.2 million national
retail wine and flavored vinegar market. Its premium packaging and product
quality have allowed it to command a premium price versus competitors' products
while outselling all other brands. The REGINA line maintained market leadership
despite what Management believes to have been inadequate marketing support and
uneven distribution while under Nabisco management. REGINA also sells flavored
cooking wines and specialty vinegars and has a growing branded food service
component to its business.
WRIGHT'S. WRIGHT'S liquid smoke is the leading brand in the $6.6 million
retail liquid smoke category, enjoying a market share of 45%. WRIGHT'S also
enjoys a strong position in food service. WRIGHT'S all natural hickory seasoning
reproduces the flavor and aroma of hickory pit smoking in meats, chicken and
fish. Patented in 1895, WRIGHT'S is a completely natural product that does not
contain preservatives, sugar or sodium. WRIGHT'S is a concentrated product and
Management believes it therefore gives consumers a good value. While WRIGHT'S is
the leading brand, it has had limited marketing support in recent years. The
Company is planning to expand product awareness through the use of recipes on
packaging and through magazine advertising and is considering expanding the
product line to include a mesquite-flavored seasoning.
VERMONT MAID. VERMONT MAID maple-flavored syrup is a brand name that is
familiar to many consumers, but the brand's distribution is largely limited to
its core greater Boston area, where it has a 16% share of the syrup category.
Management believes that VERMONT MAID'S name recognition is a powerful resource
that will allow the Company to gain national distribution of the product and
increase sales. The product is available in two flavors, regular and lite. The
VERMONT MAID product line presently does not include sizes that appeal to
warehouse and club stores or food service. These additional channels of
distribution also represent sales growth potential for the VERMONT MAID brand.
BRER RABBIT. BRER RABBIT molasses holds the number two retail market
position nationally with a 21% market share of the molasses category. In its top
18 markets, which are geographically spread across the United States, BRER
RABBIT has a market share greater than 40%. BRER RABBIT molasses is available in
two flavors, mild and full. The mild molasses is designed for table use as well
as cooking. The full flavor molasses has a stronger flavor and is used primarily
for cooking.
TRAPPEY'S. Trappey's, founded in 1898, was one of the first packers of
pepper hot sauce and the first to process peppers for pickling. Since its
inception, Trappey's has introduced many new products including RED DEVIL brand
hot sauce, TRAPPEY'S brand peppers, TORRIDO brand chili peppers and Italian
peperoncini peppers under the DULCITO brand.
Trappey's products fall in two major categories, shelf-stable peppers and
hot sauces. Trappey's shelf-stable peppers have a 6% market share of a $139.4
million national retail market and Trappey's leading item, sliced jalapenos, is
the nation's number four selling pepper and the number two selling jalapeno.
Trappey's brands of hot sauces, RED DEVIL, BULL'S and TRAPPEY'S LOUISIANA HOT
SAUCE, have a combined 6% share of an approximately $68.8 million national
retail market.
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POLANER AND OTHER CO-PACKING ARRANGEMENTS. The Company manufactures,
packages and, in certain circumstances, distributes specialty food products for
other companies under other brand names, an industry practice commonly known as
"co-packing." The Company's most significant co-packing arrangements are with
IHF to co-pack 100% of the national production of the POLANER line of preserves,
POLANER ALL-FRUIT and wet spices (primarily garlic). The Company also
distributes the POLANER products in the greater New York metropolitan area
through its DSD sales and distribution system. While the Company does not own
the POLANER brand, it remains a considerable presence in the DSD system.
Trappey's produces and packages certain TABASCO-Registered Trademark-
products for McIlhenny Company, continuing a production and packaging
arrangement that existed prior to the Trappey's Acquisition. Pursuant to a one-
year co-packing contract (the "McIlhenny Co-Packing Agreement"), the Company
produces certain TABASCO-Registered Trademark- products on a cost plus basis.
After one year, the McIlhenny Co-Packing Agreement can be terminated by either
party with six months notice. The McIlhenny intercompany production and
packaging arrangement accounted for approximately $2.8 million of Trappey's net
sales in 1996.
MARKETING, SALES AND DISTRIBUTION
The Company manages its sales and distribution systems based upon the
channels through which its products are sold. Each sales and distribution system
has its own strengths and advantages for specific product lines, which the
Company attempts to utilize as it sells its products. None of the Company's
customers, excluding IHF under the co-packing IHF Contracts, accounted for more
than 10.0% of Pro Forma 1996 net sales.
DIRECT-STORE-DOOR (DSD). The Company's DSD sales and distribution system is
the core of its B&G products business and supports the strong greater New York
metropolitan area base for its products. Management believes that its DSD sales
and distribution system is highly customer-focused and service-oriented,
providing value-added delivery and inventory services and more frequent
interaction at the retail store level, resulting in improved store relations,
improved shelf space and lower slotting fees (up-front payments to grocers for
shelf space) for new products. Management believes the DSD system's ability to
gain distribution of new products, and then support that distribution with
effective promotions, significant display activity and superior shelf
management, provides the Company with a strong competitive advantage. The DSD
sales and distribution system has historically distributed only the B&G Pickle
and Pepper Products and the IHF Products. The Company intends to leverage this
competitive strength by improving the sales and distribution of the Acquired
Brands in the greater New York metropolitan area through its DSD sales and
distribution system. Similarly, the Company is also in the process of moving its
Baked Snack Products into the DSD sales and distribution system. Management
believes that the competitive strengths of the DSD sales and distribution
system, as compared with traditional warehouse distribution systems, position
the Acquired Brands and the Company's Baked Snack Products to receive improved
store penetration, promotional support and shelf placement in the market,
without incurring significant additional slotting fees.
The DSD system is an organization of sales personnel and delivery vehicles
that directly service individual grocery stores with the Company's products. The
sales force consists of approximately 10 Account Managers who work with buyers
at the grocery chain's headquarters level, introducing new products and
organizing promotional support for existing product lines. Approximately 35
sales personnel operate at the store level, calling on store and grocery
department managers on a weekly basis, writing orders for products, positioning
new products and selling product displays to support promotional activity.
Marketing support for the products sold and distributed through the DSD system
consists primarily of trade promotions aimed at gaining display activity to
produce impulse sales. Trade advertising and coupons support this activity. A
variety of in-store support vehicles such as hang tags, racks and signage are
used by the individual sales personnel to highlight the Company's products.
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The distribution system operates on a two day delivery cycle. An order is
written and placed by a B&G salesman on Day One; ordered products are selected,
assembled and routed for delivery on Day Two; shipments are delivered directly
to stores on Day Three. Major promotional events are supported by special
distributions.
NATIONAL SALES AND DISTRIBUTION. While the Company's traditional
distribution strength has been its regional DSD system, the Company's BURNS &
RICKER and NEW YORK STYLE brands are sold on a national basis through
independent brokers and distributors servicing the deli section of the grocery
stores. The Company significantly expanded its national sales and distribution
system following the integration of the Nabisco Brands and Trappey's.
The Company intends to leverage this national network to expand the sales of
selected products currently distributed through its regional DSD sales and
distribution system. In addition, the Company intends to distribute certain of
the Nabisco Brands and Trappey's Brands through the DSD system to provide
focused sales, marketing and distribution support to increase regional sales.
The Nabisco Brands receive sales and distribution support under the
Company's transition services agreement with Nabisco. While receiving such
services from Nabisco, the Company has developed a national sales and
distribution network for the Nabisco Brands comprised primarily of brokers who
were responsible for the sales and marketing of such brands prior to Nabisco's
internalization of such services in 1996. The Company terminated its transition
services agreement with Nabisco effective September 1, 1997. The Company's
national sales and distribution network centers on six regional sales managers
and five to six strategically located distribution points. Sales are coordinated
by the regional sales managers, who supervise brokers calling on buyers at
grocery chain headquarters and providing retail coverage of the products at the
store level. Management believes that this network will allow the Company to
expand the sales and distribution of the Acquired Brands and will also provide a
platform for the broader penetration of the SANDWICH TOPPERS line into national
distribution.
Marketing support for items going through the national system typically
consists of scheduled trade promotions, targeted coupons and cross-promotions
with supporting products. Initially, advertising has consisted of magazine and
trade ads, to be supplemented at a later date with television advertising for
selected brands.
The deli component of the national sales and distribution system consists of
regional sales managers supervising an independent broker network focused on the
deli section of grocery stores. These brokers call on buyers at chain
headquarters and provide retail store support for the products. Distribution is
either directed to the grocery chain's deli warehouse or to distributors who
service the grocery chains. Marketing support for the Baked Snack Products
consists of trade promotions, in-store displays and on-package coupons designed
to encourage product trial and repeat purchases. Cross-promotions with cheeses
or other deli items are also run to encourage product trials.
The Company is also expanding this sales and distribution system to target
customers such as Wal-Mart and Sam's Clubs and other non-grocery outlets by
having the regional sales managers call directly on buyers at mass merchants and
warehouse and club stores, often in conjunction with brokers. Shipments are
direct to the customers, usually in truckload quantity. In the fourth quarter of
1996, the Company created a new line of snacks specifically for these
non-grocery outlets. This line, branded NEW YORK STYLE baked bagel snacks,
features convenient packaging in pillow-pack bags, and includes new prepacked
displays to meet the unique merchandising needs of these stores. The new
pillow-pack bag line is gaining sales momentum, with placement in a number of
mass merchants, including the Sam's Club division of Wal-Mart, Wal-Mart
Supercenters, and Price/Costco.
The Company also exports its Baked Snack Products to select international
markets including Australia, Canada, Greece, Israel, Switzerland, Japan and New
Zealand. Export sales comprised approximately 1.0% of the Company's Pro Forma
1996 net sales.
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FOOD SERVICE. The food service sales and distribution system stands
separate from the other means by which the Company sells and distributes its
products. Food service sales are managed by a separate sales force dedicated to
this channel. Food service sales managers direct brokers who sell the product to
distributors or directly to customers depending on the product and account.
Distribution is done directly from the Company's warehouses to either a
distributor or customer. Marketing support for this channel consists of trade
promotions to encourage volume purchases and trade advertising. In addition, the
Company distributes brochures providing product knowledge and recipe suggestions
to end users.
Sales of the B&G Pickle and Pepper Products include a sizable food service
component, primarily under the SAN-DEL label, a business acquired by the Company
in 1987. Management believes that the Company has a cost advantage over most
competitors in this area due to plant efficiency and local sourcing of produce.
The Company's ability to produce specialty food service items efficiently has
allowed it to gain business with the growing fast food sandwich franchises,
expanding the Company food service business to a national scale. This business
has grown approximately 25% per year for the past two years due to this success.
The REGINA and WRIGHT'S brands also have significant food service sales, which
are national in scope. Both REGINA and WRIGHT'S have a strong following among
chefs and cooks in the food service industry due to their high quality and
consistent performance in recipes. Food service sales are lower gross profit
margin sales than retail sales.
COMPETITION
The food products business is highly competitive. The Company competes with
other producers of its products on the basis of price, convenience, quality and
product development expertise. The Company operates in markets that are highly
competitive, and the Company faces competition in each of its product lines. The
Company competes with a significant number of companies of varying sizes,
including divisions or subsidiaries of larger companies. Many of these
competitors have multiple product lines and may have substantially greater
financial and other resources.
RAW MATERIALS
The Company purchases agricultural products and other raw materials from
growers, commodity processors and other food companies. The Company's principal
raw materials include peppers, cucumbers and other vegetables as well as flour
and vegetable oils. The Company purchases its agricultural raw materials in bulk
or pursuant to short-term supply contracts. The Company purchases most of its
agricultural products during the period from July 1 to October 31 from a variety
of suppliers. The Company purchases approximately 75% of its agricultural
products from sources near its manufacturing facilities in order to minimize the
high transportation costs associated with transporting bulk agricultural
products. The Company also uses packaging materials, particularly glass jars.
The Company purchases its raw materials from a variety of suppliers and
alternate sources of supply are readily available. See "Risk Factors--Raw
Materials."
PRODUCTION AND FACILITIES
The Company operates the manufacturing plants described in the following
table. In general, the plants are strategically located near major customer
markets and raw materials. Management believes that the Company's manufacturing
plants have sufficient capacity to accommodate the Company's planned growth over
the next five years. The Company's Hurlock, Maryland manufacturing facility
operates at an average capacity utilization of approximately 40%, with peak
capacity utilization of 70% occurring during the height of the pickle and pepper
production season from June 1 to November 1. In June 1997, as part of the
continuous focus on cost levels and production efficiencies, the Company
consolidated two manufacturing facilities and a separate warehouse facility for
its Baked Snack Products into a new manufacturing and warehouse facility.
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The Company operates the manufacturing and warehouse facilities described in
the following table. Management believes that these facilities are suitable for
its operations and provide sufficient capacity to meet the Company's
requirements for the foreseeable future.
<TABLE>
<CAPTION>
APPROX. SQ.
FACILITY LOCATION PRODUCTS MANUFACTURED FT.
- ------------------------------------------------ ------------------------------------------------ --------------
<S> <C> <C>
Roseland, NJ.................................... Headquarters/Preserves manufacturing 124,534
South Brunswick, NJ............................. Baked Snack Products manufacturing/ Warehouse 144,000
Hurlock, MD*.................................... Pickles, peppers, wet spices manufacturing/
Warehouse 236,000
Hurlock, MD*.................................... Warehouse 80,000
Hurlock, MD..................................... Warehouse 35,000
Hurlock, MD..................................... Warehouse 66,000
Sharptown, MD*.................................. Pickle storage facility 3,000
Sandtown, DE*................................... Warehouse 70,000
Bad Axe, MI*.................................... Undeveloped Property 10 acres
Albertson, NC................................... Produce receiving station 2,400
New Iberia, LA*................................. Manufacturing/Warehouse 157,846
</TABLE>
- ------------------------
* Owned.
The Company manufactures and packages food products under other brand names,
an industry practice commonly known as "co-packing." Under two co-packing
contracts with IHF, the Company produces 100% of all of IHF's national
requirements for the POLANER lines of fruit spreads, preserves and wet spices.
In addition, the Company has a third contract with IHF under which the Company
distributes the POLANER line of fruit spreads, preserves and wet spices in the
New York metropolitan area.
The Company manufactures POLANER wet spices in the Hurlock, Maryland
facility pursuant to a five-year agreement expiring in March 1998 with a minimum
production volume guarantee from IHF. The Hurlock facility, which the Company
also uses to produce its pickle and relish products, is owned by the Company and
all employees at the facility are employed by the Company. The Company sells the
POLANER spices to IHF at a fixed price above the costs of raw materials, labor
and allocated overhead. The Company produces POLANER preserves and fruit spreads
at its Roseland, New Jersey facility, pursuant to a contract through March 1999.
Unlike the IHF Contract for production of wet spices at Hurlock, IHF provides
the manufacturing equipment (IHF invested $3.0 million to upgrade the
manufacturing equipment technology in 1995) and all working capital for the
production of POLANER preserves and fruit spread products. The Company includes
allocations of overhead in its cost, thus improving the profitability of its
overall business. The production of fruit spreads, preserves and wet spices
under these IHF Contracts accounted for $31.9 million of net sales in 1996.
The Company sells and distributes the POLANER products though the Company's
DSD system pursuant to a perpetual contract that is cancellable upon 12 month's
notice by either party. While the contract pertains to the distribution of
POLANER products only, the Company has expanded its distribution relationship to
include other IHF products, including PAM-Registered Trademark-,
ROTEL-Registered Trademark-, RANCH STYLE-Registered Trademark-,
LUCK'S-Registered Trademark- and G. WASHINGTON-Registered Trademark- label
brands (approximately 11.0% of the IHF products distributed). Distribution of
IHF products accounted for $18.9 million of net sales in 1996.
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Trappey's produces certain TABASCO-Registered Trademark- products for
McIlhenny Company under the McIlhenny Co-Packing Agreement. See
"Business--Products and Markets." The McIlhenny products are produced at
Trappey's New Iberia, Louisiana facility.
The Company also has agreements for the co-packing of some of its products.
Although the Company owns certain processing, storage and bottling equipment
used in the manufacture of REGINA wine vinegars and cooking wines and WRIGHT'S
liquid smoke, all of the Nabisco Brand products are produced for the Company by
third parties under co-packing agreements. WRIGHT'S liquid smoke and BRER RABBIT
molasses are produced by a contract manufacturer under a co-packing arrangement
that expires in February 2001, or earlier upon nine months written notice to the
other party, or, if the termination applies only to WRIGHT'S products, upon six
months notice. The VERMONT MAID products are produced pursuant to a co-packing
agreement that continues in effect from year to year unless terminated by either
party by October 1 of any contract year. Each of the Company's co-packers
produces products for other companies. The Company believes that there are
alternative sources of co-packing production readily available for its products.
In connection with the Nabisco Brands Acquisition, the Company entered into
a co-pack agreement with Nabisco, pursuant to which Nabisco will provide
co-packing services for the REGINA products for up to nine months following the
closing date of the Nabisco Brands Acquisition at Nabisco's direct variable cost
(excluding overhead) for such services and at levels consistent with those
provided by Nabisco for the Nabisco Brands for the year ended December 31, 1996.
The Company entered into the Nabisco co-packing arrangement to continue
production and bottling of the REGINA retail products until February 1998. The
Company expects to move production of REGINA retail products to the current
co-packer of REGINA food service products following the expiration of the
Nabisco co-pack agreement.
TRADEMARKS AND PATENTS
The Company owns 66 trademarks which are registered in the United States and
23 trademarks which are registered in foreign countries including Canada, the
Dominican Republic, Japan, South Korea, the Philippines and Thailand. In
addition, the Company has seven trademark applications pending in the United
States and one trademark application pending in Mexico. Examples of the
Company's trademarks include B&G, BLOCK & GUGGENHEIMER, BAGEL CHIPMIX, BRER
RABBIT, BURNS & RICKER, NEW YORK STYLE, REGINA, SAN-DEL, SANDWICH TOPPERS,
VERMONT MAID and WRIGHT'S.
The Company considers its trademarks to be of significant importance in the
Company's business. The Company is not aware of any circumstances that would
negatively impact its trademarks. See "Risk Factors--Trademarks and Patents."
GOVERNMENTAL REGULATION
The operations of the Company are subject to extensive regulation by the
United States Food and Drug Administration, the United States Department of
Agriculture and other state and local authorities regarding the processing,
packaging, storage, distribution and labeling of the Company's products. The
Company's processing facilities and products are subject to periodic inspection
by federal, state and local authorities. The Company believes that it is
currently in substantial compliance with all material governmental laws and
regulations and maintains all material permits and licenses relating to its
operations. Nevertheless, there can be no assurance that the Company is in full
compliance with all such laws and regulations or that it will be able to comply
with any future laws and regulations in a cost-effective manner. Failure by the
Company to comply with applicable laws and regulations could subject it to civil
remedies, including fines, injunctions, recalls or seizures, as well as
potential criminal sanctions, which could have a material adverse effect on the
business, financial condition or results of operation of the Company.
As described above, the Company is subject to the Food, Drug and Cosmetic
Act and regulations promulgated thereunder by the FDA. This comprehensive
regulatory program governs, among other things, the manufacturing, composition
and ingredients, labeling, packaging and safety of food. For
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example, the FDA regulates manufacturing practices for foods through its current
"good manufacturing practices" regulations and specifies the recipes for certain
foods. In addition, the Nutrition Labeling and Education Act of 1990 prescribes
the format and content of certain information required to appear on the labels
of food products. The Company is subject to regulation by certain other
governmental agencies, including the U.S. Department of Agriculture. 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 MATTERS
The Company's operations are subject to various federal, state and local
environmental laws and regulations relating to the emission, discharge, storage,
treatment, handling, generation, transportation, release, disposal,
investigation and remediation of certain materials, substances and wastes used
in or resulting from its operations. The Company's operations are also governed
by laws and regulations relating to workplace safety and worker health which,
among other things, regulate employee exposure to hazardous chemicals in the
workplace. As with other companies engaged in like businesses, the nature of the
Company's operations expose it to the risk of liabilities or claims with respect
to environmental matters, including those relating to the disposal and release
of hazardous substances, and there can be no assurance that material costs will
not be incurred in connection with such liabilities or claims. The Company
believes, however, that its operations are in substantial compliance with
applicable environmental laws.
In connection with the B&G and B&R Acquisition, the Company identified
certain historic environmental conditions or possible permit exceedances for
which no current response obligation exists or enforcement response is pending.
However, such obligation or enforcement activity cannot be ruled out in the
future. Pursuant to the B&G and B&R Acquisition Agreement, Specialty Foods is
obligated to indemnify the Company with respect to expense for such identified
matters, subject to certain limitations. Even without such an indemnity, the
Company has no reason to believe that the cost of any such response or
compliance activity, if required, would be material. In addition, the Company is
in the process of resolving waste water discharge exceedances at one of its
facilities, which were also identified in connection with the B&G and B&R
Acquisition, for which it has been paying surcharges, by seeking a permit
revision. If the discharge limits are not changed, the Company may be required
to install control equipment to perform additional pretreatment. The surcharges
have not amounted to a material cost, nor does the Company believe that the cost
of control equipment would be material. This matter also would be subject to the
Specialty Foods indemnity.
The Company has not made any material expenditures during the last three
fiscal years in order to comply with environmental laws or regulations. Based on
the Company's experience to date, the Company believes that the future cost of
compliance with existing environmental laws and regulations (and liability for
known environmental conditions) will not have a material adverse effect on the
Company's business, financial condition or results of operations. However, the
Company cannot predict what environmental or health and safety legislation or
regulations will be enacted in the future or how existing or future laws or
regulations will be enforced, administered or interpreted, nor can it predict
the amount of future expenditures which may be required in order to comply with
such environmental or health and safety laws or regulations or to respond to
such environmental claims. See "--Governmental Regulation."
LEGAL PROCEEDINGS
From time to time the Company is involved in legal proceedings arising in
the ordinary course of its business. Management believes that there is no
litigation pending that could have a material adverse effect on its operations.
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EMPLOYEES
On September 27, 1997, B&G's workforce consisted of 419 employees. Of the
total number of employees, 334 were engaged in manufacturing, 58 were engaged in
marketing and sales and 27 were engaged in administration. The Company considers
its employee relations generally to be good.
Approximately 65 of the Company's employees at its Roseland, New Jersey
facility are represented by a collective bargaining agreement with the
International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of
America (Local No. 863). This collective bargaining agreement expires in March
1999. A prolonged work stoppage or strike at any facility with union employees
could have a material adverse effect on the business, financial condition or
results of operations of the Company. In addition, there can be no assurance
that upon the expiration of existing collective bargaining agreements new
agreements will be reached without union action or that any such new agreements
will be on terms satisfactory to the Company.
The Company also employs 51 persons at the Trappey's facility in New Iberia,
Louisiana, all of whom are engaged in manufacturing. None of these employees are
represented by a collective bargaining agreement.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
persons who are members of the Board of Directors or executive officers of B&G.
Other officers may also be appointed to fill certain positions. Each director of
B&G holds office until the next annual meeting of stockholders of B&G or until
his successor has been elected and qualified.
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---------------------------------------------------- ----------- ----------------------------------------------------
<S> <C> <C>
Leonard S. Polaner.................................. 66 Chairman of the Board of Directors
David L. Wenner..................................... 48 President, Chief Executive Officer and Director
Robert C. Cantwell.................................. 40 Executive Vice President of Finance and Chief
Financial Officer
David H. Burke...................................... 56 Executive Vice President of Sales and Marketing
James H. Brown...................................... 55 Executive Vice President of Manufacturing
Thomas J. Baldwin................................... 38 Director
Alfred Poe.......................................... 48 Director
Harold O. Rosser II................................. 48 Director
Stephen C. Sherrill................................. 43 Director
</TABLE>
LEONARD S. POLANER, CHAIRMAN OF THE BOARD: Leonard Polaner has been
Chairman of the Board of B&G since March 1993 when the Polaner business was sold
to IHF. Prior to that time, Mr. Polaner was President and Chief Executive
Officer of B&G, positions which he had assumed upon joining the Company in 1986.
Mr. Polaner began his career in the food products industry in 1956 when, after
earning his Masters Degree from Harvard Business School, he joined M. Polaner
Inc., a family-run business. He has been active in many industry trade groups,
including the New York Preservers Association and the International Jelly and
Preservers Association, organizations in which he served as President and a
member of the Board, respectively.
DAVID L. WENNER, PRESIDENT AND CHIEF EXECUTIVE OFFICER: David Wenner is the
President and Chief Executive Officer of the Company, positions he has held
since March 1993. Mr. Wenner joined B&G in 1989 as Assistant to the President,
directly responsible for the Company's distribution and operations. In 1991, he
was promoted to Vice President. He continued to be responsible for distribution
and operations, but also took new responsibility for the production of
POLANERproducts. Prior to joining B&G, Mr. Wenner spent nine years in the
consumer products division at Johnson & Johnson in supervision and management
positions responsible for manufacturing, maintenance and purchasing. In 1985,
Mr. Wenner transferred to Ethicon, a subsidiary of Johnson & Johnson, where he
was a plant superintendent responsible for manufacturing.
ROBERT C. CANTWELL, EXECUTIVE VICE PRESIDENT OF FINANCE AND CHIEF FINANCIAL
OFFICER: Robert Cantwell is the Executive Vice President of Finance and Chief
Financial Officer of B&G. He joined the Company in 1983 as the Assistant Vice
President of Finance. In that position, Mr. Cantwell had responsibility for all
financial reporting, including budgeting. Mr. Cantwell was promoted to his
current position in 1991, assuming full responsibility for all financial
matters, as well as MIS, Data Processing, Administration and Corporate Human
Resources. Prior to joining the Company, Mr. Cantwell spent four years at
Deloitte & Touche, where he received accreditation as a Certified Public
Accountant.
DAVID H. BURKE, EXECUTIVE VICE PRESIDENT OF SALES AND MARKETING: David
Burke is the Executive Vice President of Sales and Marketing of the Company. Mr.
Burke has an extensive background with major consumer products companies. His
experience includes eight years with Procter & Gamble in sales and
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sales management and 12 years at Quaker Oats, where he was a Regional Sales
Manager and later the director of Broker Sales. Mr. Burke also spent four years
with Pet Inc. as Vice President of sales and marketing for their frozen foods
business. Mr. Burke joined B&G in 1990 and since that time has been responsible
for the national expansion of POLANER ALL-FRUIT and the sales and marketing of
all of the B&G, BURNS & RICKER and NEW YORK STYLE products.
JAMES H. BROWN, EXECUTIVE VICE PRESIDENT OF MANUFACTURING: James Brown is
the Senior Vice President of Manufacturing and has 24 years of experience in
manufacturing with B&G and POLANER. He has been responsible for all
manufacturing at the Roseland facility since 1981. In 1994, he assumed
responsibility for B&G's other four manufacturing facilities. Prior to joining
B&G (Polaner) in 1972, Mr. Brown worked at Kraft Foods for two years as a
project engineer and spent four years in the U.S. Navy.
THOMAS J. BALDWIN, DIRECTOR: Since 1995, Thomas J. Baldwin has been the
Chief Executive Officer and a founding stockholder of Christmas Corner, Inc., a
specialty retail chain that owns and operates seasonal Christmas stores. Mr.
Baldwin is also a principal and co-founder of PB Ventures. From 1988 through
1995, Mr. Baldwin was a Managing Director of the leveraged buyout firm Invus
Group, Ltd.
ALFRED POE, DIRECTOR: Since 1996, Alfred Poe has been a consultant to
companies engaged in various industries, including the food industry. Mr. Poe
was the President of the Meal Enhancement Group of Campbell's Soup Company from
1993 through 1996, and was a Corporate Vice President of Campbell's from 1991
through 1996. Previously, from 1982 to 1991, he held various positions,
including Vice President, Branch Director and Commercial Director, with Mars,
Inc.
HAROLD O. ROSSER II, DIRECTOR: Since its formation in 1995, Harold Rosser
has been a principal of BRS. Mr. Rosser was an officer of Citicorp Venture
Capital from 1987 through 1994. Previously, he spent 12 years with
Citicorp/Citibank in various management and corporate finance positions. Mr.
Rosser is a director of Jitney-Jungle Stores of America, Inc., Restaurant
Associates Corp. and Holdings.
STEPHEN C. SHERRILL, DIRECTOR: Since its formation in 1995, Stephen
Sherrill has been a principal of BRS. Mr. Sherrill was an officer of Citicorp
Venture Capital from 1983 through 1994. Previously, he was an associate at the
New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison. Mr. Sherrill is a
director of Galey & Lord, Inc., Jitney-Jungle Stores of America, Inc.,
Restaurant Associates Corp., Windy Hill Pet Food Company, Inc. and Holdings.
DIRECTOR COMPENSATION AND ARRANGEMENTS
Directors of the Company will receive compensation for their services as
directors in the amount of $1,000 per meeting of the Board of 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.
ANNUAL BONUS PLAN
The Company also maintains an Annual Bonus Plan that provides for annual
incentive awards to be made to key executives upon the Company's attainment of
pre-set annual financial objectives. The amount of the annual award to each
executive is based upon a percentage of the executive's annualized base salary.
Awards are paid in a cash lump sum following the close of each plan year. The
plan provides for forfeiture or proration of awards in the event of certain
circumstances such as the executive's promotion or demotion, death, retirement
or resignation.
STOCK OPTION PLAN
The Company has adopted an option plan for key employees of the Company,
pursuant to which options to purchase an aggregate of 6.25% of Holding's fully
diluted common stock are outstanding.
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EXECUTIVE COMPENSATION
The following table presents certain summary information concerning
compensation earned by the Company's Chief Executive Officer and the four other
most highly paid executive officers of the Company, including the Chairman
(collectively, the "Named Executive Officers"), for services rendered in all
capacities to the Company for the year ended December 28, 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------
<S> <C> <C> <C> <C>
ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS(1) OTHER(2) COMPENSATION(3)
- --------------------------------------------------------------- --------- ----------- ----------- -----------------
Leonard S. Polaner
Chairman of the Board........................................ $ 100,000 $ 54,000 $ 7,650 $ 9,000
David L. Wenner
President and Chief Executive Officer........................ 160,313 78,092 10,000 9,000
Robert C. Cantwell
Executive Vice President of Finance and Chief
Financial Officer.......................................... 127,230 63,262 10,000 9,000
David H. Burke
Executive Vice President of Sales and Marketing.............. 128,174 64,622 9,800 9,000
James H. Brown
Executive Vice President of Manufacturing.................... 122,209 61,432 9,850 9,000
</TABLE>
- ------------------------
(1) Includes annual bonus payments under the Company's Annual Bonus Plan.
(2) Includes personal use of a Company automobile or automobile allowances.
(3) Includes the Company's matching contributions to the 401(k) Plan and to the
Company's pension plan.
EMPLOYMENT AGREEMENTS
The Company has no employment agreements.
401(K) PLAN
The Company maintains a tax-qualified defined contribution plan with a cash
or deferred arrangement intended to qualify under Section 401(k) of the Internal
Revenue Code of 1986, as amended. Company employees become eligible to
participate in the plan upon reaching age 21 and completing one year of
employment with the Company. Each participant in the plan may elect to defer, in
the form of contributions to the plan, up to 17% of compensation that would
otherwise be paid to the participant in the applicable year, which percentage
may be increased or decreased by the administrative committee of the plan, but
is otherwise not to exceed the statutorily prescribed annual limit ($9,500 in
1997). The Company makes a 50% matching contribution with respect to each
participant's elective contributions, up to four percent of such participant's
compensation. Matching contributions vest over a rolling five-year period.
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PENSION PLAN
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
REMUNERATION 15 20 25 30 35
- ----------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
40,000..................................................... $ 5,141 $ 6,855 $ 8,568 $ 10,282 $ 11,996
60,000..................................................... $ 8,591 $ 11,455 $ 14,318 $ 17,182 $ 20,046
80,000..................................................... $ 12,041 $ 16,055 $ 20,068 $ 24,082 $ 28,096
100,000.................................................... $ 15,491 $ 20,655 $ 25,818 $ 30,982 $ 36,146
120,000.................................................... $ 18,941 $ 25,255 $ 31,568 $ 37,882 $ 44,196
140,000.................................................... $ 22,391 $ 29,855 $ 37,318 $ 44,782 $ 52,246
160,000.................................................... $ 25,841 $ 34,455 $ 43,068 $ 51,682 $ 60,296
</TABLE>
Benefits under the plans are calculated generally under a formula of 0.75%
of final average earnings multiplied by service plus 0.4% of final average
earnings in excess of covered compensation multiplied by service limited to 35
years. The compensation covered by the pension plan is W-2 earnings and any
amounts contributed to any tax qualified profit sharing plan or cafeteria plan
limited to $160,000 as required by Section 401(a)(17). As of September 27, 1997,
the years of credited service for each of the Named Executive Officers were: Mr.
Polaner, 10; Mr. Wenner, 8; Mr. Cantwell, 14; Mr. Burke, 7; and Mr. Brown, 10.
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OWNERSHIP OF CAPITAL STOCK
The Company is a wholly owned subsidiary of Holdings. The following table
sets forth certain information as of November 5, 1997 with respect to the
beneficial ownership of the 13% Series A Cumulative Preferred Stock, par value
$.01 per share, of Holdings ("Holdings Preferred Stock") and the common stock,
par value $.01 per share, of Holdings ("Holdings Common Stock") by (i) each
person or entity who owns five percent or more thereof, (ii) each director of
the Company who is a stockholder, (iii) the Named Executive Officers and (iv)
all directors and officers of the Company as a group. Unless otherwise
specified, all shares are directly held.
<TABLE>
<CAPTION>
NUMBER AND PERCENT OF SHARES
--------------------------------------------------
<S> <C> <C> <C> <C>
HOLDING HOLDING
COMMON STOCK PREFERRED STOCK
------------------------ ------------------------
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
- --------------------------------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Bruckmann, Rosser, Sherrill & Co., L.P.(1).................................
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830 85,000 85.0% 18,775 98.8%
Leonard S. Polaner......................................................... 3,000 3.0 145 0.8
David L. Wenner............................................................ 3,000 3.0 20 0.1
David H. Burke............................................................. 3,000 3.0 20 0.1
James H. Brown............................................................. 3,000 3.0 20 0.1
Robert C. Cantwell......................................................... 3,000 3.0 20 0.1
Stephen C. Sherrill(1)..................................................... 85,000 85.0 18,775 98.8
Harold O. Rosser II(1)..................................................... 85,000 85.0 18,775 98.8
Thomas J. Baldwin.......................................................... -- -- -- --
Alfred Poe................................................................. -- -- -- --
All directors and officers as a group (9 persons)(2)....................... 16,988 17.0 664 3.5
</TABLE>
- ------------------------
(1) Includes shares held by certain other entities and individuals affiliated
with BRS (together with BRS, the "BRS Investors"). BRS disclaims beneficial
ownership of such shares. BRS is a limited partnership, the sole general
partner of which is BRS Partners, Limited Partnership ("BRS Partners") and
the manager of which is Bruckmann, Rosser, Sherrill & Co., Inc. ("BRS &
Co."). The sole general partner of BRS Partners is BRSE Associates, Inc.
("BRSE Associates"). Bruce C. Bruckmann, Harold O. Rosser II and Stephen C.
Sherrill are stockholders of BRS & Co. and BRSE Associates and may be deemed
to share beneficial ownership of the shares shown as beneficially owned by
BRS. Such individuals disclaim beneficial ownership of any such shares.
(2) With respect to Messrs. Sherrill and Rosser, directors of the Company,
excludes shares held by BRS and certain other entities and individuals
affiliated with BRS, of which shares Messrs. Sherrill and Rosser disclaim
beneficial ownership.
HOLDINGS PREFERRED STOCK
The Amended and Restated Certificate of Incorporation of Holdings provides
that Holdings may issue 50,000 shares of preferred stock, par value $.01 per
share, of which 22,000 shares have been designated as the Holdings Preferred
Stock. Holders of Holdings Preferred Stock are entitled to receive, when, as and
if declared by the Board of Directors of Holdings, out of funds legally
available for payment thereof, cash dividends on each share of Holdings
Preferred Stock at a rate PER ANNUM equal to 13% of the Liquidation Preference
(as defined below) of such share before any dividends are declared and paid, or
set apart for payment, on any shares of capital stock junior to the Holdings
Preferred Stock ("Junior Stock") with respect to the same dividend period. All
dividends shall be cumulative without interest, whether or not earned or
declared. "Liquidation Preference" means, on any specific date, with respect to
each share of Holdings Preferred Stock, the sum of (i) $1,000 per share plus
(ii) the accumulated dividends with
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respect to such share. The payment of dividends is limited by the Indenture and
the New Credit Facility. There is no mandatory redemption for the Holdings
Preferred Stock, which is redeemable at the option of Holdings.
In the event of a voluntary or involuntary liquidation, dissolution or
winding up of Holdings, holders of Holdings Preferred Stock shall be entitled to
be paid out of the assets of Holdings available for distribution to its
stockholders an amount in cash equal to the Liquidation Preference per share,
plus an amount equal to a prorated dividend from the last dividend payment date
to the date fixed for liquidation, dissolution or winding up, before any
distribution is made on any shares of Junior Stock. If such available assets are
insufficient to pay the holders of the outstanding shares of Holdings Preferred
Stock in full, such assets, or the proceeds thereof, shall be distributed
ratably among such holders. Holdings may optionally redeem, in whole or in part,
the Holdings Preferred Stock at any time at a price per share of 100% of the
then effective Liquidation Preference per share, plus an amount equal to a
prorated dividend for the period from the dividend payment date immediately
prior to the redemption date to the redemption date. Except as otherwise
required by law, the holders of Holdings Preferred Stock have no voting rights
and are not entitled to any notice of meeting of stockholders.
HOLDINGS COMMON STOCK
The Amended and Restated Certificate of Incorporation of Holdings provides
that Holdings may issue 250,000 shares of Holdings Common Stock. The holders of
Holdings Common Stock are entitled to one vote for each share held of record on
all matters submitted to a vote of the stockholders.
STOCKHOLDERS AGREEMENT
The BRS Investors, certain members of management of B&G ("Management
Investors") and Holdings are parties to a Securities Purchase and Holders
Agreement (the "Stockholders Agreement") containing certain agreements among
such stockholders with respect to the capital stock and corporate governance of
Holdings and certain of its subsidiaries. The following is a summary description
of the principal terms of the Stockholders Agreement, a copy of which is
available upon request to the Company.
Pursuant to the Stockholders Agreement, the Board of Directors of Holdings
shall be comprised of at least two individuals designated by BRS and one
individual designated by the Management Investors. The initial designees of BRS
are Stephen C. Sherrill and Harold O. Rosser II. For so long as he shall be
President of BGH Holdings, Inc., a Delaware corporation and a subsidiary of B&G,
and subject to certain rights of removal, David L. Wenner shall be the designee
of the Management Investors.
The Stockholders Agreement contains certain provisions which, with certain
exceptions, restrict the ability of the Management Investors from transferring
any Holdings Common Stock or Holdings Preferred Stock except pursuant to the
terms of the Stockholders Agreement. If the Board of Directors of Holdings and
holders of more than 50% of the Holdings Common Stock approve the sale of
Holdings or certain of its subsidiaries (an "Approved Sale"), each stockholder
has agreed to consent to such Approved Sale and, if such sale includes the sale
of stock, each stockholder has agreed to sell such stockholder's Holdings Common
Stock and Holdings Preferred Stock on the terms and conditions approved by the
Board of Directors of Holdings and the holders of a majority of the Holdings
Common Stock then outstanding. The Stockholders Agreement also provides for
certain additional restrictions on transfer of Holdings Common Stock and
Holdings Preferred Stock by the Management Investors, including the right of
Holdings to purchase any and all Holdings Common Stock and Holdings Preferred
Stock held by a Management Investor upon termination of such Management
Investor's employment prior to March 27, 2002, at a formula price, and the grant
of a right of first refusal in favor of Holdings in the event a Management
Investor elects to transfer such Holdings Common Stock or Holdings Preferred
Stock.
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
The BRS Investors, the Management Investors and Holdings are parties to a
Registration Rights Agreement (the "Holdings Registration Rights Agreement")
pursuant to which Holdings has granted certain registration rights to the
stockholders of Holdings with respect to the Holdings Common Stock. Under the
Holdings Registration Rights Agreement, Holdings has granted to the BRS
Investors two demand registration rights with respect to the shares of Holdings
Common Stock held by the BRS Investors. All of the stockholders party to the
Holdings Registration Rights Agreement have the right to participate, or
"piggyback," in certain registrations initiated by Holdings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCKHOLDERS AGREEMENT AND REGISTRATION RIGHTS AGREEMENT
The BRS Investors, the Management Investors and Holdings are parties to the
Stockholders Agreement and the Holdings Registration Rights Agreement. See
"Ownership of Capital Stock--Stockholders Agreement" and "--Registration Rights
Agreement."
BRS MANAGEMENT AND TRANSACTION SERVICES AGREEMENTS
The Company and Holdings are party to a management services agreement (the
"BRS Management Agreement") with BRS & Co., the manager of BRS, pursuant to
which BRS & Co. is paid $250,000 per annum for certain management, business and
organizational strategy and merchant and investment banking services rendered to
the Company and Holdings. Any future increase in payments under the BRS
Management Agreement are restricted by the terms of the Indenture. See
"Description of the Notes." The Company and BRS & Co. also are party to a
transaction services agreement pursuant to which BRS & Co. will be paid a
transaction fee for management, financial and other corporate advisory services
rendered by BRS & Co. in connection with acquisitions by the Company, which fee
will not exceed 1.0% of total transaction value. In the case of the Nabisco
Brands and Trappey's Acquisitions, the transaction fees equaled $500,000 and
$120,000, respectively.
REDEMPTION OF BRS NOTES
In connection with the B&G and B&R Acquisition, the Company entered into a
Note Purchase Agreement with the BRS Investors for the issuance of $13.0 million
of Senior Subordinated Notes of the Company (the "BRS Notes"). In connection
with the Nabisco Brands Acquisition, $6.0 million of the proceeds of the Interim
Notes were used to repay a portion of the BRS Notes, and the remaining $7.0
million of the BRS Notes were exchanged by the BRS Investors for Holdings
Preferred Stock having a liquidation value of $7.0 million. In turn, Holdings
contributed the $7.0 million of BRS Notes to the Company for cancellation.
EAGLE ROCK NOTES
The Company's subsidiary, Roseland Distribution Company ("RDC"), is party to
a lease (the "Roseland Lease") for its Roseland facility with 426 Eagle Rock
Avenue Associates ("Eagle Rock"), a real estate partnership of which Leonard S.
Polaner, the Company's Chairman, is the general partner. RDC pays $43,090 per
month in rent in cash to Eagle Rock and, pursuant to a Memorandum of Agreement
entered into in connection with the Roseland Lease, an additional amount in the
form of promissory notes payable to Eagle Rock (the "Eagle Rock Notes"), which
are issued in an annual aggregate principal amount of $187,740. The Eagle Rock
Notes mature on the expiration date of the Roseland Lease, April 18, 1999, and
bear interest at a rate equal to the rate, as of the issue date of an Eagle Rock
Note, for Treasuries with a maturity of April 1999. RDC's liability under the
Eagle Rock Notes as of September 27, 1997 was $795,000, and the Company
estimates that the aggregate principal amount of all Eagle Rock Notes issued and
to be issued will be approximately $1.2 million.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a summary of certain indebtedness of the Company. To the
extent such summary contains descriptions of the New Credit Facility and other
loan documents, such descriptions do not purport to be complete and are
qualified in their entirety by reference to such documents, which are available
upon request from the Company. As of September 27, 1997, the Company had not
borrowed under the New Credit Facility.
NEW CREDIT FACILITY
In connection with the Financing, the Company entered into the New Credit
Facility with a syndicate of financial institutions for which Heller Financial,
Inc. acts as agent (the "Agent"). The following is a summary of the material
terms and conditions of the New Credit Facility and is subject to the detailed
provisions of the credit agreement (the "Credit Agreement") entered into by and
among the Company, the lenders party thereto (the "Lenders") and the Agent, and
various related documents entered into in connection therewith. Capitalized
terms used but not defined herein have the respective meanings assigned to them
in the Credit Agreement.
GENERAL. The New Credit Facility provides up to a maximum aggregate amount
of $50.0 million financing through a $50.0 million revolving credit facility,
which includes a $3.0 million letter of credit facility providing for the
issuance or guarantee of standby and trade letters of credit.
Proceeds of the New Credit Facility are restricted to funding the Company's
working capital requirements, capital expenditures and acquisitions. The Company
may use the New Credit Facility to finance future acquisitions of companies that
are in the same line of business as the Company, subject to certain criteria.
The New Credit Facility will limit acquisitions to $20.0 million per year as
well as a $20.0 million limit per acquisition. Other conditions include: (i) the
maintenance by the Company of certain financial targets, after giving effect to
any such acquisitions, including, but not limited to, total debt and total
senior debt to EBITDA tests; (ii) compliance by the Company with the Credit
Agreement and the Indenture; (iii) a positive historical cash flow by such
acquisition targets; and (iv) satisfactory completion of due diligence on the
acquisition targets.
INTEREST RATES; FEES. Interest is computed on the outstanding daily balance
of the revolving portion of the New Credit Facility at the Company's option of
either: (i) a floating rate per annum equal to 1.0% in excess of the Base Rate;
or (ii) a floating rate per annum equal to 2.50% in excess of the LIBOR Rate.
The Company is charged a fee of 0.50% per annum on the average daily balance
of the unused portion of the New Credit Facility, payable monthly in arrears.
The Company also pays the Lenders a fee, calculated daily and payable monthly,
in addition to any bank fees incurred, in an amount equal to 2.50% per annum of
the aggregate undrawn face amount of all letters of credit issued or guaranteed
from time to time under the letter of credit facility.
REPAYMENT. The New Credit Facility may be borrowed, repaid and reborrowed
from time to time until August 31, 2002, subject to certain conditions on the
date of any such borrowing.
SECURITY. The New Credit Facility is secured by a first priority lien upon
all of the real and personal property of the Company and its Subsidiaries and a
pledge of all of the capital stock of the Company and its Subsidiaries.
GUARANTEES. The Obligations of the Company under the New Credit Facility
are guaranteed by the Company's Subsidiaries. In addition, Holdings has
guaranteed the Company's obligations under the Credit Agreement, which guarantee
has been secured by a pledge of the capital stock of the Company.
PREPAYMENTS. The Company is required to make prepayments on loans under the
New Credit Facility in an amount equal to the net proceeds received by the
Company (giving effect to applicable taxes) and/or
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its Subsidiaries from the disposition of any assets, including proceeds from the
sale of stock of any of the Company's Subsidiaries or certain equity issuances.
CONDITIONS AND COVENANTS. The obligations of the lenders under the Credit
Agreement are subject to the satisfaction of certain conditions precedent
customary in credit facilities or otherwise appropriate under the circumstances.
The Company and each of its subsidiaries are subject to certain financial and
negative covenants contained in the Credit Agreement, including without
limitation covenants that restrict, subject to specified exceptions, (i) the
incurrence of additional indebtedness and other obligations and the granting of
additional liens, (ii) mergers, acquisitions, investments and acquisitions and
dispositions of assets, (iii) the incurrence of capitalized and operating lease
obligations, (iv) advances, dividends, and stock repurchases and redemptions,
(v) prepayment or repurchase of other indebtedness and amendments to certain
agreements governing indebtedness, including the Indenture and the Notes, (vi)
engaging in transactions with affiliates and formation of subsidiaries, (vii)
capital expenditures, (viii) payment of management fees, (ix) the use of
proceeds and (x) changes of lines of business. There are also covenants relating
to compliance with ERISA and environmental and other laws, payment of taxes,
maintenance of corporate existence and rights, maintenance of insurance and
interest rate protection, and financial reporting. Certain of these covenants
are more restrictive than those set forth in the Indenture. In addition, the
Credit Agreement requires the Company to maintain compliance with certain
specified financial ratios, including maximum capital expenditure limits, a
minimum fixed charge coverage ratio, a minimum total interest coverage ratio and
a maximum leverage ratio.
EVENTS OF DEFAULT. The New Credit Facility also includes events of default
that are typical for these types of credit facilities and appropriate in the
context of the Financing, including, without limitation, a default in the event
of a change of control of Holdings or the Company. The occurrence of any of such
events of default could result in acceleration of the Company's obligations
under the New Credit Facility and foreclosure on the collateral securing such
obligations, which could have material adverse results to holders of the Notes.
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DESCRIPTION OF THE NOTES
GENERAL
The Existing Notes were issued pursuant to an Indenture (the "Indenture"),
dated August 11, 1997, between the Company and The Bank of New York, as trustee
(the "Trustee"), in a private transaction that is not subject to the
registration requirements of the Securities Act. See "Notice to Investors." The
terms of the Indenture apply to the Existing Notes and to the New Notes to be
issued in exchange therefor pursuant to the Exchange Offer (all Notes being
referred to herein collectively as the "Notes"). The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (the "Trust Indenture Act"). The Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and the Trust Indenture Act for a statement thereof. The following summary of
the material provisions of the Indenture does not purport to be complete and is
qualified in its entirety by reference to the Indenture, including the
definitions therein of certain terms used below. Copies of the proposed form of
Indenture and Registration Rights Agreement are available as set forth below
under "--Additional Information." The definitions of certain terms used in the
following summary are set forth below under "--Certain Definitions." For
purposes of this summary, the term "Company" refers only to B&G Foods, Inc. and
not to any of its Subsidiaries.
The Notes are general unsecured obligations of the Company, subordinated in
right of payment to all current and future Senior Debt, including borrowings
under the Credit Agreement. Borrowings under the Credit Agreement are secured by
substantially all of the Company's assets, including the Capital Stock of the
Company's existing and future Subsidiaries, and are guaranteed by all such
Subsidiaries, which guarantees are secured by all of such Subsidiaries' assets.
The Notes are guaranteed by all of the Company's existing and future
Subsidiaries. The Notes rank PARI PASSU in right of payment with all other
senior subordinated Indebtedness of the Company issued in the future, if any,
and senior in the right of payment to all subordinated Indebtedness of the
Company issued in the future, if any. As of September 27, 1997, the Company had
no Senior Debt and, through its Subsidiaries, had Senior Debt and additional
liabilities (including trade payables, accrued expenses, amounts due to related
parties, deferred income taxes and other liabilities) aggregating approximately
$42.8 million. The Indenture limits, subject to certain financial tests, the
amount of additional Indebtedness, including Senior Debt, that the Company and
its Subsidiaries may incur. See "--Certain Covenants--Incurrence of Indebtedness
and Issuance of Preferred Stock."
The operations of the Company are conducted through its Subsidiaries and,
therefore, the Company is dependent upon the cash flow of its Subsidiaries to
meet its obligations, including its obligations under the Notes. The Notes are
effectively subordinated to all Indebtedness and other liabilities and
commitments (including trade payables and lease obligations) of the Company's
Subsidiaries. Any right of the Company to receive assets of any of its
Subsidiaries upon the latter's liquidation or reorganization (and the consequent
right of the Holders of the Notes to participate in those assets) will be
effectively subordinated to the claims of that Subsidiary's creditors, except to
the extent that the Company is itself recognized as a creditor of such
Subsidiary, in which case the claims of the Company would still be subordinate
to any security in the assets of such Subsidiary and any indebtedness of such
Subsidiary senior to that held by the Company. See "Risk Factors--Holding
Company Structure; Effective Subordination" and "Risk Factors-- Fraudulent
Conveyance Considerations."
PRINCIPAL, MATURITY AND INTEREST
The Notes will be limited in aggregate principal amount to $120.0 million
and will mature on August 1, 2007. Interest on the Notes will accrue at the rate
of 9 5/8% per annum and will be payable semi-annually in arrears on February 1
and August 1, commencing on February 1, 1998, to Holders of record on the
immediately preceding January 15 and July 15. Interest on the Notes will accrue
from the most recent date on which interest has been paid or, if no interest has
been paid, from the date of original issuance.
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Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. Principal, premium, if any, and interest and Liquidated Damages,
if any, on the Notes will be payable at the office or agency of the Company
maintained for such purpose within the City and State of New York or, at the
option of the Company, payment of interest and Liquidated Damages, if any, may
be made by check mailed to the Holders of the Notes at their respective
addresses set forth in the register of Holders of Notes; PROVIDED THAT all
payments of principal, premium, interest and Liquidated Damages, if any, with
respect to Notes the Holders of which have given wire transfer instructions to
the Company will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof. Until
otherwise designated by the Company, the Company's office or agency in New York
will be the office of the Trustee maintained for such purpose. The Notes will be
issued in denominations of $1,000 and integral multiples thereof.
SUBORDINATION
The payment of principal of, premium, if any, and interest on the Notes will
be subordinated in right of payment, as set forth in the Indenture, to the prior
payment in full in cash or Cash Equivalents of all Senior Debt, whether
outstanding on the date of the Indenture or thereafter incurred.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities, the holders of Senior Debt will be entitled to receive
payment in full in cash or Cash Equivalents of all Obligations due in respect of
such Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt) before the
Holders of Notes will be entitled to receive any payment with respect to the
Notes, and until all Obligations with respect to Senior Debt are paid in full in
cash or Cash Equivalents, any distribution to which the Holders of Notes would
be entitled shall be made to the holders of Senior Debt (except that Holders of
Notes may receive and retain (i) Permitted Junior Securities and (ii) payments
made from the trust described under "--Legal Defeasance and Covenant
Defeasance"). If a distribution is made to holders of the Notes that, due to the
subordination provisions, such distribution should not have been made to them,
such holders will be required to hold such distribution in trust for the holders
of Senior Debt and pay it over to them (pursuant to such written instructions as
the holders of Senior Debt or a representative on their behalf may provide to
such holders of the Notes) as their interests may appear.
The Company also may not make any payment upon or in respect of the Notes
(except in Permitted Junior Securities or from the trust described under
"--Legal Defeasance and Covenant Defeasance") if (i) a default in the payment of
the principal of, premium, if any, or interest on Designated Senior Debt occurs
and is continuing beyond any applicable period of grace or (ii) any other
default occurs and is continuing with respect to Designated Senior Debt that
permits holders of the Designated Senior Debt as to which such default relates
to accelerate its maturity and the Trustee receives a notice of such default (a
"Payment Blockage Notice") from the holders of any Designated Senior Debt, which
notice states it is a Payment Blockage Notice under the Indenture. Payments on
the Notes may and shall be resumed (a) in the case of a payment default, upon
the date on which such default is cured or waived and (b) in case of a
nonpayment default, the earlier of the date on which such nonpayment default is
cured or waived or 179 days after the date on which the applicable Payment
Blockage Notice is received, unless the maturity of any Designated Senior Debt
has been accelerated. However, the Company may pay 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 Debt 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. No new period of payment
blockage may be commenced unless and until 360 days have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a
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subsequent Payment Blockage Notice unless such default shall have been waived
for a period of not less than 90 days.
The Indenture requires that the Company promptly notify holders of Senior
Debt if payment of the Notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of the Company who are holders of Senior Debt. As of September 27,
1997, the Company had approximately $1.4 million of Senior Debt (exclusive of an
unused commitment of up to $50.0 million under the Credit Agreement). The
Indenture limits, subject to certain financial tests, the amount of additional
Indebtedness, including Senior Debt, that the Company and its Subsidiaries can
incur. See "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock."
"DESIGNATED SENIOR DEBT" means (i) any Indebtedness outstanding under the
Credit Agreement and (ii) any other Senior Debt permitted hereunder the
principal amount of which is $15.0 million or more and that has been designated
by the Company as "Designated Senior Debt."
"PERMITTED JUNIOR SECURITIES" means (i) Equity Interests in the Company or
any Guarantor which, to the extent received by any Holder in connection with any
bankruptcy, reorganization, insolvency or similar proceeding in which any Equity
Interests are also exchanged for or distributed in respect of Senior Debt, are
either common equity securities or are subordinated to all such Equity Interests
so exchanged or distributed to substantially the same extent as, or to a greater
extent than, the Notes are subordinated to Senior Debt pursuant to the
Indenture, and (ii) debt securities that are subordinated to all Senior Debt
(and any debt securities issued in exchange for Senior Debt) to substantially
the same extent as, or to a greater extent than, the Notes are subordinated to
Senior Debt pursuant to the Indenture.
"SENIOR DEBT" means (i) all Obligations from time to time outstanding under
the Credit Agreement, including all Hedging Obligations with respect thereto and
any Permitted Refinancing Indebtedness thereunder (and, for purposes of the
Indenture, any such Senior Debt shall be considered to be outstanding whenever
any loan commitment under the Credit Agreement is outstanding), (ii) any other
Indebtedness of the Company or any Guarantor that is a Subsidiary of the Company
that is permitted to be incurred by the Company or such Guarantor pursuant to
the Indenture unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes, and (iii) all Obligations of the Company or any Guarantor
that is a Subsidiary of the Company with respect to any of the foregoing.
Notwithstanding anything to the contrary in the foregoing, Senior Debt will not
include (v) any Obligation of the Company to any Subsidiary of the Company or
any of its Affiliates, (w) any liability for federal, state, local or other
taxes owed or owing by the Company (other than such taxes owed or owing to the
lenders under the Credit Agreement), (x) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities), (y) any
Obligations in respect of Capital Stock of the Company or (z) that portion of
the principal amount of any Indebtedness (and any obligations with respect to
such incremental principal amount) which at the time of incurrence is incurred
in violation of the Indenture.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes will be jointly and
severally guaranteed (the "Subsidiary Guarantees") by the Guarantors. The
Subsidiary Guarantee of each Guarantor will be subordinated to the prior payment
in full of all Senior Debt of such Guarantor, which as of September 27, 1997
(including trade payables, accrued expenses, amounts due to related parties,
deferred income taxes and other liabilities) was approximately $42.8 million;
and the amounts for which the Guarantors will be liable under the guarantees
issued from time to time with respect to Senior Debt, to the same extent as the
Obligations of the Company are subordinated to Senior Debt of the Company. The
obligations of each
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Guarantor under its Subsidiary Guarantee is limited so as not to constitute a
fraudulent conveyance under applicable law. See, however, "Risk
Factors--Fraudulent Conveyance Considerations."
The Indenture provides that no Guarantor may consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person), another
corporation, Person or entity (except the Company or another Guarantor) unless
(i) subject to the provisions of the following paragraph, the Person formed by
or surviving any such consolidation or merger (if other than such Guarantor)
assumes all the obligations of such Guarantor pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee, under
the Notes and the Indenture; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; (iii) such Guarantor, or any
Person formed by or surviving any such consolidation or merger, would have
Consolidated Net Worth (immediately after giving effect to such transaction)
equal to or greater than the Consolidated Net Worth of such Guarantor
immediately preceding the transaction; and (iv)(a) the Company would be
permitted by virtue of the Company's pro forma Fixed Charge Coverage Ratio,
immediately after giving effect to such transaction, to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the covenant described below under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" or (b)
would have a pro forma Fixed Charge Coverage Ratio that is greater than the
actual Fixed Charge Coverage Ratio for the same four-quarter period.
Notwithstanding the foregoing paragraph, (i) any Guarantor may consolidate
with, merge into or transfer all or a part of its properties and assets to the
Company or any other Guarantor and (ii) any Guarantor may merge with an
Affiliate that has no significant assets or liabilities and was incorporated
solely for purpose of reincorporating such Guarantor in another State of the
United States; PROVIDED THAT such merged entity continues to be a Guarantor.
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of any
Guarantor, then such Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the capital stock of
such Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all of the assets of such Guarantor) will be
released and relieved of any obligations under its Subsidiary Guarantee;
PROVIDED THAT the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the Indenture. See "--Repurchase at
the Option of Holders--Asset Sales."
OPTIONAL REDEMPTION
Except as set forth below, the Notes will not be redeemable at the Company's
option prior to August 1, 2002. Thereafter, the Notes will be subject to
redemption at any time at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on August
1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2002.............................................................................. 104.813%
2003.............................................................................. 103.208
2004.............................................................................. 101.604
2005 and thereafter............................................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to August 1, 2000, the
Company may on any one or more occasions redeem an aggregate of up to 35% of the
original aggregate principal amount of Notes at a redemption price of 109.625%
of the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds of
any Public
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Equity Offering of common stock of the Company or a capital contribution to the
Company's common equity of the net cash proceeds of a concurrent Public Equity
Offering of common stock by the Company's direct parent; PROVIDED THAT at least
65% of the original aggregate principal amount of Notes remain outstanding
immediately after each occurrence of such redemption; and PROVIDED, further,
that each such redemption shall occur within 60 days of the date of the closing
of such Public Equity Offering.
Notwithstanding the foregoing, at any time on or prior to August 1, 2002,
the Notes also may 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 may such redemption date occur
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 and Liquidated Damages, 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).
"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 redemption date of the redemption price of such
Note at August 1, 2002 (such redemption price being set forth in the table
above) PLUS all required interest payments due on such Note through August 1,
2002, such present value 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 such
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 such redemption date to August 1, 2002; PROVIDED, HOWEVER, that if
the period from such redemption date to August 1, 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.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; PROVIDED
THAT no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. If any Note is to be
redeemed in part only, the notice of redemption that relates 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. Notes called
for redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on Notes or portions of them called
for redemption.
MANDATORY REDEMPTION
Except as set forth below under "--Repurchase at the Option of Holders," the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
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REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by the
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; PROVIDED THAT each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Indenture will provide
that, prior to complying with the provisions of this covenant, but in any event
within 90 days following a Change of Control, the Company will either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of Notes
required by this covenant. The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The Credit Agreement currently prohibits the Company from purchasing any
Notes and also provides that certain change of control events with respect to
the Company would constitute a default or event of default thereunder. Any
future credit agreements or other agreements relating to Senior Debt to which
the Company becomes a party may contain similar restrictions and provisions. In
the event a Change of Control occurs at a time when the Company is prohibited
from purchasing Notes, the Company could seek the consent of its lenders to the
purchase of Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from purchasing Notes. In such
case, the Company's failure to purchase tendered Notes would constitute an Event
of Default under the Indenture which would, in turn, constitute a default or
event of default under the Credit Agreement. In such circumstances, the
subordination provisions in the Indenture would likely restrict payments to the
Holders of Notes.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance
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with the requirements set forth in the Indenture applicable to a Change of
Control Offer made by the Company and purchases all Notes validly tendered and
not withdrawn under such Change of Control Offer.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) (other than persons who are, or groups of persons who are, made up entirely
of Principals or their Related Parties) other than in the ordinary course of
business; (ii) the adoption of a plan relating to the liquidation or dissolution
of the Company; (iii) prior to the first public offering of Voting Stock of the
Company, the consummation of any transaction the result of which is that the
Principals or the Related Parties cease to be the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of majority voting power of the Voting Stock of the Company
(measured by voting power rather than number of shares), whether as a result of
issuance of securities of the Company, any merger, consolidation, liquidation or
dissolution of the Company, any direct or indirect transfer of securities by any
Principal or Related Party or otherwise (for purposes of this clause (iii) and
(iv) below, the Principals and Related Parties shall be deemed to have
"beneficial ownership" of the Voting Stock of a Person (the "specified
corporation") held by any other Person (the "parent corporation") so long as the
Principals or Related Parties beneficially own (as so defined) directly or
indirectly, a majority of the voting power of the Voting Stock of the parent
corporation); (iv) following the first Public Equity Offering of Voting Stock of
the Company, the consummation of any transaction the result of which is that any
"person" (as such term is defined in Sections 13(d) and 14(d) of the Exchange
Act), other than one or more Principals or Related Parties becomes the
"beneficial owner" (as such term is defined in clause (iii) above, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or is exercisable only after the passage of time or upon the
occurrence of a subsequent condition), directly or indirectly, of more than 35 %
of the Voting Stock of the Company, PROVIDED THAT the Principals and Related
Parties beneficially own (as defined in clause (iii) above), directly or
indirectly, in the aggregate a lesser percentage of the total voting power of
the Voting Stock of the Company 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 (for purposes of
this clause (iv), 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 clause (iii) above), directly or
indirectly, more than 35% of the voting power of the Voting Stock of such parent
corporation and the Principals and the Related Parties "beneficially own" (as
defined in clause (iii) above), directly or indirectly, in the aggregate a
lesser percentage of the total voting power of the Voting Stock of such parent
corporation 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 such parent corporation); (v) the first
day on which a majority of the members of the Board of Directors of the Company
are not Continuing Directors; or (vi) the Company consolidates with, or merges
with or into, any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which any of
the outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such transaction where the
Voting Stock of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to such
conversion or exchange).
"PRINCIPALS" means BRS, any equity owner of Holdings on the date of the
Indenture, and the members of management of the Company or Holdings or any of
their respective Subsidiaries as of the date of the Indenture.
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"RELATED PARTY" means, with respect to any Principal, (A) any spouse or
immediate family member (in the case of an individual) of such Principal or (B)
a trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners or Persons beneficially holding a 66 2/3% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (A).
ASSET SALES
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, consummate an Asset Sale unless (i) the Company or such
Subsidiary receives consideration at the time of such Asset Sale at least equal
to the fair market value (which, in the case of any Asset Sale involving shares
or assets having a fair market value in excess of $2.0 million, shall be
determined in good faith by the Company's Board of Directors) of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least 75%
of the consideration therefor received by the Company or such Subsidiary is in
the form of cash or Cash Equivalents; PROVIDED THAT the amount of (x) any Senior
Debt of the Company or any Subsidiary of the Company that is assumed by the
transferee of any such assets pursuant to a customary novation agreement that
releases the Company or such Subsidiary from further liability thereon and (y)
any securities, notes or other obligations received by the Company or any such
Subsidiary from such transferee that are immediately converted by the Company or
such Subsidiary into cash (to the extent of the cash received), shall be deemed
to be cash for purposes of this provision; and PROVIDED, FURTHER, that any Asset
Sale pursuant to a condemnation, appropriation or other similar taking,
including by deed in lieu of condemnation, or pursuant to the foreclosure or
other enforcement of a Permitted Lien or exercise by the related lienholder of
rights with respect thereto, including by deed or assignment in lieu of
foreclosure shall not be required to satisfy the conditions set forth in clauses
(i) and (ii) of this paragraph.
Within 270 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to repay
Indebtedness under any Credit Facility (and to correspondingly permanently
reduce the commitments with respect thereto; PROVIDED THAT the Company will not
be required to effect such permanent reductions from the Issue Date in excess of
an aggregate of $25.0 million) or (b) to acquire or make a controlling
Investment in or with respect to a Permitted Business or the acquisition of all
or substantially all of the assets of a Permitted Business, or the making of a
capital expenditure or the acquisition of other long-term assets in a Permitted
Business. Pending the final application of any such Net Proceeds, the Company
may temporarily reduce Indebtedness under any Credit Facility or otherwise
invest such Net Proceeds in any manner that is not prohibited by the Indenture.
Any Net Proceeds from an Asset Sale that are not applied or invested as provided
in the first sentence of this paragraph shall be deemed to constitute "Excess
Proceeds" from an Asset Sale. When the aggregate amount of Excess Proceeds
exceeds $5.0 million, the Company shall be required to make an offer to all
Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a PRO RATA basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any other payment or distribution on account
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of the Company's or any of its Subsidiaries' Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company) or to the direct or indirect holders of the Company's or
any of its Subsidiaries' Equity Interests in their capacity as such (other than
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of the Company); (ii) purchase, redeem or otherwise acquire or retire for
value (including without limitation, in connection with any merger or
consolidation involving the Company) any Equity Interests of the Company or any
direct or indirect parent of the Company or other Affiliate of the Company
(other than any such Equity Interests owned by a Wholly Owned Subsidiary of the
Company); (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes, except a payment of interest or principal at Stated
Maturity; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "--Incurrence of Indebtedness and Issuance
of Preferred Stock;" and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company or any of its Subsidiaries
after the date of the Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii) or (vi) of the next succeeding paragraph), is less than
the sum of (i) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the first
fiscal quarter immediately following the date of the Indenture to the end of
the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment
(or, if such Consolidated Net Income for such period is a deficit, less 100%
of such deficit), plus (ii) 100% of the aggregate net cash proceeds received
by the Company as a contribution to its capital or from the issue or sale
since the date of the Indenture of Equity Interests of the Company (other
than Disqualified Stock and other than as provided in clause (h) of the
definition of Permitted Investments), or of Disqualified Stock or debt
securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or convertible
debt securities) sold to a Subsidiary of the Company and other than
Disqualified Stock or convertible debt securities that have been converted
into Disqualified Stock), plus (iii) to the extent that any Restricted
Investment that was made by the Company or any of its Subsidiaries after the
date of the Indenture is sold for cash or otherwise liquidated or repaid for
cash, the lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment.
The foregoing provisions shall not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Indebtedness which is subordinated to the Notes or Equity
Interests of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
PROVIDED THAT the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c) (ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of Indebtedness which is
subordinated to the Notes with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the
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payment of any dividend or distribution by a Subsidiary of the Company to the
holders of its common Equity Interests on a PRO RATA basis; (v) the repurchase,
redemption or other acquisition or retirement for value of Equity Interests of
the Company or Holdings held by any former employee, director or consultant of
the Company or any Subsidiary or Holdings issued pursuant to any management
equity plan or stock option plan or any other management or employee benefit
plan or agreement; PROVIDED, HOWEVER, that the aggregate amount of Restricted
Payments made under this clause (v) does not exceed (A) $1.0 million in any
calendar year and (B) $3.0 million in the aggregate since the date of the
Indenture; PROVIDED FURTHER, that cancellation of Indebtedness owing to the
Company from members of management of the Company or any of its Subsidiaries in
connection with a repurchase of Equity Interests of the Company will not be
deemed to constitute a Restricted Payment for purposes of this covenant or any
other provision of the Indenture; (vi) repurchases of Equity Interests deemed to
occur upon exercise of stock options upon surrender of Equity Interests to pay
the exercise price of such option; (vii) the payment by the Company of dividends
to Holdings for the purpose of (A) permitting Holdings to satisfy federal, state
and local income tax obligations to the extent such obligations are actually due
and owing and are a direct result of the net income of the Company being
included on a consolidated, combined or unitary income tax return filed by
Holdings or otherwise being attributed to Holdings for tax purposes and (B)
permitting Holdings to pay the necessary fees and expenses to maintain its
corporate existence and good standing (which shall not exceed $500,000 per
annum); PROVIDED THAT the amount of dividends described in this clause (vii)
shall be excluded from the calculation of the amounts of Restricted Payments
hereunder; and (viii) reasonable and customary directors' fees to the members of
Holdings' or the Company's board of directors, PROVIDED THAT with respect to
clauses (ii), (iii), (v), (vi) and (vii) above, no Default or Event of Default
shall have occurred and be continuing immediately after such transaction.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary of the
Company, pursuant to the Restricted Payment. The fair market value of any non-
cash Restricted Payment shall be determined by the Board of Directors of the
Company whose resolution with respect thereto shall be delivered to the Trustee.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant
"--Restricted Payments" were computed, together with a copy of any fairness
opinion or appraisal required by the Indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company shall not issue any Disqualified Stock and
shall not permit any of its Subsidiaries to issue any shares of preferred stock;
PROVIDED, HOWEVER, that the Company may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock if the Company's Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.00 to 1, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock had
been issued, as the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant do not apply to the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company of term Indebtedness, revolving credit
Indebtedness and indebtedness under letters of credit (with letters of
credit being deemed to have a principal amount
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equal to the maximum potential liability of the Company thereunder) under
any Credit Facility (and the Guarantee thereof by the Guarantors); provided
that, subject to clause (xii) below, the aggregate principal amount of all
Indebtedness and letters of credit outstanding at any one time under all
Credit Facilities after giving effect to such incurrence, does not exceed
$50.0 million less the aggregate amount of all permanent repayments from Net
Proceeds of Asset Sales or as stated amortization of a term loan, if
applicable, optional or mandatory, of the principal of any Indebtedness
under a Credit Facility (or any such Permitted Refinancing Indebtedness)
that have been made since the date of the Indenture; provided that such
deduction will not exceed, in the aggregate, $25.0 million;
(ii) the incurrence by the Company and its Subsidiaries of the Existing
Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by the
Notes and the incurrence by the Guarantors of the Subsidiary Guarantees;
(iv) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the
Company or such Subsidiary, in an aggregate principal amount, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
Indebtedness incurred pursuant to this clause (iv), not to exceed $5.0
million at any time outstanding;
(v) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness;
(vi) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Subsidiaries that are Guarantors; PROVIDED, HOWEVER, that (i) if the Company
is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes and the Indenture, (ii) if a Subsidiary of the Company
is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of such Subsidiary's
Subsidiary Guarantee and (iii)(A) any subsequent event or issuance or
transfer of Equity Interests that results in any such Indebtedness being
held by a Person other than the Company or a Subsidiary of the Company and
(B) any sale or other transfer of any such Indebtedness to a Person that is
not either the Company or a Subsidiary of the Company that is a Guarantor
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Subsidiary, as the case may be, that was
not permitted by this clause (vi);
(vii) the issuance by a Subsidiary that is a Guarantor of preferred stock
to the Company or to any of its Subsidiaries that are Guarantors; PROVIDED,
HOWEVER, that any subsequent event or issuance or transfer of any Equity
Interests that results in the owner of such preferred stock ceasing to be
the Company or one of its Subsidiaries that are Guarantors or any subsequent
transfer of such preferred stock to a Person other than the Company or any
of its Subsidiaries that are Guarantors, shall be deemed to be an issuance
of preferred stock by such Subsidiary that was not permitted by this clause
(vii);
(viii) the incurrence by the Company or any of its Subsidiaries of Hedging
Obligations that are incurred for the purpose of fixing or hedging interest
rate risk with respect to any floating rate Indebtedness that is permitted
by the terms of the Indenture to be outstanding;
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(ix) Indebtedness arising from agreements of the Company or a Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred in connection with the disposition of
any business, assets or a Subsidiary, other than the guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing such
acquisition; PROVIDED, HOWEVER, that (A) such Indebtedness is not reflected
on the balance sheet of the Company or any Subsidiary (contingent
obligations referred to in a footnote to financial statements and not
otherwise reflected on the balance sheet will not be deemed to be reflected
on such balance sheet for purposes of this clause (A)) and (B) the maximum
assumable liability in respect of all such Indebtedness shall at no time
exceed the gross proceeds including noncash proceeds (the fair market value
of such noncash proceeds being measured at the time received and without
giving effect to any subsequent changes in value) actually received by the
Company and its Subsidiaries in connection with such disposition;
(x) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Subsidiary of the Company that was
permitted to be incurred by another provision of this covenant "--Incurrence
of Indebtedness and Issuance of Preferred Stock";
(xi) the incurrence of Indebtedness by one of the Company's Subsidiaries
evidenced by the promissory notes (the "Eagle Rock Notes") issued and
issuable under the certain Lease Agreement date April 19, 1986, as amended
by a Memorandum of Agreement dated February 26, 1993, between one of the
Company's Subsidiaries (as successor in interest to DSD, Inc.) and 426 Eagle
Rock Avenue Associates; or
(xii) the incurrence by the Company of additional Indebtedness in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (xii), not to exceed $10.0 million; PROVIDED THAT such
additional Indebtedness may be Senior Debt under any Credit Facility.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories of
Permitted Debt described in clauses (i) through (xii) above or is entitled to be
incurred pursuant to the first paragraph of this covenant, the Company shall, in
its sole discretion, classify such item of Indebtedness in any manner that
complies with this covenant. Accrual of interest, the accretion of accreted
value and the payment of interest in the form of additional Indebtedness will
not be deemed to be an incurrence of Indebtedness for purposes of this covenant.
LIENS
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist
or become effective any Lien of any kind securing Indebtedness or trade payables
(other than Permitted Liens) upon any of their property or assets, now owned or
hereafter acquired, unless all payments due under the Indenture and the Notes
are secured on an equal and ratable basis with the obligations so secured until
such time as such obligations are no longer secured by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any Subsidiary of the Company or the Company to (i)(x) pay dividends or make any
other distributions to the Company or any of its Subsidiaries that are
Guarantors (1) on its Capital Stock or (2) with respect to any other interest or
participation in, or measured by, its profits, or (y) pay any Indebtedness owed
to the Company or any of its Subsidiaries, (ii) make loans or advances to the
Company or any of its Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its
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Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (a) the Indenture, the Notes and the Credit Agreement as in effect on
the date of the Indenture, (b) applicable law, (c) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Subsidiaries as in effect at the time of such acquisition (except with respect
to Indebtedness incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, PROVIDED THAT, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture to
be incurred, (d) restrictions of the nature described in clause (iii) above by
reason of customary non-assignment, sub-letting and restriction on transfer
provisions in contracts, agreements, and leases entered into in the ordinary
course of business and consistent with past practices, (e) purchase money
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, (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 of the Capital Stock or assets of such Subsidiary pending the closing of
such sale or disposition, (g) agreements relating to secured Indebtedness
otherwise permitted to be incurred pursuant to the covenants described under the
"--Incurrence of Indebtedness and Issuance of Preferred Stock" and "--Liens"
that limit the right of the debtor to dispose of assets securing such
Indebtedness, (h) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business, and
(i) Permitted Refinancing Indebtedness in respect of Indebtedness referred to in
clause (a), (c) and (e) of this paragraph, PROVIDED THAT the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company will not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the Notes and the Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of the Company with or into a Wholly Owned Subsidiary of the
Company, the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (A) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of covenant described above under the
caption "--Incurrence of Indebtedness and Issuance of Preferred Stock."
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any properties or assets to, or purchase any
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property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or Guarantee with, or for the
benefit of, any Affiliate of any such Person (each of the foregoing, an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that
are no less favorable to the Company or the relevant Subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of its Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of its Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an investment banking firm (or, if an investment banking firm is
generally not qualified to give such an opinion, by an appraisal firm) of
national standing; PROVIDED THAT none of the following shall be deemed to be
Affiliate Transactions: (1) any employment agreement entered into by the Company
or any of its Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or such Subsidiary, as the case may be,
(2) transactions between or among the Company and/or its Subsidiaries that are
Guarantors, (3) Restricted Payments that are permitted by the covenant described
above under the caption
"--Restricted Payments" and payments made under the Eagle Rock Notes permitted
by the covenant described above under the caption "--Incurrence of Indebtedness
and Issuance of Preferred Stock," (4) fees and compensation paid to members of
the Board of Directors of the Company and of its Subsidiaries in their capacity
as such, to the extent such fees and compensation are reasonable and customary,
(5) advances to employees for moving, entertainment and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business and
consistent with past practices; (6) management or similar fees payable to BRS or
an Affiliate thereof (to the extent such fees do not, in the aggregate, exceed
2.0% of the actual Consolidated Cash Flow of the Company for the period in
respect of which such fees are paid); (7) fees payable to BRS or its Affiliate
under a transaction services agreement in effect on the date of the Indenture;
(8) maintenance in the ordinary course of business of customary 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 and (9) fees and compensation paid to, and
indemnity provided on behalf of, officers, directors or employees of the Company
or any of its Subsidiaries, as determined by the Board of Directors of the
Company or of any such Subsidiary, shall not be deemed to be Affiliate
Transactions.
SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, enter into any sale and leaseback transaction; PROVIDED
THAT the Company may enter into a sale and leaseback transaction if (i) the
Company could have incurred Indebtedness in an amount equal to the Attributable
Debt relating to such sale and leaseback transaction pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant
described above under the caption "--Incurrence of Indebtedness and Issuance of
Preferred Stock" and (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee if such fair market value exceeds $2.5 million) of the
property that is the subject of such sale and leaseback transaction and (iii)
the transfer of assets in such sale and leaseback transaction is permitted by,
and the Company applies the proceeds of such transaction in compliance with, the
covenant described above under the caption
"--Repurchase at the Option of Holders--Asset Sales," if applicable.
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LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY OWNED
SUBSIDIARIES
The Indenture provides that the Company (i) will not, and will not permit
any Wholly Owned Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Subsidiary of the
Company to any Person (other than the Company or a Wholly Owned Subsidiary of
the Company that is a Guarantor), unless (a) such transfer, conveyance, sale,
lease or other disposition is of all the Capital Stock of such Wholly Owned
Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with the covenant described
above under the caption "--Repurchase at the Option of Holders--Asset Sales,"
and (ii) shall not permit any Wholly Owned Subsidiary of the Company to issue
any of its Equity Interests (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 of the Company that is a Guarantor.
ADDITIONAL SUBSIDIARY GUARANTEES
The Indenture provides that, if the Company or any of its Subsidiaries shall
acquire or create another Subsidiary after the date of the Indenture, then such
newly acquired or created Subsidiary will (i) execute a supplemental indenture
in form and substance satisfactory to the Trustee providing that such Subsidiary
will become a Guarantor under the Indenture and (ii) deliver an Opinion of
Counsel to the effect, INTER ALIA, that such supplemental indenture has been
duly authorized and executed by such Subsidiary.
NO SENIOR SUBORDINATED DEBT
The Indenture provides that, notwithstanding any other provision thereof,
(i) the Company will not incur, create, issue, assume, guarantee or otherwise
become liable directly or indirectly for any Indebtedness (including Acquired
Debt) that is subordinate or junior in right of payment to any Senior Debt and
senior in any respect in right of payment to the Notes and (ii) no Guarantor
will incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness (including Acquired Debt) that is subordinate or junior in right of
payment to any Senior Debt of a Guarantor and senior in any respect in right of
payment to the Subsidiary Guarantees.
BUSINESS ACTIVITIES
The Indenture provides that the Company will not, and the Company will not
permit any of its Subsidiaries to, directly or indirectly, engage in any line of
business other than a Permitted Business, except to such extent as would not be
material to the Company and its Subsidiaries taken as a whole.
PAYMENTS FOR CONSENT
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture or the Notes unless such consideration
is offered to be paid or is paid to all Holders of the Notes that consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
REPORTS
The Indenture provides that whether or not the Company is required by the
rules and regulations of the SEC, so long as any Notes are outstanding, the
Company will furnish to each of the Holders of Notes (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the SEC on Forms 10-Q and 10-K if the Company were required to file such
forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and results of
operations of the Company and any consolidated Subsidiaries and, with
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respect to the annual information only, reports thereon by the Company's
independent public accountants (which shall be firm(s) of established national
reputation) and (ii) all information that would be required to be filed with the
SEC on Form 8-K if the Company were required to file such reports. All such
information and reports shall be filed with the SEC on or prior to the dates on
which such filings would have been required to be made had the Company been
subject to the rules and regulations of the SEC. In addition, whether or not
required by the rules and regulations of the SEC, the Company shall file a copy
of all such information and reports with the SEC for public availability within
the time periods specified in the SEC's rules and regulations (unless the SEC
will not accept such a filing) and make such information available to securities
analysts and prospective investors upon request; PROVIDED, HOWEVER, that if
prior to the effectiveness of the Exchange Offer Registration Statement, the
information that would be required to be filed in a Form 10-K, 10-Q or 8-K
pursuant to this sentence is filed as part of the Exchange Offer Registration
Statement, such filing shall be deemed to satisfy the requirements of this
sentence; and PROVIDED FURTHER, that the quarterly information required to be
filed for the quarter ended June 30, 1997 shall not be required to be so filed
until 90 days after the Closing Date (unless the Exchange Offer Registration
Statement shall have already been filed, in which event such filing for the
quarter ended June 30, 1997 shall not be required). For so long as any Notes
remain outstanding, the Company and the Guarantors shall furnish to the Holders
and to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company or
any of its Subsidiaries to comply with the provisions described under the
caption "--Certain Covenants--Merger, Consolidation or Sale of Assets"; (iv)
failure by the Company or any of its Subsidiaries for 30 days after notice to
comply with the provisions described under the captions "--Certain
Covenants--Restricted Payments," "--Certain Covenants-- Incurrence of
Indebtedness and Issuance of Preferred Stock," "--Repurchase at the Option of
Holders-- Asset Sales" or "--Repurchase at the Option of Holders--Change of
Control"; (v) failure by the Company or any of its Subsidiaries for 60 days
after notice to comply with any of its other agreements in the Indenture or the
Notes; (vi) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of the Indenture, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates without duplication $5.0 million or more and such
default shall not have been cured or acceleration rescinded within a five
business day period; (vii) failure by the Company or any of its Subsidiaries to
pay final judgments aggregating in excess of $5.0 million (excluding amounts
covered by insurance), which judgments are not paid, discharged or stayed for a
period of 60 days; (viii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Subsidiaries and (ix) except as permitted
by the Indenture, any Subsidiary Guarantee shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Guarantor, or any Person acing on behalf of any
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee.
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If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the Notes to be due and payable immediately; PROVIDED, HOWEVER, that so long
as any Designated Senior Debt is outstanding, such declaration shall not become
effective until the earlier of (i) five days after the receipt by
representatives of Designated Senior Debt of such written notice of acceleration
or (ii) the date of acceleration of any Designated Senior Debt. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
August 1, 2002 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to August 1, 2002, then the premium
specified in the Indenture shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes or the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages, if any, on such Notes when such payments are due from
the trust referred to below, (ii) the Company's obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights, powers,
trusts, duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions
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of the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "--Events of
Default and Remedies" will no longer constitute an Event of Default with respect
to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages,
if any, on the outstanding Notes on the stated maturity or on the applicable
redemption date, as the case may be, and the Company must specify whether the
Notes are being defeased to maturity or to a particular redemption date; (ii) in
the case of Legal Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of the
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
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; (iii) in the case of Covenant Defeasance, the
Company shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions, the Holders of the outstanding Notes 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; (iv) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit (other
than a Default or Event of Default resulting from the borrowing of funds to be
applied to such deposit) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
will not result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than the Indenture) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; (vi) the Company must have delivered to the Trustee an
opinion of counsel to the effect that, subject to customary assumptions and
exclusions, after the 91st day following the deposit, the trust funds will not
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; (vii) the
Company must deliver to the Trustee an Officers' Certificate stating that the
deposit was not made by the Company with the intent of preferring the Holders of
Notes over the other creditors of the Company with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others; and (viii)
the Company must deliver to the Trustee an Officers' Certificate and an opinion
of counsel, each stating that, subject to customary assumptions and exclusions,
all conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption.
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Also, the Company is not required to transfer or exchange any Note for a period
of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"--Repurchase at the Option of Holders"), (iii) reduce the rate of or change the
time for payment of interest on any Note, (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration), (v) make any Note payable
in money other than that stated in the Notes, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the rights
of Holders of Notes to receive payments of principal of or premium, if any, or
interest on the Notes, (vii) waive a redemption payment with respect to any Note
(other than a payment required by one of the covenants described above under the
caption "-- Repurchase at the Option of Holders") or (viii) make any change in
the foregoing amendment and waiver provisions. In addition, any amendment to the
provisions of Article 10 of the Indenture (which relate to subordination) will
require the consent of the Holders of at least 75% in aggregate principal amount
of the Notes then outstanding if such amendment would adversely affect the
rights of Holders of Notes.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of Notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
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The Holders of a majority in principal amount of the then outstanding Notes
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that in case an Event of Default shall occur
(which shall not be cured), the Trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder of Notes, unless such Holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to B&G Foods, Inc., 426
Eagle Rock Avenue, Roseland, New Jersey 07068, Attention: Chief Financial
Officer.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the Existing Notes are and the
New Notes will be issued in the form of one Global Note (the "Global Note"). The
Global Note will be deposited on the date of the closing of the Exchange Offer
with, or on behalf of, The Depository Trust Company (the "Depositary") and
registered in the name of Cede & Co., as nominee of the Depositary (such nominee
being referred to herein as the "Global Note Holder").
Notes that are issued as described below under "-- Certificated Securities"
will be issued in the form of registered definitive certificates (the
"Certificated Securities"). Upon the transfer of Certificated Securities, such
Certificated Securities may, unless the Global Note has previously been
exchanged for Certificated Securities, be exchanged for an interest in the
Global Note representing the principal amount of Notes being transferred.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only thorough the Depositary's
Participants or the Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Note, the Depositary will credit the
accounts of Participants designated by the Initial Purchasers with portions of
the principal amount of the Global Note and (ii) ownership of the Notes
evidenced by the Global Note will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depositary
(with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants.
Prospective purchasers are advised that the laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer Notes evidenced by the Global
Note will be limited to such extent.
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of any
Notes evidenced by the Global Note. Beneficial owners of Notes evidenced by the
Global Note will not be considered the owners or Holders thereof under
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the Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither the
Company nor the Trustee will have any responsibility or liability for any aspect
of the records of the Depositary or for maintaining, supervising or reviewing
any records of the Depositary relating to the Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Notes registered in the name of the Global
Note Holder on the applicable record date will be payable by the Trustee to or
at the direction of the Global Note Holder in its capacity as the registered
Holder under the Indenture. Under the terms of the Indenture, the Company and
the Trustee may treat the persons in whose names Notes, including the Global
Note, are registered as the owners thereof for the purpose of receiving such
payments. 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 Notes. The Company believes, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants with
such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of the
Depositary. Payments by the Depositary's Participants and the Depositary's
Indirect Participants to the beneficial owners of Notes will be governed by
standing instructions and customary practice and will be the responsibility of
the Depositary's Participants or the Depositary's Indirect Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). If (i) the Company notifies the Trustee in writing
that the Depositary is no longer willing or able to act as a depositary and the
Company is unable to locate a qualified successor within 90 days or (ii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of Notes in the form of Certificated Securities under the
Indenture, then, upon surrender by the Global Note Holder of its Global Note,
Notes in such form will be issued to each person that the Global Note Holder and
the Depositary identify as being the beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchasers have entered into the Registration
Rights Agreement. Pursuant to the Registration Rights Agreement, the Company has
agreed to file with the Commission the Exchange Offer Registration Statement on
the appropriate form under the Securities Act with respect to the New Notes.
Upon the effectiveness of the Exchange Offer Registration Statement, the Company
will offer to the Holders of Transfer Restricted Securities pursuant to the
Exchange Offer who are able to make certain representations the opportunity to
exchange their Transfer Restricted Securities for New Notes. If (i) the Company
is not required to file the Exchange Offer Registration Statement or permitted
to consummate the Exchange Offer because the Exchange Offer is not permitted by
applicable law or Commission policy or (ii) any Holder of Transfer Restricted
Securities notifies the Company prior to the 20th day following consummation of
the Exchange Offer that (A) it is prohibited by law or Commission policy from
participating in the Exchange Offer or (B) that it may not resell the New Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or (C) that it is a
broker-dealer and owns Existing Notes acquired directly from the Company or an
affiliate of the
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Company, the Company will file with the Commission a Shelf Registration
Statement to cover resales of the Notes by the Holders thereof who satisfy
certain conditions relating to the provision of information in connection with
the Shelf Registration Statement. The Company will use its best efforts to cause
the applicable registration statement to be declared effective as promptly as
possible by the Commission. For purposes of the foregoing, "Transfer Restricted
Securities" means each Note until (i) the date on which such Note has been
exchanged by a person other than a broker-dealer for a New Note in the Exchange
Offer, (ii) following the exchange by a broker-dealer in the Exchange Offer of a
Note for a New Note, the date on which such New Note is sold to a purchaser who
receives from such broker-dealer on or prior to the date of such sale a copy of
the prospectus contained in the Exchange Offer Registration Statement, (iii) 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 (iv) the
date on which such Note is distributed to the public pursuant to Rule 144 under
the Act.
The Registration Rights Agreement provides that (i) the Company will file an
Exchange Offer Registration Statement with the Commission on or prior to 90 days
after the Closing Date, (ii) the Company will use its best efforts to have the
Exchange Offer Registration Statement declared effective by the Commission on or
prior to 150 days after the Closing Date, (iii) unless the Exchange Offer would
not be permitted by applicable law or Commission policy, the Company will
commence the Exchange Offer and use its best efforts to issue on or prior to 30
business days after the date on which the Exchange Offer Registration Statement
was declared effective by the Commission, New Notes in exchange for all Notes
tendered prior thereto in the Exchange Offer and (iv) if obligated to file the
Shelf Registration Statement, the Company will use its best efforts to file the
Shelf Registration Statement with the Commission on or prior to 30 days after
such filing obligation arises and to cause the Shelf Registration to be declared
effective by the Commission on or prior to 45 days after such obligation arises.
If (a) the Company fails to file any of the Registration Statements required by
the Registration Rights Agreement on or before the date specified for such
filing, (b) any of such Registration Statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), or (c) the Company fails to consummate the
Exchange Offer within 30 business days of the Effectiveness Target Date with
respect to the Exchange Offer Registration Statement, or (d) the Shelf
Registration Statement or the Exchange Offer Registration Statement is declared
effective but thereafter ceases to be effective or usable in connection with
resales of Transfer Restricted Securities during the periods specified in the
Registration Rights Agreement and is not succeeded within 30 days by another
effective Registration Statement; PROVIDED THAT the Shelf Registration Statement
or the Exchange Offer Registration Statement shall not cease to be effective or
usable in connection with resales of Transfer Restricted Securities for more
than 30 days in any calendar year (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then the Company will pay
Liquidated Damages to each Holder of Notes, with respect to the first 90-day
period immediately following the occurrence of the first Registration Default in
an amount equal to $.05 per week per $1,000 principal amount of Notes held by
such Holder. The amount of the Liquidated Damages will increase by an additional
$.05 per week per $1,000 principal amount of Notes with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.25 per week per $1,000 principal
amount of Notes. All accrued Liquidated Damages will be paid by the Company on
each Damages Payment Date to the Global Note Holder by wire transfer of
immediately available funds or by federal funds check and to Holders of
Certificated Securities by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
Holders of Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) 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 and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights
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Agreement in order to have their Notes included in the Shelf Registration
Statement and benefit from the provisions regarding Liquidated Damages set forth
above.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person; PROVIDED THAT, the
amount of Acquired Debt only at the time so acquired shall include the accreted
value together with any interest thereon that is more than 30 days past due.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control "
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED THAT
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than in the ordinary course of business consistent with past
practices (PROVIDED THAT the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole will be governed by the covenants described above under the captions
"--Repurchase at the Option of Holders--Change of Control" and "--Certain
Covenants--Merger, Consolidation, or Sale of Assets" and not by the provisions
of the covenant described above under the caption "--Repurchase at the Option of
Holders--Asset Sales"), and (ii) the issue or sale by the Company or any of its
Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in the
case of either clause (i) or (ii), whether in a single transaction or a series
of related transactions (a) that have a fair market value in excess of $1.0
million or (b) for Net Proceeds in excess of $1.0 million. Notwithstanding the
foregoing: (i) a transfer of assets by the Company to a Wholly Owned Subsidiary
of the Company that is a Guarantor or by a Wholly Owned Subsidiary of the
Company to the Company or to another Wholly Owned Subsidiary of the Company that
is a Guarantor, (ii) an issuance or sale of Equity Interests by a Subsidiary of
the Company to the Company or to another Wholly Owned Subsidiary of the Company
that is a Guarantor, (iii) a disposition of obsolete equipment or equipment that
is no longer useful in the conduct of business of the Company and its
Subsidiaries and that is disposed of in the ordinary course of business;
PROVIDED, HOWEVER, that such dispositions do not exceed $500,000 per annum, (iv)
a Restricted Payment that is permitted by the covenant described above under the
caption "--Certain Covenants--Restricted Payments" and (v) a disposition of
inventory or Cash Equivalents in the ordinary course of business will not be
deemed to be Asset Sales.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of interest
implicit in such transaction, determined in accordance with GAAP) of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction (including any period
for which such lease has been extended or may, at the option of the lessor, be
extended).
"BRS" means Bruckmann, Rosser, Sherrill & Co., L.P., a Delaware limited
partnership.
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"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participation, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) 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, (iii) certificates of deposit and eurodollar
time deposits with maturities of not more than one year from the date of
acquisition, bankers' acceptances with maturities of not more than one year from
the date of acquisition and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500.0 million
and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or one of the two highest ratings from Standard & Poor's with
maturities of not more than one year from the date of acquisition, (vi)
investment funds investing 95% of their assets in securities of the types
described in clauses (i)--(v) above, and (vii) readily marketable direct
obligations issued by any State of the United States of America or any political
subdivision thereof having maturities of not more than one year from the date of
acquisition and having one of the two highest rating categories obtainable from
either Moody's Investors Service, Inc. or Standard & Poor's.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) Fixed Charges, to the extent that any such Fixed Charge was deducted
in computing such Consolidated Net Income, plus (iv) depreciation and
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation and amortization were deducted in computing such Consolidated
Net Income, minus (v) non-cash items increasing such Consolidated Net Income for
such period, in each case, on a consolidated basis and determined in accordance
with GAAP.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries (for such
period, on a consolidated basis, determined in accordance with GAAP); provided
that (i) the Net Income (but not loss) of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the
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date of such acquisition shall be excluded, and (iv) the cumulative effect of a
change in accounting principles shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments) and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"CONTINUING DIRECTOR" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"CREDIT AGREEMENT" means the Second Amended and Restated Credit Agreement,
dated as of August 11, 1997, among the Company, Heller Financial, Inc. and the
lenders from time to time party thereto (the "Heller Agreement"), as such
agreement may be amended, restated, modified, renewed, refunded, replaced or
refinanced from time to time thereafter, including any appendices, exhibits or
schedules to any of the foregoing, as the same may be in effect from time to
time, in each case, as such agreements may be amended, modified, supplemented,
renewed, refunded, replaced, refinanced, extended or restated from time to time
(whether with the original agents and lenders or other agents and lenders or
otherwise, and whether provided under the original credit agreement or other
credit agreements or otherwise), including any appendices, exhibits or schedules
to any of the foregoing.
"CREDIT FACILITIES" means, with respect to the Company, one or more debt
facilities (including, without limitation, the Credit Agreement) or commercial
paper facility with banks or other institutional lenders providing for revolving
credit loans, receivables financing (including through the sale of receivables
to such lenders or to special purpose entities formed to borrow from such
lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
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"DEFAULT" means any event that is or with the passage of time or the giving
of notice (or both) would be an Event of Default.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature, except to the extent that such Capital Stock is solely
redeemable with, or solely exchangeable for, any Capital Stock of such Person
that is not Disqualified Stock.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXISTING INDEBTEDNESS" means up to $1.0 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Credit Agreement and the Notes) in existence on the date
of the Indenture, until such amounts are repaid.
"FIXED CHARGES" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of debt issuance costs and original issue discount
(other than issuance costs and discounts incurred on the date of the Indenture),
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), (ii) the consolidated interest of
such Person and its Subsidiaries that was capitalized during such period, (iii)
any interest expense on Indebtedness of another Person that is Guaranteed by
such Person or one of its Subsidiaries or secured by a Lien on assets of such
Person or one of its Subsidiaries (whether or not such Guarantee or Lien is
called upon) and (iv) the product of (a) all dividend payments, whether or not
in cash, on any series of preferred stock of such Person or any of its
Subsidiaries, other than dividend payments on Equity Interests payable solely in
Equity Interests of the Company (other than Disqualified Stock), times (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
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings under any Credit Facility)
or issues preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but on or prior to the date
on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by the Company or any of its
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the definition
of Consolidated Net Income, (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, and
(iii) the Fixed Charges attributable to discontinued operations, as
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determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of the
referent Person or any of its Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the statements and pronouncements of
the Financial Accounting Standards Board and such other statements by such other
entities as have been approved by a significant segment of the accounting
profession, which are applicable at the date of determination.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the net payment
Obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all Indebtedness of others
secured by a Lien on any asset of such Person (whether or not such Indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any Indebtedness of any other Person, and any
liability, whether or not contingent, whether or not it appears on the balance
sheet of such Person. The amount of any Indebtedness outstanding as of any date
shall be the accreted value thereof, in the case of any Indebtedness that does
not require current payments of interest.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other Obligations),
advances or capital contributions (excluding commission, travel and
entertainment, moving, and similar advances to officers and employees made in
the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP. If Holdings, the Company or any of their
respective Subsidiaries sells or otherwise disposes of any Equity Interests of
any direct or indirect Subsidiary of Holdings or the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a direct
or indirect Subsidiary of Holdings or the Company, Holdings, the Company, or
such Subsidiary, as the case may be, shall be deemed to have made an Investment
on the date of any such sale or disposition equal to the fair market value of
the Equity Interests of such Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of the covenant described above
under the caption "--Certain Covenants--Restricted Payments."
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
any asset and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
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"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss).
"NET PROCEEDS" means the aggregate cash proceeds or Cash Equivalents
received by the Company or any of its Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
all costs relating to such Asset Sale (including, without limitation, legal,
accounting, investment banking and brokers fees, and sales and underwriting
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of Indebtedness (other than Indebtedness under any
Credit Facility) secured by a Lien on the asset or assets that were the subject
of such Asset Sale and any reserve for adjustment in respect of the sale price
of such asset or assets established in accordance with GAAP.
"OBLIGATIONS" means any principal, premium (if any), interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to Holdings, the Company or their Subsidiaries whether
or not a claim for post-filing interest is allowed in such proceeding),
penalties, fees, charges, expenses, indemnifications, reimbursement obligations,
damages (including Liquidated Damages), guarantees and other liabilities or
amounts payable under the documentation governing any Indebtedness or in respect
thereof.
"PERMITTED BUSINESS" means the lines of business conducted by the Company on
the date hereof and businesses reasonably related thereto.
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or in a
Wholly Owned Subsidiary of the Company that is a Guarantor; (b) any Investment
in Cash Equivalents; (c) any Investment by the Company or any Subsidiary of the
Company in a Person engaged in a Permitted Business, if as a result of such
Investment (i) such Person becomes a Wholly Owned Subsidiary of the Company and
a Guarantor or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Subsidiary of the Company that is
a Guarantor; (d) any Restricted Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "--Repurchase at
the Option of Holders--Asset Sales;" (e) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock) of
Holdings; (f) other Investments by the Company or any of its Subsidiaries in any
Person having an aggregate fair market value (measured as of the date made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (f) that are at the time
outstanding, not to exceed $4.0 million; (g) intercompany loans to the extent
permitted by the covenant described above under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock;" and (h)
loans by the Company in an aggregate principal amount not exceeding $1.0 million
to employees of the Company or its Subsidiaries to finance the sale of Holdings
Capital Stock by Holdings to such employees; PROVIDED THAT the net cash proceeds
from such sales respecting such loaned amounts will not be included in the
calculation described in clause (c) of the second paragraph of the covenant
described above under the caption "--Certain Covenants--Restricted Payments."
"PERMITTED LIENS" means (i) Liens on assets of the Company or any of the
Guarantors to secure Senior Debt permitted by the Indenture to be incurred; (ii)
Liens on the assets of the Company or any of the
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Guarantors to secure Hedging Obligations with respect to Indebtedness under any
Credit Facility permitted by the Indenture to be incurred; (iii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company; PROVIDED THAT
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company; (iv) Liens on property existing at
the time of acquisition thereof by the Company or any Subsidiary of the Company,
PROVIDED THAT such Liens were in existence prior to the contemplation of such
acquisition and only extend to the property so acquired; (v) Liens existing on
the date of the Indenture; (vi) Liens to secure any Permitted Refinancing
Indebtedness incurred to refinance any Indebtedness secured by any Lien referred
to in the foregoing clauses (i) through (v), PROVIDED, HOWEVER, that such new
Lien shall be limited to all or part of the same property that secured the
original Lien (PROVIDED THAT such Liens may extend to after-acquired property,
including any assets or Capital Stock of any subsequently formed or acquired
Subsidiary, if such original Lien included such property or assets as
collateral) and the Indebtedness secured by such Lien at such time is not
increased to any amount greater than permitted under clauses (i) and (xii) of
the Covenant described above under the caption "--Certain Covenants--Incurrence
of Indebtedness and Issuance of Preferred Stock" in the case of Senior Debt
under any Credit Facility, or, in the case of other Indebtedness, the
outstanding principal amount or, if greater, committed amount of the
Indebtedness described under clauses (i) through (v), as the case may be, at the
time the original Lien became a permitted Lien; (vii) Liens in favor of the
Company or any Wholly Owned Subsidiary that is a Guarantor; (viii) Liens
incurred in the ordinary course of business of the Company or any Subsidiary of
the Company with respect to obligations that do not exceed $5.0 million in the
aggregate at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Subsidiary; (ix) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds, deposits to secure the performance of
bids, trade contracts, government contracts, leases or licenses or other
obligations of a like nature incurred in the ordinary course of business
(including, without limitation, landlord Liens on leased properties); (x) Liens
for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently prosecuted, PROVIDED THAT any reserve or
other appropriate provision as shall be required to conform with GAAP shall have
been made therefor; (xi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (v) of the second paragraph of the covenant
described above under the caption "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock" covering only the assets acquired
with such Indebtedness; (xii) carriers', warehousemen's, mechanics', landlords'
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business in respect of obligations not overdue for a period in excess of 60 days
or which are being contested in good faith by appropriate proceedings promptly
instituted and diligently prosecuted; PROVIDED THAT any reserve or other
appropriate provision as shall be required to conform with GAAP shall have been
made therefor; (xiii) easements, rights-of-way, zoning and similar restrictions
and other similar encumbrances or title defects incurred, or leases or subleases
granted to others, in the ordinary course of business, which do not in any case
materially detract from the value of the property subject thereto or do not
interfere with or adversely affect in any material respect the ordinary conduct
of the business of the Company and its Subsidiaries taken as a whole; (xiv)
Liens in favor of customs and revenue authorities to secure payment of customs
duties in connection with the importation of goods in the ordinary course of
business and other similar Liens arising in the ordinary course of business;
(xv) leases or subleases granted to third Persons not interfering with the
ordinary course of business of Holdings, the Company or any of their respective
Subsidiaries; (xvi) Liens (other than any Lien imposed by ERISA or any rule or
regulation promulgated thereunder) incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, and other types of social security; (xvii) deposits, in an aggregate
not to exceed $250,000, made in the ordinary course of business to secure
liability to insurance carriers; (xviii) Liens for purchase money obligations
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(including refinancings thereof permitted under the covenant described above
under the caption
"--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock"), PROVIDED THAT (A) the Indebtedness secured by any such Lien is
permitted under the covenant described above under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" and (B)
any such Lien encumbers only the asset so purchased; (xix) any attachment or
judgment Lien not constituting an Event of Default under clause (i) of the first
paragraph of the section described above under the caption "--Events of Default
and Remedies"; (xx) any interest or title of a lessor or sublessor under any
operating lease; and (xxi) Liens under licensing agreements for use of
Intellectual Property entered into in the ordinary course of business.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries (other than intercompany
Indebtedness); PROVIDED THAT: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
amount permitted by clause (i) of the second paragraph under the covenant
described above under the caption "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock;" plus accrued and unpaid interest
thereon in the case of the Credit Agreement, or the principal amount of (or
accreted value, if applicable), plus accrued and unpaid interest on, any other
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or a Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"PUBLIC EQUITY OFFERING" means any underwritten primary public offering of
the Common Stock or other Voting Stock of the Company or Holdings, pursuant to
an effective registration statement (other than a registration statement on Form
S-4, Form S-8, or any successor or similar form) under the Securities Act.
"REPRESENTATIVE" means the administrative agent under the Credit Agreement
or its successor thereunder or any similar agent for any Designated Senior Debt.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"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 of
the Indenture.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the Credit Agreement or other
original documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at
100
<PAGE>
the time owned or controlled, directly or indirectly, by such Person and (ii)
any partnership (a) the sole general partner or the managing general partner of
which is such Person or an entity described in clause (i) and related to such
Person or (b) the only general partners of which are such Person or one or more
entities described in clause (i) and related to such Person (or any combination
thereof).
"SUBSIDIARY GUARANTEE" means the Guarantee of the Notes by each of the
Guarantors pursuant to Article 11 of the Indenture and in the form of Guarantee
endorsed on the form of Note attached as Exhibit A to the Indenture and any
additional Guarantee of the Notes to be executed by any Subsidiary of the
Company pursuant to the covenant described above under the caption "--Certain
Covenants-- Additional Subsidiary Guarantees."
"VOTING STOCK" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary, 100% of the outstanding
Capital Stock and other Equity Interests of which is directly or indirectly
owned by the Company or Holdings.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Existing Notes
where such Existing Notes were acquired as a result of market-making activities
or other trading activities. The Company has agreed that, for a period of one
year after the Effective 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 , 1998 (90 days after the date of this
Prospectus), all dealers effecting transactions in the New Notes may be required
to deliver a prospectus.
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 price or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such 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. For a period of one year
after the Effective 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 Exchange Offer (including
the expenses of one counsel for the holders of the Existing Notes) other than
commissions or
101
<PAGE>
concessions of any brokers or dealers and will indemnify the holders of the
Existing Notes (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
The Company has covenanted with the Initial Purchasers that it will file
with the Commission an Exchange Offer Registration Statement under the
Securities Act with respect to an issue of New Notes, will use its best efforts
to cause the Exchange Offer Registration Statement to become effective under the
Securities Act, will offer to the holders of the Notes who are not prohibited by
law or policy of the Commission from participating in the Exchange Offer the
opportunity to exchange their Notes for New Notes, which New Notes will be
substantially identical in all respects to the Notes (except that the New Notes
generally will not contain terms with respect to transfer restrictions). Under
certain circumstances, the Company has agreed to file a Shelf Registration
Statement and to use its best efforts to cause such Shelf Registration Statement
to be declared effective. The Company, under certain circumstances, will be
required to pay Liquidated Damages if the Company is not in compliance with
certain of its obligations under the Registration Rights Agreement. See
"Description of Notes -- Registration Rights; Liquidated Damages."
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Dechert Price & Rhoads, New York, New York.
EXPERTS
The financial statements of B&G Foods, Inc. and subsidiaries as of September
27, 1997 and December 28, 1996, and for the 39-week period ended September 27,
1997, and the years ended December 28, 1996 and December 30, 1995, have been
included herein and in the Registration Statement in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing. The report of KPMG Peat Marwick LLP states that as further
described in note 1 to the financial statements, the Predecessor was acquired on
December 27, 1996 in a business combination accounted for as a purchase. As a
result, the Successor Consolidated financial statements are presented on a
different basis of accounting than the Predecessor Combined financial statements
and, therefore, are not comparable.
The combined financial statements of the Nabisco Brands as of June 17, 1997
and December 31, 1996, and for the 24-week period ended June 17, 1997 and the
years ended December 31, 1996 and 1995, have been included herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing. The report of
KPMG Peat Marwick LLP states that the financial statements of the Nabisco Brands
were prepared to present the net assets acquired and the product contribution of
the Nabisco Brands pursuant to the purchase agreement between Nabisco, Inc. and
RWBV Acquisition Corp., a wholly-owned, indirect subsidiary of B&G Foods, Inc.
(the "Buyer") as described in note 1 and are not intended to be a complete
presentation of the Nabisco Brands' financial position, results of operations
and cash flows.
The consolidated financial statements of JEM Brands, Inc. and subsidiary as
of August 15, 1997 and December 28, 1996, and the 33-week period ended August
15, 1997 and the years ended December 28, 1996 and December 31, 1995, have been
included herein and in the Registration Statement in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
102
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
B&G FOODS, INC.
Independent Auditors' Report............................................................................... F-2
Balance Sheets as of September 27, 1997 and December 28, 1996.............................................. F-3
Statements of Operations for the 39-week period ended September 27, 1997
and fiscal years ended December 28, 1996 and December 30, 1995........................................... F-4
Statements of Cash Flows for the 39-week period ended September 27, 1997
and fiscal years ended December 28, 1996 and December 30, 1995........................................... F-5
Notes to Financial Statements.............................................................................. F-6
THE NABISCO BRANDS
Independent Auditors' Report............................................................................... F-23
Combined Statements of Net Assets Acquired as of June 17, 1997
and December 31, 1996.................................................................................... F-24
Combined Statements of Product Contribution for the 24-week period ended
June 17, 1997 and fiscal years ended December 31, 1996 and December 31, 1995............................. F-25
Notes to Combined Financial Statements..................................................................... F-26
JEM BRANDS, INC.
Independent Auditors' Report............................................................................... F-29
Consolidated Balance Sheets as of August 15, 1997 and December 28, 1996.................................... F-30
Consolidated Statements of Earnings for the 33-week period ended August 15, 1997
and fiscal years ended December 28, 1996 and December 31, 1995........................................... F-31
Consolidated Statements of Retained Earnings for the 33-week period ended
August 15, 1997 and fiscal years ended December 28, 1996 and December 31, 1995........................... F-32
Consolidated Statements of Cash Flows for the 33-week period ended August 15, 1997
and fiscal years ended December 28, 1996 and December 31, 1995........................................... F-33
Notes to Consolidated Financial Statements................................................................. F-34
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
B&G Foods, Inc.:
We have audited the accompanying balance sheets of B&G Foods, Inc. and
subsidiaries (Successor Consolidated) as of September 27, 1997 and December 28,
1996, and the related statements of operations, and cash flows for the 39-week
period ended September 27, 1997, and the statements of operations, and cash
flows for the Predecessor Combined (as described in note 1) for the years ended
December 28, 1996 and December 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As further described in note 1, the Predecessor was acquired on December 27,
1996 in a business combination accounted for as a purchase. As a result, the
Successor Consolidated financial statements are presented on a different basis
of accounting than the Predecessor Combined financial statements and, therefore,
are not comparable.
In our opinion, the Successor Consolidated financial statements referred to
above present fairly, in all material respects, the financial position of B&G
Foods, Inc. and subsidiaries as of September 27, 1997 and December 28, 1996, and
the results of their operations and their cash flows for the 39-week period
ended September 27, 1997 in conformity with generally accepted accounting
principles. Further, in our opinion, the Predecessor Combined financial
statements referred to above present fairly, in all material respects, the
results of operations and cash flows of the Predecessor Combined for the years
ended December 28, 1996 and December 30, 1995 in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Short Hills, New Jersey
October 31, 1997
F-2
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPT. 27, DEC. 28,
1997 1996
(SUCCESSOR (SUCCESSOR
CONSOLIDATED) CONSOLIDATED)
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 3,699 $ 291
Trade accounts receivable, less allowance for doubtful accounts of $564 in 1997... 13,117 8,373
Inventories....................................................................... 28,670 23,609
Prepaid expenses and other current assets......................................... 2,116 494
Deferred income taxes............................................................. 2,958 2,260
------------- -------------
Total current assets............................................................ 50,560 35,027
Property, plant and equipment, net.................................................. 23,489 15,584
Intangible assets, net.............................................................. 101,635 50,650
Other assets........................................................................ 5,335 2,151
------------- -------------
Total assets.................................................................... $ 181,019 $ 103,412
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current installments of long-term debt............................................ $ 280 $ 1,976
Trade accounts payable............................................................ 19,881 14,334
Accrued expenses.................................................................. 9,569 7,716
Due to related parties............................................................ 121 4,009
------------- -------------
Total current liabilities....................................................... 29,851 28,035
Long-term debt, including amounts payable to related parties of $795 and $13,650 in
1997 and 1996, respectively....................................................... 121,121 51,537
Other liabilities................................................................... 186 730
Deferred income taxes............................................................... 11,632 10,610
------------- -------------
Total liabilities............................................................... 162,790 90,912
------------- -------------
Stockholder's equity:
Common stock, $.01 par value per share.
Authorized 1,000 shares; issued and outstanding 1 share in 1997
and 1996........................................................................ -- --
Additional paid-in capital........................................................ 20,000 13,000
Receivable from stock issuance.................................................... -- (500)
Accumulated deficit............................................................... (1,771) --
------------- -------------
Total stockholder's equity...................................................... 18,229 12,500
------------- -------------
Commitments and contingencies (notes 6, 12 and 13)
Total liabilities and stockholder's equity...................................... $ 181,019 $ 103,412
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
39-WEEK
PERIOD ENDED YEAR ENDED YEAR ENDED
SEPT. 27, DEC. 28, DEC. 30,
1997 1996 1995
(SUCCESSOR (PREDECESSOR (PREDECESSOR
CONSOLIDATED) COMBINED) COMBINED)
------------- ------------ ------------
<S> <C> <C> <C>
Net sales............................................................. $ 104,337 $ 129,307 $ 112,245
Cost of goods sold.................................................... 70,064 91,187 79,293
------------- ------------ ------------
Gross profit...................................................... 34,273 38,120 32,952
Sales, marketing and distribution expenses............................ 24,350 28,414 23,863
General and administrative expenses................................... 3,165 2,941 2,598
Management fees--related parties...................................... 191 1,249 1,097
------------- ------------ ------------
Operating income.................................................. 6,567 5,516 5,394
Other expense:
Interest expense--related parties................................... 788 4,452 3,624
Interest expense.................................................... 5,320 197 156
------------- ------------ ------------
Income before income tax expense and extraordinary item........... 459 867 1,614
Income tax expense.................................................... 426 591 896
------------- ------------ ------------
Income before extraordinary item.................................. 33 276 718
Extraordinary item, net of income tax benefit of $1,138............... (1,804) -- --
------------- ------------ ------------
Net (loss) income................................................. $ (1,771) $ 276 $ 718
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
39-WEEK
PERIOD ENDED
SEPT. 27, YEAR ENDED YEAR ENDED
1997 DEC. 28, 1996 DEC. 30, 1995
(SUCCESSOR (PREDECESSOR (PREDECESSOR
CONSOLIDATED) COMBINED) COMBINED)
------------- ------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income............................................................... $ (1,771) $ 276 $ 718
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:....................................................................
Depreciation and amortization............................................... 4,229 4,105 3,511
Deferred income tax (benefit) expense....................................... (934) 386 395
Extraordinary item.......................................................... 2,942 -- --
Provision for doubtful accounts............................................. 564 -- --
Changes in assets and liabilities, net of effects from businesses acquired:
Trade accounts receivable............................................... (4,430) (190) (23)
Inventories............................................................. 185 (1,305) (3,198)
Prepaid expenses and other current assets............................... (1,610) (595) 194
Other assets............................................................ (8) (11) 3
Trade accounts payable.................................................. 5,082 (1,214) 4,742
Accrued expenses........................................................ 749 (1,496) (2,123)
Due to related parties.................................................. 121 2,316 5,221
Other liabilities....................................................... (544) (194) 110
------------- ------------- ------
Net cash provided by operating activities........................... 4,575 2,078 9,550
------------- ------------- ------
Cash flows from investing activities:
Acquisition of New York Style................................................... -- -- (6,300)
Paid for Successor Acquisitions................................................. (63,019) -- --
Paid for Acquired Companies..................................................... (4,009) -- --
Capital expenditures............................................................ (2,976) (2,573) (2,571)
Proceeds from sales of property, plant and equipment............................ 162 -- --
------------- ------------- ------
Net cash used in investing activities............................... (69,842) (2,573) (8,871)
------------- ------------- ------
Cash flows from financing activities:
Payments of long-term debt...................................................... (68,379) (318) (284)
Proceeds from issuance of long-term debt........................................ 143,145 206 191
Proceeds from issuance of common stock.......................................... 500 -- --
Payments of debt issuance costs................................................. (6,591) -- --
------------- ------------- ------
Net cash provided by (used in) financing activities......................... 68,675 (112) (93)
------------- ------------- ------
Increase (decrease) in cash and cash equivalents............................ 3,408 (607) 586
Cash and cash equivalents at beginning of period.................................... 291 898 312
------------- ------------- ------
Cash and cash equivalents at end of period.......................................... $ 3,699 $ 291 $ 898
------------- ------------- ------
------------- ------------- ------
Supplemental disclosure of cash flow information--cash paid for:
Interest........................................................................ $ 3,975 $ 197 $ 155
------------- ------------- ------
------------- ------------- ------
Income taxes.................................................................... $ 180 $ 203 $ 108
------------- ------------- ------
------------- ------------- ------
B&G Foods, Inc. Cash Transactions as of December 27, 1996:
Cash paid for Acquired Companies (note 1)....................................... $ 63,240
-------------
-------------
Cash paid for deferred debt issuance costs...................................... 1,328
-------------
Total investing activities.................................................. $ 64,568
-------------
-------------
Cash proceeds from debt ($52,068) and equity ($12,500) financing activities
(note 1)....................................................................... $ 64,568
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(1) BUSINESS ACQUISITIONS AND NATURE OF OPERATIONS
ORGANIZATION, ACQUISITION AND FINANCING
B&G Foods, Inc. (formerly known as B Companies Acquisition Corp.) was
incorporated on November 13, 1996 to acquire (the "Acquisition") BGH Holdings,
Inc., the holding company of Bloch & Guggenheimer, Inc. and related companies,
and BRH Holdings, Inc., the holding company of Burns & Ricker, Inc.
(collectively, the "Acquired Companies" or the "Predecessor"), subsidiaries of
Specialty Foods Corporation ("SFC"). B&G Foods, Inc. and the Acquired Companies
upon the Acquisition are hereinafter referred to as the "Successor" or the
"Company." The Acquisition was structured as a stock purchase with an aggregate
purchase price of approximately $70,000, including transaction costs, and was
consummated on December 27, 1996. As part of the Acquisition, SFC guaranteed the
Company's trade receivables at December 27, 1996. On December 27, 1996, the
Company issued one share of common stock to, and became a wholly-owned
subsidiary of, B Companies Holdings Corp., which in turn is majority owned by
Bruckmann, Rosser, Sherrill and Co., L.P. ("BRS"), a private equity investment
firm, and minority owned by management and certain other investors.
In addition to initial equity of $12,500, the financing of the Acquisition
was provided through a $50,000 Senior Secured Credit Facility which consisted of
a Revolving Credit Facility of $23,500 and Term Loan Facilities A and B of
$14,500 and $12,000, respectively. Additionally, the Company issued $13,000 of
12% Senior Subordinated Notes due 2004 to BRS and other certain investors (the
"BRS Note").
NATURE OF OPERATIONS
The Company is a manufacturer, marketer and distributor of branded pickles,
peppers, bagel chips and other specialty food products to retailers and food
service establishments. The Company distributes these products to retailers in
the greater New York metropolitan area through a direct-store-door sales and
distribution system and elsewhere in the United States through a nationwide
network of independent brokers and distributors.
ACQUISITION ACCOUNTING
The Acquisition has been accounted for using the purchase method.
Accordingly, the excess of the purchase price over the fair value of
identifiable net assets acquired, representing goodwill, is included in
intangible assets. The consideration (including acquisition costs of $1,329) and
allocation of the purchase price are summarized below:
<TABLE>
<CAPTION>
<S> <C>
Purchase Price Consideration:
Term Loan Facilities A and B..................................................... $ 26,500
Revolving Credit Facility........................................................ 11,240
Proceeds from Common Stock Issuance.............................................. 12,500
12% Senior Subordinated Notes due to related parties............................. 13,000
Cash paid subsequent to December 27, 1996........................................ 5,337
Long-term liabilities assumed.................................................... 1,445
---------
$ 70,022
---------
---------
</TABLE>
F-6
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(1) BUSINESS ACQUISITIONS AND NATURE OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Allocation of Purchase Price:
<S> <C>
Property, plant and equipment.................................................... $ 15,584
Intangible assets--trademarks.................................................... 29,804
Intangible assets--goodwill...................................................... 20,846
Other assets, principally net current assets..................................... 12,858
Deferred income tax liabilities.................................................. (9,070)
---------
$ 70,022
---------
---------
</TABLE>
RESTRUCTURING
As part of the Acquisition, management authorized and committed to a plan to
undertake certain restructuring moves, principally involving the consolidation
of several warehouse and production facilities resulting in restructuring
accruals of $1,536 as part of the allocation of the purchase price. The
restructuring consisted primarily of approximately $952 of estimated lease and
other tenancy costs through 1998, $228 in severance and termination benefits for
approximately 100 employees, and the remaining portion relating to charges
resulting from changes in the production process as part of the consolidation,
which was completed in June 1997. The Company does not expect to incur material
incremental costs. As of September 27, 1997, the restructuring reserve balance
was reduced to $738 as a result of cash expenditures relating primarily to
tenancy costs and severance payments.
SUCCESSOR ACQUISITIONS AND ACCOUNTING
On June 17, 1997, the Company acquired certain assets from Nabisco, Inc. for
a purchase price of approximately $50,557, including transactions costs.
Financing for this acquisition and certain related transaction fees and expenses
was provided by $35,000 of new borrowings on an amended and restated Senior
Secured Credit Facility, and $17,000 of the proceeds from the issuance of
$23,000 of 12% Senior Subordinated Notes due December 16, 1997 (the "Interim
Notes"), with $6,000 used to repay a portion of the BRS Note.
On August 15, 1997, the Company acquired all of the outstanding capital
stock of JEM Brands, Inc. ("JEM"), a manufacturer of peppers and branded hot
sauces, for approximately $12,462, including transaction costs. Financing for
this acquisition and certain related transaction fees and expenses was provided
by the proceeds from the issuance of $120,000 Senior Subordinated Notes on
August 11, 1997.
The above acquisitions (collectively, the "Successor Acquisitions") have
been accounted for using the purchase method and, accordingly, the assets
acquired, liabilities assumed, and results of operations are included in the
Successor Consolidated financial statements from the date of the acquisitions.
The excess of the purchase price over the fair value of identifiable net assets
acquired, representing goodwill, is included in intangible assets.
F-7
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(1) BUSINESS ACQUISITIONS AND NATURE OF OPERATIONS (CONTINUED)
The costs of the Successor Acquisitions have been allocated to tangible and
intangible assets as follows:
<TABLE>
<S> <C>
Property, plant and equipment...................................... $ 7,111
Intangible assets--trademarks...................................... 24,500
Intangible assets--goodwill........................................ 28,045
Other assets, principally net current assets....................... 4,621
Deferred income tax liabilities, net............................... (1,258)
---------
$ 63,019
---------
---------
</TABLE>
PREDECESSOR ACQUISITION AND ACCOUNTING
On September 11, 1995, the Predecessor completed the acquisition of
substantially all of the assets and certain liabilities of New York Style Bagel
Chips ("NYS") for total consideration of approximately $6,300. The transaction
was financed through additional borrowings from SFC. The Predecessor's
acquisition has been accounted for using the purchase method and, accordingly,
the assets acquired, liabilities assumed, and results of operations are included
in the Predecessor Combined financial statements from the date of acquisition.
The purchase price was allocated to the underlying assets and liabilities based
on their fair values, with the excess recorded as goodwill.
PRO FORMA SUMMARY OF OPERATIONS
The following unaudited pro forma summary of operations for the 39-week
period ended September 27, 1997 and fiscal year ended December 28, 1996 presents
the results of operations of the Company as if the Acquisition and Successor
Acquisitions had occurred as of the beginning of each of the respective fiscal
years. In addition to including the results of operations of the Acquired
Companies and the Successor Acquisitions, the pro forma information gives effect
primarily to interest on additional borrowings and changes in depreciation and
amortization of intangible assets.
<TABLE>
<CAPTION>
39-WEEK
PERIOD YEAR
ENDED ENDED
SEPT.27, DEC.28,
1997 1996
---------- ----------
<S> <C> <C>
Net sales............................................................. $ 124,841 $ 175,708
Income before extraordinary item...................................... $ 769 $ 2,646
---------- ----------
---------- ----------
</TABLE>
The pro forma information presented above does not purport to be indicative
of the results that actually would have been attained if the Acquisition, the
Successor Acquisitions, and related financing transactions had occurred at the
beginning of the years presented and is not intended to be a projection of
future results.
F-8
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) FISCAL YEAR AND BASIS OF PRESENTATION
The Company utilizes, as did the Predecessor, a 52-53 week fiscal year
ending on the last Saturday in December. Fiscal years 1996 and 1995 contain 52
weeks.
The Successor's financial statements are presented on a consolidated basis.
The Predecessor's financial statements are presented on a combined basis because
all of the Acquired Companies were under common control. All significant
intercompany balances and transactions have been eliminated.
B&G Foods, Inc. had no operations prior to the Acquisition and neither B&G
Foods, Inc. nor the Acquired Companies had any operations on Saturday, December
28, 1996. As a result, the statements of operations and cash flows for the
fiscal years ended December 28, 1996 and December 30, 1995 present the combined
results of operations of the Acquired Companies (Predecessor Combined). The
financial statements subsequent to the Acquisition are presented on a different
cost basis and use a different accounting policy (see note 2(f)) than the
financial statements prior to the Acquisition and, therefore, are not
comparable. Further, related party transactions (see note 11) affect the
comparability of the financial statements.
(B) CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, all highly liquid debt
instruments with original maturities of three months or less are considered to
be cash and cash equivalents.
(C) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
using the first- in, first-out and average cost methods.
(D) PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. Plant and equipment under
capital leases are stated at the present value of minimum lease payments.
Depreciation on plant and equipment is calculated using the straight-line method
over the estimated useful lives of the assets, generally 12 to 20 years for
buildings and improvements, 5 to 10 years for machinery and equipment, and 3 to
5 years for office furniture and vehicles. Plant and equipment held under
capital leases and leasehold improvements are amortized on a straight-line basis
over the shorter of the lease term or estimated useful life of the asset.
Expenditures for maintenance, repairs and minor replacements are charged to
current operations. Expenditures for major replacements and betterments are
capitalized.
Capital lease obligations of $122 and $759 were incurred during the 39-week
period ended September 27, 1997 and fiscal year 1995, respectively (none in
1996), when the Company entered into leases for new machinery and equipment.
(E) INTANGIBLE ASSETS
Intangible assets consist of goodwill and trademarks. Goodwill is amortized
on a straight-line basis over 40 years. Trademarks are amortized on a
straight-line basis over 20 to 40 years. The Company assesses the recoverability
of the intangible assets by determining whether the amortization of the
intangible
F-9
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(E) INTANGIBLE ASSETS (CONTINUED)
assets over their remaining lives can be recovered through undiscounted future
operating cash flows. The amount of impairment, if any, is measured based on
projected discounted future operating cash flows using a discount rate
reflecting the Company's average cost of funds. The assessment of the
recoverability of intangible assets will be impacted if estimated future
operating cash flows are not achieved.
(F) PACKAGE DESIGN COSTS
Package design costs relate to the development of product packaging and
labels. Prior to the Acquisition, the Predecessor capitalized package design
costs and amortized such costs over a four-year period. Since the Acquisition,
the Successor has expensed package design costs as incurred. Package design
costs expensed in the 39-week period ended September 27, 1997 were $161.
Amortization of package design costs in fiscal years 1996 and 1995 was $77 and
$25, respectively.
(G) DEFERRED DEBT ISSUANCE COSTS
Deferred debt issuance costs are amortized using the straight-line method
over the term of the related debt agreements and are classified as other
non-current assets. Amortization of deferred debt issuance costs for the 39-week
period ended September 27, 1997 was $473 (none in fiscal years 1996 and 1995).
As a result of the debt repayments and amendments described in note 7,
during the 39-week period September 27, 1997, the Company recorded an
extraordinary charge of $1,804, net of income tax benefit of $1,138, to write
off deferred debt issuance costs relating to its Senior Secured Credit Agreement
and the Interim Notes.
(H) ADVERTISING COSTS
Advertising costs are expensed as incurred. Advertising costs amounted to
approximately $87, $285 and $151 during the 39-week period ended September 27,
1997 and the fiscal years 1996 and 1995, respectively.
(I) INCOME TAXES
From August 17, 1993 to the date of the Acquisition, the Predecessor was
included in the consolidated federal income tax return of SFC. SFC was
responsible for the filing of income tax returns and payment of income taxes. No
formal tax sharing agreement existed between SFC and the Predecessor, and no
federal income taxes were allocated to the Predecessor. State income taxes were
allocated to the Predecessor based on the actual state income tax liability.
Income tax expense reported in the accompanying statements of operations for
fiscal 1996 and 1995 has been computed as if the Predecessor filed a separate
federal tax return.
Effective December 28, 1996, the Company is included in the consolidated
federal income tax return of B Companies Holdings Corp. Income tax expense
reported in the accompanying statement of operations for the 39-week period
ended September 27, 1997 has been computed as if the Company filed a separate
federal tax return.
F-10
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(I) INCOME TAXES (CONTINUED)
Deferred tax assets and liabilities of the Company are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
(J) PENSION PLANS
The Company has defined benefit pension plans covering substantially all of
its employees. The Company's funding policy is to contribute annually the amount
recommended by its actuaries. Such plans are the same as the plans of the
Predecessor.
(K) FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and cash equivalents, accounts receivable, accounts payable and accrued
expenses are reflected in the financial statements at carrying value, which
approximates fair value due to the short-term nature of these instruments. The
carrying value of the Company's borrowings approximates the fair value based on
the current rates available to the Company for similar instruments.
(L) USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions relating to the reporting of assets and liabilities and the
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 those estimates.
(M) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The provisions of Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", were adopted on December 31, 1995. This statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. Adoption of this statement did not have
a material impact on the Company's financial position, results of operations, or
liquidity.
(N) RECLASSIFICATIONS
Certain amounts in the December 28, 1996 financial statements have been
reclassified to conform with the September 27, 1997 financial statement
presentation.
F-11
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(3) INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
SEPT. 27, DEC. 28,
1997 1996
--------- ---------
<S> <C> <C>
Raw materials and packaging............................................. $ 6,286 $ 4,495
Work in progress........................................................ 2,251 1,948
Finished goods.......................................................... 20,133 17,166
--------- ---------
$ 28,670 $ 23,609
--------- ---------
--------- ---------
</TABLE>
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net consists of the following:
<TABLE>
<CAPTION>
SEPT. 27, DEC. 28,
1997 1996
--------- ---------
<S> <C> <C>
Land.................................................................... $ 2,307 $ 582
Buildings and improvements.............................................. 6,751 4,496
Leasehold improvements.................................................. 622 34
Machinery and equipment................................................. 14,015 9,224
Office furniture and vehicles........................................... 801 508
Leased property under capital leases.................................... 908 740
Construction in progress................................................ 227 --
--------- ---------
25,631 15,584
Less accumulated depreciation and amortization.......................... 2,142 --
--------- ---------
$ 23,489 $ 15,584
--------- ---------
--------- ---------
</TABLE>
As a result of the Acquisition, the cost of property, plant and equipment at
December 28, 1996 represents estimated fair value with no accumulated
depreciation.
Plant and equipment includes amounts under capital leases as follows:
<TABLE>
<CAPTION>
SEPT. 27, DEC. 28,
1997 1996
----------- -----------
<S> <C> <C>
Machinery and equipment................................................... $ 122 $ 122
Office furniture and vehicles............................................. 786 618
----- -----
908 740
Less accumulated amortization............................................. 203 --
----- -----
$ 705 $ 740
----- -----
----- -----
</TABLE>
Amortization of assets held under capital leases is included with
depreciation expense.
F-12
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(5) INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
SEPT. 27, DEC. 28,
1997 1996
---------- ---------
<S> <C> <C>
Goodwill............................................................... $ 48,945 $ 20,846
Trademarks............................................................. 54,304 29,804
---------- ---------
103,249 50,650
Less accumulated amortization.......................................... 1,614 --
---------- ---------
$ 101,635 $ 50,650
---------- ---------
---------- ---------
</TABLE>
(6) LEASES
The Company has several noncancelable operating leases, primarily for
warehouses, transportation equipment and machinery. These leases generally
require the Company to pay all executory costs such as maintenance, taxes and
insurance.
Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) for the periods set
forth below are as follows:
<TABLE>
<S> <C>
October through December 1997....................................... $ 517
Years ended December:
1998.............................................................. 1,844
1999.............................................................. 854
2000.............................................................. 673
2001.............................................................. 628
2002.............................................................. 567
Thereafter........................................................ 2,736
---------
$ 7,819
---------
---------
</TABLE>
Future minimum capital lease payments as of September 27, 1997 are as
follows:
<TABLE>
<S> <C>
Year ending September 27:
1998.............................................................. $ 351
1999.............................................................. 289
2000.............................................................. 44
2001.............................................................. --
2002.............................................................. --
Thereafter........................................................ --
---------
Total minimum lease payments.................................... 684
Less amount representing interest (at 9% to 13%).................... 78
---------
Present value of net minimum capital lease payments............... 606
Less current installments of obligations under capital leases....... 280
---------
Obligations under capital leases, excluding current installments
(included in long-term debt).................................... $ 326
---------
---------
</TABLE>
F-13
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(6) LEASES (CONTINUED)
Total rental expense was $1,122, $1,735 and $1,500 for the 39-week period
ended September 27, 1997 and the fiscal years 1996 and 1995, respectively.
The Company leases a manufacturing facility from the Chairman of the Board
of the Company under an operating lease expiring in April 1999. Total rent
expense associated with this lease for the 39-week period ended September 27,
1997 and the fiscal years 1996 and 1995 was $346, $492 and $477, respectively.
(7) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPT. 27, DEC. 28,
1997 1996
---------- ---------
<S> <C> <C>
Revolving credit facility.............................................. $ -- $ 12,568
Term Loan A, payable in quarterly installments beginning June 30, 1997
through December 31, 2001............................................ -- 14,500
Term Loan B, payable in quarterly installments beginning June 30, 1997
through December 31, 2003............................................ -- 12,000
9.625% Senior Subordinated Notes due August 1, 2007.................... 120,000 --
12% Senior Subordinated Note payable to related parties due December
31, 2004............................................................. -- 13,000
Obligations under capital leases with interest at 9% to 13%
collateralized by certain machinery, equipment and vehicles.......... 606 795
Unsecured notes payable to related party with various interest rates
ranging from 6.20% to 6.68%, due April 1999.......................... 795 650
---------- ---------
Total long-term debt............................................... 121,401 53,513
Less current installments.............................................. 280 1,976
---------- ---------
Long-term debt, excluding current installments..................... $ 121,121 $ 51,537
---------- ---------
---------- ---------
</TABLE>
In connection with the Acquisition, B&G Foods, Inc. entered into a $50,000
Credit Agreement (the "Credit Facility") which consists of a $23,500 revolving
credit facility, Term Loan A of $14,500 and Term Loan B of $12,000. Interest was
determined based on several available rates as stipulated in the Credit Facility
and borrowings on the revolver were limited to specified percentages of eligible
accounts receivable and inventories, as defined. In connection with the
Company's acquisition of certain assets from Nabisco, Inc. on June 17, 1997, the
Credit Facility was amended and restated to increase the Company's revolving
credit facility by $1,500 and increase Term Loans A and B by $33,500 in the
aggregate, with new repayment terms beginning September 1997 on the term loans.
Additionally, on June 17, 1997, $6,000 of the BRS Note was repaid (plus accrued
interest) and $7,000 of the BRS Note was contributed to capital. In connection
with the issuance of the 9.625% $120,000 Senior Subordinated Notes on August 11,
1997, the term loans were repaid in full, and the Credit Facility was further
amended and restated to provide for, among other things, a maximum $50,000
revolving credit facility due August 31, 2002. Borrowings under the revolver are
not limited by percentages of underlying assets. There was no outstanding
balance at September 27, 1997 under the Credit Facility.
F-14
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(7) LONG-TERM DEBT (CONTINUED)
Interest on the Credit Facility is determined based on several alternative
rates as stipulated in the Credit Facility, including the base lending rate per
annum plus 1.0% or LIBOR plus 2.50%. The Credit Facility is secured by
substantially all of the Company's assets. The Credit Facility also provides for
mandatory prepayment requirements based on asset dispositions and issuance of
securities, as defined. The Credit Facility contains covenants that will
restrict, among other things, the ability of the Company to incur additional
indebtedness, pay dividends and create certain liens. The Credit Facility also
contains certain financial covenants which, among other things, specify maximum
capital expenditure limits, a minimum fixed charge coverage ratio, a minimum
total interest coverage ratio and a maximum indebtedness to EBIDAT ratio, each
ratio as defined. Proceeds of the Credit Facility are restricted to funding the
Company's working capital requirements, capital expenditures and acquisitions of
companies in the same line of business as the Company, subject to certain
criteria. The Credit Facility limits acquisitions to $20,000 per year as well as
$20,000 per acquisition.
The Credit Facility requires an annual commitment fee of an amount equal to
0.50% of the average daily unused portion of the Credit Facility. The Credit
Facility also provides a maximum commitment for letters of credit of $3,000 and
requires an annual commitment fee of 2.50% of the aggregate unused portion. At
September 27, 1997, letters of credit of approximately $361 have been issued
under the Credit Facility.
On February 7, 1997, the Company entered into a two-year interest rate cap
agreement in order to reduce the exposure of changes in interest rates on the
Credit Facility. The interest rate cap agreement consists of a cap rate of
11.25%. The cost of the interest rate cap agreement was $16, which is recorded
in deferred financing fees (other assets) in the accompanying consolidated
balance sheet at September 27, 1997 and is being amortized over the life of the
Credit Facility.
On August 11, 1997, the Company issued $120,000 of 9.625% Senior
Subordinated Notes (the "Notes") due August 1, 2007 with interest payable
semiannually on February 1 and August 1 of each year, commencing February 1,
1998. The proceeds of the Notes were used to repay the outstanding balances
together with accrued and unpaid interest with respect to the Credit Facility
and the Interim Notes, to finance the acquisition of JEM, to pay certain related
fees and expenses and for general corporate purposes. The indenture for the
Notes contain certain covenants that, among other things, limit the ability of
the Company to incur additional debt, issue preferred stock, pay dividends or
make certain other restricted payments, enter into transactions with affiliates,
make certain asset dispositions, merge or consolidate with, or transfer
substantially all of its assets to, another person, as defined, encumber assets
under certain circumstances, restrict dividends and other payments from
subsidiaries, engage in sale and leaseback transactions, issue capital stock, as
defined, or engage in certain business activities.
The Notes will be redeemable at the option of the Company, in whole or in
part, at any time on or after August 1, 2002 at 104.813% of their principal
amount plus accrued and unpaid interest and Liquidated Damages, as defined, if
any, beginning August 1, 2002, and thereafter at prices declining annually to
100% on or after August 1, 2005. In addition, at any time prior to August 1,
2000, the Company may, in its discretion, redeem up to 35% of the original
aggregate principal amount of the Notes at a redemption price equal to 109.625%
of the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, as defined, if any, to the date of redemption, with the net proceeds of
one or more Public Equity Offering, as defined; provided that at least 65% of
the original aggregate principal amount of the Notes remains outstanding
immediately after each redemption. Upon the occurrence of a Change in
F-15
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(7) LONG-TERM DEBT (CONTINUED)
Control, as defined, the Company will have the option, at any time on or prior
to August 1, 2002, to redeem the Notes, in whole but not in part, at a
redemption price equal to 100% of the principal amount plus the Applicable
Premium, as defined, plus accrued and unpaid interest and Liquidated Damages, as
defined, if any, to the date of redemption and if the Company does not so redeem
the Notes or if such Change in Control, as defined, occurs after August 1, 2002,
the Company will be required to make an offer to repurchase the Notes at a price
equal to 101% of the principal amount, together with accrued and unpaid interest
and Liquidated Damages, as defined, if any, to the date of repurchase. The Notes
are not subject to any sinking fund requirements.
As described in note 6, the Company leases a manufacturing facility from the
Chairman of the Board of the Company. The Company pays $43 per month in rent in
cash and, pursuant to a Memorandum of Agreement, an additional amount in the
form of unsecured notes payable, which are issued in an annual aggregate
principal amount of $188. The Company's liability under the issued unsecured
notes as of September 27, 1997 and December 28, 1996 was $795 and $650,
respectively. The notes are due in April 1999, the date of the lease expiration.
The Company estimates that the remaining obligation of the notes to be issued is
$354 and $507 as of September 27, 1997 and December 28, 1996, respectively. Such
amounts are included in accrued expenses and other liabilities.
At September 27, 1997 and December 28, 1996, accrued interest of $1,653 and
$13, respectively, is included in accrued expenses in the accompanying balance
sheets.
The aggregate maturities of long-term debt are as follows:
<TABLE>
<S> <C>
October through December 1997..................................... $ 68
Years ended December:
1998............................................................ 317
1999............................................................ 977
2000............................................................ 39
2001............................................................ --
2002............................................................ --
Thereafter...................................................... 120,000
---------
$ 121,401
---------
---------
</TABLE>
F-16
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(8) INCOME TAX (BENEFIT) EXPENSE
Income tax (benefit) expense has been classified in the accompanying
statements of operations as follows:
<TABLE>
<CAPTION>
39-WEEK
PERIOD YEAR YEAR
ENDED ENDED ENDED
SEPT. 27, DEC. 28, DEC. 30,
1997 1996 1995
--------- ----------- -----------
<S> <C> <C> <C>
Income before extraordinary item.................................................... $ 426 $ 591 $ 896
Extraordinary item.................................................................. (1,138) -- --
--------- ----- -----
$ (712) $ 591 $ 896
--------- ----- -----
--------- ----- -----
</TABLE>
Income tax (benefit) expense consists of the following:
<TABLE>
<CAPTION>
39-WEEK
PERIOD YEAR YEAR
ENDED ENDED ENDED
SEPT. 27, DEC. 28, DEC. 30,
1997 1996 1995
--------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal........................................................................... $ -- $ 95 $ 317
State............................................................................. 222 110 184
--------- ----- -----
222 205 501
--------- ----- -----
Deferred:
Federal........................................................................... (716) 271 383
State............................................................................. (218) 115 12
--------- ----- -----
(934) 386 395
--------- ----- -----
$ (712) $ 591 $ 896
--------- ----- -----
--------- ----- -----
</TABLE>
Income tax (benefit) expense differs from the expected income tax (benefit)
expense (computed by applying the U.S. federal income tax rate of 34% to pretax
income) as a result of the following:
<TABLE>
<CAPTION>
39-WEEK
PERIOD YEAR YEAR
ENDED ENDED ENDED
SEPT. 27, DEC. 28, DEC. 30,
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Computed expected tax (benefit) expense............................................. $ (844) $ 295 $ 549
State income taxes, net of federal income tax benefit............................... 3 149 129
Non-deductible expenses, principally amortization of goodwill....................... 129 147 218
----- ----- -----
$ (712) $ 591 $ 896
----- ----- -----
----- ----- -----
</TABLE>
F-17
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(8) INCOME TAX (BENEFIT) EXPENSE (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:
<TABLE>
<CAPTION>
SEPT. 27, DEC. 28,
1997 1996
---------- ----------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance....................................... $ 225 $ --
Inventories, principally due to additional costs capitalized for tax purposes........... 571 400
Accruals and other liabilities not currently deductible................................. 2,585 2,026
Net operating loss carryforwards........................................................ 3,802 2,482
Deferred financing costs................................................................ 1,231 --
---------- ----------
Total gross deferred tax assets..................................................... 8,414 4,908
Less valuation allowance................................................................ (950) (824)
---------- ----------
Net deferred tax assets............................................................. 7,464 4,084
---------- ----------
Deferred tax liabilities:
Plant and equipment..................................................................... (2,143) (436)
Intangible assets....................................................................... (13,995) (11,998)
---------- ----------
Total gross deferred tax liabilities................................................ (16,138) (12,434)
---------- ----------
Net deferred tax liability.......................................................... $ (8,674) $ (8,350)
---------- ----------
---------- ----------
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based upon the level of
historical taxable income and projections for future taxable income over the
periods in which the deferred tax assets are deductible, management believes it
is more likely than not the Company will realize the benefits of these
deductible differences, net of the existing valuation allowances at September
27, 1997. The amount of the deferred tax asset considered realizable, however,
could be reduced in the near term if estimates of future taxable income during
the carryforward period are reduced. The valuation allowance at September 27,
1997 and December 28, 1996 of $950 and $824, respectively, represents the
allowance for state net operating loss carryforwards of $15.7 million and $13.6
million, respectively, which are available to offset future state taxable
income, if any, through 2003. Any future utilization of these state net
operating loss carryforwards will result in an adjustment to goodwill to the
extent it reduces the valuation allowance.
At September 27, 1997, the Company has net operating loss carryforwards for
federal income tax purposes of $8,414 which are available to offset future
federal taxable income, if any, through 2009. As a result of the Acquisition and
Successor Acquisitions, the annual utilization of the net operating loss
carryforwards is limited under certain provisions of the Internal Revenue Code.
F-18
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(9) PENSION BENEFITS
The Company has defined benefit pension plans covering substantially all of
its employees, which plans were previously provided by the Predecessor. The
benefits are based on years of service and the employee's compensation, as
defined. The Company makes annual contributions to the plans equal to the
maximum amount that can be deducted for income tax purposes. The following table
sets forth the plans' funded status and amounts recognized in the Successor
Consolidated balance sheets.
<TABLE>
<CAPTION>
SEPT.27, DEC.28,
1997 1996
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligations--vested benefit
obligation............................................................. $ (4,731) $ (4,434)
--------- ---------
--------- ---------
Accumulated benefit obligation........................................... $ (4,810) $ (4,508)
--------- ---------
Projected benefit obligation............................................. (6,551) (6,047)
Plan assets at fair value................................................ 4,781 4,190
--------- ---------
Excess of projected benefit obligation over plan assets.............. (1,770) (1,857)
Unrecognized net gain.................................................... (178) --
--------- ---------
Accrued pension cost................................................. $ (1,948) $ (1,857)
--------- ---------
--------- ---------
</TABLE>
Plan assets are invested primarily in government securities and mutual
funds.
Net pension cost includes the following components:
<TABLE>
<CAPTION>
39-WEEK
PERIOD YEAR YEAR
ENDED ENDED ENDED
SEPT. 27, DEC. 28, DEC. 30,
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Service cost--benefits earned during the period..................................... $ 331 $ 412 $ 335
Interest cost on projected benefit obligation....................................... 324 387 332
Actual return on plan assets........................................................ (283) (168) (499)
Net amortization and deferral....................................................... 17 (107) 232
----- ----- -----
Net pension cost................................................................ $ 389 $ 524 $ 400
----- ----- -----
----- ----- -----
</TABLE>
Assumptions used in accounting for the pension plans as of September 27,
1997 and December 28, 1996 were:
<TABLE>
<S> <C>
Discount rates................................................. 7.25 to%
7.50
Rate of increase in compensation levels........................ 5.00%
Expected long-term rate of return on assets.................... 7.75 to%
8.50
-----------
-----------
</TABLE>
The Company sponsors several defined contribution plans covering
substantially all of its employees, which plans were previously sponsored by the
Predecessor. Employees may contribute to these plans and these contributions are
matched at varying amounts by the Company. Company contributions for the
matching component of these plans amounted to $132, $229 and $216 for the
39-week period ended September 27, 1997 and the fiscal years ended December 28,
1996 and December 30, 1995, respectively.
F-19
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(10) CHANGES IN STOCKHOLDER'S EQUITY
The changes in stockholder's equity for the 39-week period ended September
27, 1997 and the fiscal years ended December 28, 1996 and December 30, 1995 are
as follows:
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RECEIVABLE ACCUMU-
--------------------- PAID-IN FROM STOCK LATED
SHARES AMOUNT CAPITAL ISSUANCE DEFICIT TOTAL
--------- ---------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994................... 8,900 $ 15,131 $ 13,331 $ -- $ 799 $ 29,261
Net income..................................... -- -- -- -- 718 718
--------- ---------- ----------- ----- --------- ---------
Balance at December 30, 1995................... 8,900 15,131 13,331 -- 1,517 29,979
Net income..................................... -- -- -- -- 276 276
--------- ---------- ----------- ----- --------- ---------
Balance at December 27, 1996, immediately prior
to acquisition............................... 8,900 15,131 13,331 -- 1,517 29,979
Adjustment associated with acquisition......... -- -- 369 -- -- 369
Eliminate predecessor equity upon
acquisition.................................. (8,900) (15,131) (13,700) -- (1,793) (30,624)
Successor shares issued upon acquisition....... 1 -- 13,000 (500) -- 12,500
--------- ---------- ----------- ----- --------- ---------
Balance at December 28, 1996................... 1 -- 13,000 (500) -- 12,500
Net loss....................................... -- -- -- -- (1,771) (1,771)
Capital contribution (note 7).................. -- -- 7,000 -- -- 7,000
Payment of receivable from stock issuance...... -- -- -- 500 -- 500
--------- ---------- ----------- ----- --------- ---------
Balance at September 27, 1997.................. 1 $ -- $ 20,000 $ -- $ (1,771) $ 18,229
--------- ---------- ----------- ----- --------- ---------
--------- ---------- ----------- ----- --------- ---------
</TABLE>
(11) RELATED PARTY TRANSACTIONS
In conjunction with the Acquisition, the Company entered into a Management
Agreement with BRS, in which BRS is paid an annual fee of $250 for certain
management, business and organizational strategy, and merchant and investment
banking services. Charges for such services amounted to approximately $191
during the 39-week period ended September 27, 1997. The Management Agreement
will expire either on December 27, 2006 or the date that BRS owns less than 20%
of the outstanding common stock, if sooner.
The Company entered into a Transaction Services Agreement pursuant to which
BRS will be paid a transaction fee for management, financial and other corporate
advisory services rendered by BRS in connection with acquisitions by the
Company, which fee will not exceed 1.0% of the total transaction value. In
connection with the Successor Acquisitions, the Company paid transaction fees
aggregating $700, which was included in the allocation of the respective
purchase prices.
DUE TO RELATED PARTIES
Due to related parties includes final amounts payable to SFC for the
Acquisition at December 28, 1996 (paid in 1997) and management fees to BRS and
accrued interest payable under the unsecured notes payable to related parties at
September 27, 1997.
F-20
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(11) RELATED PARTY TRANSACTIONS (CONTINUED)
Related party interest expense on the unsecured notes payable to related
parties and the BRS Note was $788, $38 and $31 for the 39-week period ended
September 27, 1997 and the fiscal years ended December 28, 1996 and December 30,
1995, respectively.
Prior to the Acquisition, SFC provided certain financing and cash management
services for the Company and allocated certain costs for services provided. Such
charges terminated upon the completion of the Acquisition and have been replaced
with the Company's own costs. Allocations to the Company by SFC were based on
the Company's share of costs paid by SFC on its behalf for consolidated
programs. Such allocations may not be reflective of the costs which would have
been incurred if the Company operated on a stand-alone basis or which will be
incurred in the future. Management believes that the basis for allocation was
reasonable. The following is a summary of the amounts charged or allocated to
the Company:
TRADE ACCOUNTS RECEIVABLE
During the period the Company was a subsidiary of SFC (from August 1993
through December 27, 1996), the Company sold its trade accounts receivable as
they arose from sales to a financing subsidiary of SFC. Discounting expense, net
of servicing income, related to this arrangement was recorded as interest
expense and totaled approximately $807 and $657 in fiscal years 1996 and 1995,
respectively.
MANAGEMENT FEE
On January 1, 1995, the Company entered into an Administrative Services and
Management Agreement with SFC, in which SFC is paid an annual fee equal to one
percent of gross revenues, as defined, for certain accounting, legal, tax and
management advisory services. Charges for such services amounted to $1,249 and
$1,097 in fiscal years 1996 and 1995, respectively.
BORROWINGS
The weighted average interest rate on borrowings from SFC for fiscal years
1996 and 1995 was 9.94% and 10.75%, respectively. The related interest expense
recognized by the Company on such borrowings was $3,607 and $2,936 in fiscal
years 1996 and 1995, respectively.
(12) COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.
On September 27, 1997, the Company had purchase commitments with various
suppliers to purchase certain raw materials in the aggregate amount of
approximately $1,842. Management believes that all such commitments will be
fulfilled within one year.
The Company is subject to environmental regulations in the normal course of
business. Management believes that the cost of compliance with such regulations
will not have a material adverse effect on the Company's business, financial
condition or results of operations.
F-21
<PAGE>
B&G FOODS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(13) BUSINESS AND CREDIT CONCENTRATIONS
The Company's exposure to credit loss in the event of non-payment of
accounts receivable by customers is represented in the amount of those
receivables. The Company performs ongoing credit evaluations of its customers'
financial condition and generally requires no collateral from those customers.
As of September 27, 1997, other than accounts receivable from International Home
Foods, Inc. ("IHF"), the Company does not believe it has any significant
concentration of credit risk with respect to its trade accounts receivable.
The Company produces fruit spreads and wet spices pursuant to contracts with
IHF which expire in March 1999 and March 1998, respectively. Additionally, the
Company distributes certain IHF products under a contract terminable on 12
months notice. There can be no assurance that upon expiration of these
contracts, new agreements will be reached or that any such new agreements will
be on terms satisfactory to the Company. Sales to IHF under these contracts
during the 39-week period ended September 27, 1997 and in fiscal years 1996 and
1995 were $31,540, $50,778 and $47,368, respectively. Receivables due from IHF
included in trade accounts receivable at September 27, 1997 and December 28,
1996 were $2,807 and $1,190, respectively.
F-22
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
B&G Foods, Inc.:
We have audited the accompanying combined statements of net assets acquired
as of June 17, 1997 and December 31, 1996, and the related combined statements
of product contribution for the 24-week period ended June 17, 1997 and the years
ended December 31, 1996 and 1995 of Regina, Wright's, Brer Rabbit, and Vermont
Maid (the "Nabisco Brands"), product lines acquired from Nabisco, Inc. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying financial statements were prepared to present the net
assets acquired and the product contribution of the Nabisco Brands pursuant to
the purchase agreement between Nabisco, Inc. and RWBV Acquisition Corp., a
wholly-owned, indirect subsidiary of B&G Foods, Inc. (the "Buyer") as described
in note 1 and are not intended to be a complete presentation of the Nabisco
Brands' financial position, results of operations and cash flows.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined net assets acquired of the
Nabisco Brands as of June 17, 1997 and December 31, 1996, and the Nabisco
Brands' combined product contribution for the 24-week period ended June 17, 1997
and the years ended December 31, 1996 and 1995, pursuant to the purchase
agreement referred to in note 1, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Short Hills, New Jersey
September 30, 1997
F-23
<PAGE>
THE NABISCO BRANDS
(CERTAIN PRODUCT LINES OF NABISCO, INC.)
COMBINED STATEMENTS OF NET ASSETS ACQUIRED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 17, DEC. 31,
1997 1996
----------- -----------
<S> <C> <C>
Inventories................................................................................... $ 2,181 $ 2,370
Machinery and equipment, net.................................................................. 1,559 1,585
Coupon liabilities............................................................................ (242) (248)
----------- -----------
Net assets to be acquired................................................................. $ 3,498 $ 3,707
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
F-24
<PAGE>
THE NABISCO BRANDS
(CERTAIN PRODUCT LINES OF NABISCO, INC.)
COMBINED STATEMENTS OF PRODUCT CONTRIBUTION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
24-WEEK YEAR YEAR
PERIOD ENDED ENDED
ENDED DEC. 31, DEC. 31,
JUNE 17, 1997 1996 1995
------------- --------- ---------
<S> <C> <C> <C>
Net sales.................................................................... $ 9,916 $ 27,718 $ 28,937
Cost of goods sold........................................................... 3,531 8,782 9,121
------ --------- ---------
Gross profit............................................................. 6,385 18,936 19,816
Sales and distribution expenses.............................................. 1,350 3,572 3,753
Trade promotions and other marketing expenses................................ 954 3,729 3,478
------ --------- ---------
Product contribution..................................................... $ 4,081 $ 11,635 $ 12,585
------ --------- ---------
------ --------- ---------
</TABLE>
The accompanying notes are an integral part of the combined statements.
F-25
<PAGE>
THE NABISCO BRANDS
(CERTAIN PRODUCT LINES OF NABISCO, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. DESCRIPTION OF BUSINESS
In May 1997, RWBV Acquisition Corp. ("RWBV"), a wholly-owned subsidiary of
Bloch & Guggenheimer, Inc., and an indirect subsidiary of B&G Foods, Inc.,
entered into an Asset Purchase Agreement (the "Agreement") with Nabisco, Inc.
("Nabisco") which was consummated on June 17, 1997. The Agreement provides for
the sale of certain assets and the assumption of certain liabilities of Nabisco,
pertaining to four of its product lines: Regina wine vinegars and cooking wines
("Regina"), Wright's liquid smoke ("Wright's"), Brer Rabbit molasses and syrups
("Brer"), and Vermont Maid maple-flavored syrups ("Vermont"), collectively known
as the "Nabisco Brands." The Nabisco Brands were operated as a part of the
Specialty Products Company and Food Service Company, components of Nabisco. The
Nabisco Brands' products consist of vinegar and cooking wines (Regina), liquid
smoke hickory seasoning (Wright's), molasses (Brer), and syrup (Vermont).
Regina, Wright's and Brer are distributed on a national basis, and Vermont is
distributed primarily in the Northeast. Approximately 50% of Regina and Wright's
net sales are to food service customers, with the remaining 50% of sales to
retail customers. Brer and Vermont sell primarily to retail customers.
Under the terms of the Agreement, Nabisco sold to RWBV certain assets
exclusively used in the Nabisco Brands, as defined in the Agreement, and
retained the manufacturing plants, employees and the retained liabilities, as
defined in the Agreement. The Company also entered into a co-packing agreement
with Nabisco under which Nabisco will continue to bottle products bottled by
Nabisco until March 1998, and assumed certain co-packing contracts relating to
the other Nabisco Brands. In addition, the Company entered into a Transition
Services Agreement (as defined) with Nabisco, under which Nabisco will provide
certain sales and distribution support for the Nabisco Brands on a national
basis through December 17, 1997.
Throughout the periods covered by the combined financial statements, the
Nabisco Brands were operated and accounted for as part of Nabisco. These
combined financial statements have been carved out from Nabisco's historical
accounting records. The period from January 1, 1997 to June 17, 1997 is
hereinafter referred to as the 24-week period ended June 17, 1997.
Under Nabisco's centralized cash management system, cash requirements of the
Nabisco Brands were generally provided directly by Nabisco and cash generated by
the Nabisco Brands was remitted directly to Nabisco. 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 Nabisco Brands. 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 Nabisco Brands were sold, statements of financial position and cash flows
could not be prepared.
The manufacturing and distribution operations of the Nabisco Brands are
conducted where other Nabisco manufacturing and distribution operations, not
included in the Nabisco Brands, are present. In addition, certain
non-manufacturing operations of the Nabisco Brands share facilities and space
with other Nabisco operations. At these shared sites, only the assets of the
Nabisco Brands (inventories and machinery and equipment) are included in the
combined statements of net assets acquired.
Net sales in the accompanying statements of product contribution represent
net sales directly attributable to the Nabisco Brands. Costs and expenses in the
accompanying combined statements of
F-26
<PAGE>
THE NABISCO BRANDS
(CERTAIN PRODUCT LINES OF NABISCO, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
1. DESCRIPTION OF BUSINESS (CONTINUED)
product contribution represent direct costs and expenses related to the Nabisco
Brands. Costs for certain functions and services performed by centralized
Nabisco organizations outside the defined scope of the Nabisco Brands such as
advertising are not included. General and administrative expenses, interest
expense and income taxes were not allocated to the Nabisco Brands.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INCOME RECOGNITION. Net sales and related cost of products sold are
included in income and expense, respectively, when products are shipped to
customer.
INVENTORIES. Inventories are valued at the lower of cost or market with
cost determined by the full absorption standard cost system which approximates a
weighted average inventory cost method on a FIFO basis.
MACHINERY AND EQUIPMENT. Machinery and equipment is stated at historical
cost. Nabisco calculates depreciation using the straight-line method over the
useful lives of its machinery and equipment.
COST OF GOODS SOLD. Cost of good sold includes direct costs of materials,
labor, and overhead. Overhead allocations are based on estimated time spent by
employees, relative use of facilities and other related costs.
SELLING, MARKETING AND DISTRIBUTION EXPENSES INCLUDE THE FOLLOWING:
DISTRIBUTION. Distribution includes costs of inbound and outbound freight
and warehousing.
TRADE PROMOTIONS. Trade promotions represent promotional incentives offered
to retailers.
CONSUMER MARKETING. Consumer marketing is comprised of all costs associated
with coupons. Coupon expense is accrued as incurred. Production costs are
expensed on the initial use of the advertisement.
SELLING. Selling consists solely of broker expenses.
ESTIMATES. The preparation of combined 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 Nabisco Brands had been operating as a separate
entity or future results of the Nabisco Brands.
INTERIM REPORTING. The Nabisco Brands' fiscal year ends December 31.
Interim results are not necessarily indicative of results that might be expected
for the entire fiscal year.
F-27
<PAGE>
THE NABISCO BRANDS
(CERTAIN PRODUCT LINES OF NABISCO, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 17, DEC. 31,
1997 1996
----------- -----------
<S> <C> <C>
Raw materials and packaging............................................... $ 528 $ 739
Work in progress.......................................................... -- 228
Finished goods............................................................ 1,653 1,403
----------- -----------
$ 2,181 $ 2,370
----------- -----------
----------- -----------
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
From time to time, the Nabisco Brands may be subject to certain lawsuits and
claims and other actions arising in the normal course of business. Such lawsuits
and claims, as defined in the Agreement, are the responsibility of Nabisco.
Wright's, Brer, and Vermont are manufactured by third parties and in each
instance RWBV assumed Nabisco's co-packing agreements with these third parties
with varying terms.
F-28
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
JEM Brands, Inc.:
We have audited the accompanying consolidated balance sheets of JEM Brands,
Inc. and subsidiary as of August 15, 1997 and December 28, 1996, and the related
consolidated statements of earnings, retained earnings, and cash flows for the
33-week period ended August 15, 1997 and years ended December 28, 1996 and
December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of JEM Brands,
Inc. and subsidiary as of August 15, 1997 and December 28, 1996, and the results
of their operations and their cash flows for the 33-week period ended August 15,
1997 and years ended December 28, 1996 and December 31, 1995 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
New Orleans, Louisiana
September 17, 1997
F-29
<PAGE>
JEM BRANDS, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AUGUST 15,
1997 DECEMBER 28, 1996
-------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash........................................................................ $ -- $ --
Accounts receivable......................................................... 879 1,487
Due from parent and affiliates, net......................................... -- 1,148
Inventories................................................................. 3,215 3,868
Prepaid expenses............................................................ 12 6
Deferred income taxes....................................................... 184 217
------- -------
Total current assets...................................................... 4,290 6,726
------- -------
Deferred income taxes......................................................... 652 744
Property, plant and equipment................................................. 6,159 6,150
Less accumulated depreciation............................................... (2,526) (2,221)
------- -------
Net property, plant and equipment......................................... 3,633 3,929
------- -------
Goodwill and other intangibles, net of accumulated amortization............... 7,532 7,682
------- -------
Total assets.............................................................. $ 16,107 $ 19,081
------- -------
------- -------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable............................................................ $ 435 $ 694
Accrued expenses............................................................ 114 130
------- -------
Total current liabilities................................................. 549 824
------- -------
Other liabilities............................................................. 42 40
------- -------
Stockholder's equity:
Common stock, par value $.01 per share; authorized 250,000 shares; 200,000
shares issued and outstanding............................................. 2 2
Preferred stock, par value $100 per share; authorized 50,000 shares; 34,338
shares issued and outstanding............................................. 3,434 3,434
Additional paid-in capital.................................................. 11,333 11,333
Retained earnings........................................................... 747 3,448
------- -------
Total stockholder's equity................................................ 15,516 18,217
Commitments...................................................................
------- -------
Total liabilities and stockholder's equity................................ $ 16,107 $ 19,081
------- -------
------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
F-30
<PAGE>
JEM BRANDS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
33-WEEK
PERIOD ENDED YEAR ENDED YEAR ENDED
AUGUST 15, DEC. 28, DEC. 31,
1997 1996 1995
-------------- ----------- -----------
<S> <C> <C> <C>
Net sales............................................................... $ 10,588 $ 18,683 $ 16,945
Cost of goods sold...................................................... 6,668 11,712 9,827
------- ----------- -----------
Gross profit........................................................ 3,920 6,971 7,118
Sales, marketing and distribution expenses.............................. 2,687 4,784 4,685
General and administrative expenses..................................... 797 1,021 1,011
------- ----------- -----------
Operating income.................................................... 436 1,166 1,422
Other income (expenses):
Interest income....................................................... 142 165 97
Loss on disposal of equipment......................................... -- -- (51)
Interest expense...................................................... (4) (9) (20)
Other, net............................................................ 9 15 --
------- ----------- -----------
Earnings before income taxes........................................ 583 1,337 1,448
Income tax expense...................................................... 282 565 636
------- ----------- -----------
Net earnings........................................................ $ 301 $ 772 $ 812
------- ----------- -----------
------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-31
<PAGE>
JEM BRANDS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
33-WEEK
PERIOD ENDED YEAR ENDED YEAR ENDED
AUGUST 15, DEC. 28, DEC. 31,
1997 1996 1995
------------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period............................................ $ 3,448 $ 3,376 $ 3,064
Net earnings.............................................................. 301 772 812
Cash dividends............................................................ (3,002) (700) (500)
------------- ----------- -----------
Balance at end of period.................................................. $ 747 $ 3,448 $ 3,376
------------- ----------- -----------
------------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-32
<PAGE>
JEM BRANDS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
33-WEEK
PERIOD ENDED YEAR ENDED YEAR ENDED
AUGUST 15, DEC. 28, DEC. 31,
1997 1996 1995
------------- ------------- -----------
<S> <C> <C> <C>
Net earnings.............................................................. $ 301 $ 772 $ 812
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization........................................... 455 724 716
Loss on disposal of equipment........................................... -- -- 51
Deferred income taxes................................................... 125 127 222
Changes in operating assets and liabilities:
Accounts receivable................................................... 608 (114) (271)
Due from parent and affiliates, net................................... 1,148 (957) 178
Inventories........................................................... 653 19 255
Prepaid expenses...................................................... (6) 68 (29)
Accounts payable...................................................... (259) 443 (16)
Accrued expenses...................................................... (16) (83) (436)
Other liabilities..................................................... 2 (11) (10)
------------- ----- -----------
Net cash provided by operating activities........................... 3,011 988 1,472
------------- ----- -----------
Cash flows from investing activities--purchases of property, plant and
equipment............................................................... (9) (296) (994)
------------- ----- -----------
Cash flows from financing activities--cash dividends paid................. (3,002) (700) (500)
------------- ----- -----------
Decrease in cash.................................................... -- (8) (22)
Cash at beginning of period............................................... -- 8 30
------------- ----- -----------
Cash at end of period..................................................... $ -- $ -- $ 8
------------- ----- -----------
------------- ----- -----------
Supplemental cash flow information--interest paid......................... $ 4 $ 9 $ 20
------------- ----- -----------
------------- ----- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-33
<PAGE>
JEM BRANDS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) ORGANIZATION AND CONSOLIDATION
JEM Brands, Inc. (JEM) is a wholly-owned subsidiary of E. McIlhenny's Son
Corporation (Parent). The consolidated financial statements include the accounts
of Jem and its wholly-owned subsidiary, Trappey's Fine Foods, Inc. (Trappey's).
The stock of Jem was sold by its Parent on August 15, 1997 (see note 6). All
significant intercompany balances and transactions between Jem and Trappey's
have been eliminated.
JEM Brands, Inc. and subsidiary (the Company) manufactures and distributes a
variety of hot pepper sauces and pickled peppers throughout the United States.
The Company's primary raw materials are readily available, and the Company is
not dependent upon a single supplier or a few suppliers.
Due from parent and affiliates, net includes gross receivables from sales of
the Company to affiliates net of gross payables to the Parent and affiliates.
In 1996, the Company changed its fiscal year end to coincide with the last
Saturday in December. Consequently, the accompanying consolidated statements of
earnings for the period ended December 28, 1996 includes 51 weeks and 6 days and
for the year ended December 31, 1995 includes 52 weeks and 1 day. In conjunction
with the change in fiscal year end, the Company changed its interim reporting to
a 13-week quarter, whereas the first two periods of each quarter are comprised
of 4 weeks and the last period is comprised of 5 weeks. The accompanying
consolidated statement of earnings for the period ended August 15, 1997 includes
32 weeks and 6 days; however, this period is referred to in the accompanying
financial statements as the 33-week period ended August 15, 1997.
(b) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method.
(c) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is provided
on the straight-line method over the following estimated useful lives:
<TABLE>
<S> <C>
20-30
Buildings....................................................... years
Machinery and equipment......................................... 3-15 years
Furniture and fixtures.......................................... 3-5 years
</TABLE>
(d) GOODWILL AND OTHER INTANGIBLES
Goodwill and other intangibles, resulting from the Parent's acquisition of
Jem in 1991, are being amortized on a straight-line basis over a 40-year and
5-year period, respectively.
Amortization expense of $150, $271, and $334 is included in selling, general
and administrative expense for the periods ended August 15, 1997, December 28,
1996 and December 31, 1995, respectively. Accumulated amortization at August 15,
1997 and December 28, 1996 was $2,251 and $2,101, respectively. Other
intangibles were fully amortized in 1996. The Company's policy is to
periodically evaluate such costs
F-34
<PAGE>
JEM BRANDS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
to determine whether there has been any impairment in value primarily by
comparing current and projected sales, operating income and cash flows with the
related annual amortization expense.
(e) INCOME TAXES
The Company is included in the Parent's consolidated federal income tax
return. For financial reporting purposes, the Company accounts for federal
income taxes as if it were a separate taxpayer based upon the Parent's U.S.
Federal income tax rate.
Income taxes are accounted for in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109, "ACCOUNTING FOR
INCOME TAXES," whereby deferred tax assets and liabilities are determined based
on the differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
(f) IMPAIRMENT OF LONG-LIVED ASSETS
The Company adopted the provisions of SFAS No. 121, "ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF," in
1996. This statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell. Adoption of this statement did not have a material impact on the Company's
consolidated financial position, results of operations, or liquidity.
(g) USE OF ESTIMATES
The preparation of consolidated 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 consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
(2) PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
AUGUST 15, DECEMBER 28,
1997 1996
----------- -------------
<S> <C> <C>
Buildings.......................................................... $ 1,425 $ 1,425
Machinery and equipment............................................ 4,003 3,998
Furniture and fixtures............................................. 133 133
Land............................................................... 598 594
----------- ------
$ 6,159 $ 6,150
----------- ------
----------- ------
</TABLE>
F-35
<PAGE>
JEM BRANDS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(3) INCOME TAXES
Income tax expense consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
----------- ----------- ---------
<S> <C> <C> <C>
1997:
Federal......................................................... $ 137 $ 113 $ 250
State........................................................... 20 12 32
----- ----- ---------
$ 157 $ 125 $ 282
----- ----- ---------
----- ----- ---------
1996:
Federal......................................................... $ 438 $ 116 $ 554
State........................................................... -- 11 11
----- ----- ---------
$ 438 $ 127 $ 565
----- ----- ---------
----- ----- ---------
1995:
Federal......................................................... $ 414 $ 200 $ 614
State........................................................... -- 22 22
----- ----- ---------
$ 414 $ 222 $ 636
----- ----- ---------
----- ----- ---------
</TABLE>
The allocated tax expense differed from the amounts computed by applying the
U.S. Federal income tax rate of 35% to earnings before income taxes as a result
of the following:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Computed "expected" tax expense........................................................... $ 204 $ 468 $ 507
Amortization of goodwill and other intangibles............................................ 51 92 114
State taxes, net of federal income tax benefit............................................ 21 7 14
Other..................................................................................... 6 (2) 1
--------- --------- ---------
$ 282 $ 565 $ 636
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-36
<PAGE>
JEM BRANDS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(3) INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at August 15,
1997 and December 28, 1996 are presented below:
<TABLE>
<CAPTION>
AUGUST 15, DECEMBER 28,
1997 1996
----------- -------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards..................................................... $ 1,255 $ 1,345
Inventories.......................................................................... 82 78
----------- ------
Total deferred tax assets........................................................ 1,337 1,423
----------- ------
Deferred tax liabilities:
Property, plant and equipment........................................................ 364 360
Goodwill and other intangibles....................................................... 99 101
Pension and other related costs...................................................... 38 1
----------- ------
Total deferred tax liabilities................................................... 501 462
----------- ------
Net deferred tax asset........................................................... $ 836 $ 961
----------- ------
----------- ------
</TABLE>
There was no valuation allowance for deferred tax assets at August 15, 1997
and December 28, 1996 as management believes that the deferred tax assets will
be realized through future operations and the reversal of taxable temporary
differences.
At August 15, 1997, the Company has net operating loss carryforwards for
federal income tax purposes of approximately $3,586 which are available to
offset future taxable income of the Company through 2006. The federal net
operating loss carryforwards are subject to an annual deductible limit of
approximately $410.
(4) PENSION PLAN AND TAX DEFERRED SAVINGS PLAN
The Company has a defined benefit pension plan covering substantially all of
its employees. The plan provides benefits based on the participants' years of
service and compensation. The Company makes annual contributions to the plan
that comply with the minimum funding provisions of the Employee Retirement
Income Security Act of 1974.
Pension cost for 1997, 1996 and 1995 includes the following components:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Service cost--benefits earned during the period....................................... $ 31 $ 54 $ 31
Interest cost on projected benefit obligations........................................ 106 166 171
Actual return on plan assets.......................................................... (175) (88) (419)
Net amortization and deferral......................................................... 55 (115) 258
--------- --------- ---------
Net pension cost.................................................................. $ 17 $ 17 $ 41
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-37
<PAGE>
JEM BRANDS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(4) PENSION PLAN AND TAX DEFERRED SAVINGS PLAN (CONTINUED)
The following sets forth the plan's funded status and the related amounts
recognized in the Company's balance sheets as of August 15, 1997 and December
28, 1996:
<TABLE>
<CAPTION>
AUGUST 15, DECEMBER 28,
1997 1996
----------- ------------
<S> <C> <C>
Actuarial present value of benefit obligations-
accumulated benefit obligations, including vested benefits of $2,646 and $2,204 at
August 15, 1997 and December 28, 1996, respectively.................................. $ 2,646 $ 2,250
Effect of projected future compensation levels......................................... -- 105
----------- ------------
Projected benefit obligation for services rendered to date............................. 2,646 2,355
Plan assets at fair market value....................................................... (2,646) (2,250)
----------- ------------
Plan assets less than projected benefit obligation..................................... -- 105
Unrecognized prior service costs....................................................... (41) (46)
Unrecognized gain (loss)............................................................... 38 (83)
----------- ------------
Prepaid pension cost............................................................... $ (3) $ (24)
----------- ------------
----------- ------------
</TABLE>
Assumptions used in accounting for the pension plan as of August 15, 1997
and December 28, 1996 are:
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Discount rate................................................................... 7.5% 7.5%
Rates of increase in compensation levels........................................ 5.5% 5.5%
Expected long-term rate of return on assets..................................... 8.5% 8.5%
-- --
-- --
</TABLE>
Plan assets consist of common stocks and fixed income investments.
Additionally, the Company has a tax deferred savings plan (the Savings Plan)
available to all full-time employees of the Company who have completed six
months of service and have attained age 20 1/2. Under the terms of the Savings
Plan, any eligible employee can choose to have a percentage (minimum of 2%) of
his compensation deducted and contributed to the Savings Plan. The maximum
contribution allowed is determined annually in accordance with the applicable
provisions of the Internal Revenue Code. Provided there are sufficient company
profits, the Company will match 50% of the first 6% of a participant's
compensation contributed to the Savings Plan. In order to qualify for the
Company's matching contribution, the participant must either be a participant of
the Savings Plan at the end of the year or have terminated due to retirement,
disability or death. During 1997, 1996 and 1995, the Company contributed
approximately $15, $22 and $18, respectively, to the Savings Plan.
(5) RELATED PARTY TRANSACTIONS
The Company sells various inventory items to a wholly-owned subsidiary of
the Parent (subsidiary) at cost plus an approximate markup of 20% in 1996 and
1995. There was no markup in 1997. The Company also earns interest from the
subsidiary on the gross receivable balance related to such sales. In addition,
F-38
<PAGE>
JEM BRANDS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(5) RELATED PARTY TRANSACTIONS (CONTINUED)
included in the Company's cost of goods sold and selling, general and
administrative expense are overhead costs and selling, general and
administrative costs allocated from the subsidiary.
The net sales, allocated cost and interest earned related to the subsidiary
that are included in the accompanying consolidated statements of earnings are as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Net sales............................................................................ $ 1,127 $ 2,799 $ 1,768
--------- --------- ---------
--------- --------- ---------
Cost of goods sold (overhead cost)................................................... $ 75 $ 122 $ 120
--------- --------- ---------
--------- --------- ---------
Selling, general and administrative expense.......................................... $ 1,079 $ 1,446 $ 1,209
--------- --------- ---------
--------- --------- ---------
Interest income...................................................................... $ 142 $ 165 $ 97
--------- --------- ---------
--------- --------- ---------
</TABLE>
During 1995, the Company purchased various inventory items and machinery and
equipment from the subsidiary, at cost and net book value, respectively. The
inventory purchases, which were included in cost of goods sold in 1995, amounted
to $159, and the machinery and equipment purchases amounted to $75.
(6) SALE OF COMPANY'S STOCK
On August 15, 1997, the Parent sold its interest in the common and preferred
stock of the Company to B&G Foods, Inc. for $12,250. Immediately prior to the
sale of the Company's stock, a cash dividend of $2,652 was declared and paid.
The cash dividend paid represented the net amount due from parent and
affiliates, which was received by the Company immediately prior to the August
15, 1997 dividend payment.
The accompanying consolidated financial statements of the Company as of and
for the period ended August 15, 1997 represent the financial position, results
of operations, and cash flows of the Company prior to the sale of the Company's
stock.
F-39
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, ANY OF THE NOTES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------------
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... i
Summary........................................ 1
Risk Factors................................... 13
Use of Proceeds................................ 19
Capitalization................................. 20
Pro Forma Condensed Consolidated Financial
Information................................... 21
Selected Historical Financial and Other Data... 27
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 33
The Exchange Offer............................. 40
Certain Federal Income Tax Considerations...... 47
Business....................................... 49
Management..................................... 62
Ownership of the Capital Stock................. 66
Certain Relationships and Related
Transactions.................................. 68
Description of Certain Indebtedness............ 69
Description of Notes........................... 71
Plan of Distribution........................... 101
Legal Matters.................................. 102
Experts........................................ 102
Index to Financial Statements.................. F-1
</TABLE>
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN THE
ORIGINAL DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
$120,000,000
[LOGO]
B&G FOODS, INC.
---------------------
PROSPECTUS
---------------------
OFFER TO EXCHANGE
9 5/8% SENIOR SUBORDINATED NOTES
DUE 2007
FOR ALL OUTSTANDING
9 5/8% SENIOR SUBORDINATED NOTES
DUE 2007
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "GCL") provides in
relevant part that a corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such person's conduct was unlawful.
In addition, Section 145 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper.
Section 145 also provides that to the extent a director, officer, employee
or agent of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to above, or defense of any
claim issue or matter therein, he shall be indemnified against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection therewith.
Furthermore, Section 145 provides that nothing in the above-described
provisions shall be deemed exclusive of any other rights to indemnification or
advancement of expenses to which any person may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 102(b)(7) of the GCL provides that a corporation may in its
certificate of incorporation eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director except for liability: (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under Section 174 of the GCL (pertaining to
certain prohibited acts including unlawful payment of dividends or unlawful
purchase or redemption of the corporation's capital stock); or (iv) for any
transaction from which the director derived an improper personal benefit.
The Certificates of Incorporation of the Company, RWBV Acquisition Corp. and
RWBV Brands Company provide that the respective directors of such corporations
shall be entitled to the benefits of all limitations on the liability of
directors generally under Delaware law and such corporations shall indemnify
II-1
<PAGE>
all persons whom they are permitted to indemnify to the full extent permitted
under Section 145 of the GCL. The Certificates of Incorporation of BGH Holdings,
Inc., Bloch & Guggenheimer, Inc., Roseland Distribution Company, Roseland
Manufacturing, Inc., BRH Holdings, Inc., and JEM Brands, Inc., provide for the
limitation or elimination of the liability of directors to such corporations or
their stockholders for monetary damages for breach of their fiduciary duties to
the fullest extent permitted by the laws of Delaware. The Certificate of
Incorporation of Burns & Ricker, Inc. provides for the indemnification of all
persons held liable by reason of being a director or officer and for the
limitation or elimination of the liabilities of directors, to the fullest extent
permitted under Delaware law, to the corporation or its stockholders for
monetary damages for breach of their fiduciary duties as a director.
In addition, the Bylaws of the Company, and RWBV Acquisition Corp., RWBV
Brands Company provide for the indemnification of their directors and officers
to the fullest extent permitted under Delaware law as in effect from time to
time and by their respective certificate of incorporation. The Bylaws of BGH
Holdings, Inc., Bloch & Guggenheimer, Inc., Roseland Distribution Company,
Roseland Manufacturing, Inc., BRH Holdings, Inc., and JEM Brands, Inc., provide
for the indemnification of each director and officer who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative if
the director or officer acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interest of such
corporation and had no reason to believe that his conduct was unlawful. The
Bylaws of JEM Brands, Inc. also provide that, to the fullest extent permitted by
the GCL, a director of the corporation shall not be liable to such corporation
or its stockholders for breach of fiduciary duty as a director. The Bylaws of
Burns & Ricker, Inc. contain no provision with respect to the indemnification of
directors and officers of the corporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS.
<TABLE>
<C> <S>
3.1 Articles of Incorporation of B&G Foods, Inc.*
3.2 Bylaws of B&G Foods, Inc.*
3.3 Articles of Incorporation of BGH Holdings, Inc.*
3.4 Bylaws of BGH Holdings, Inc.*
3.5 Articles of Incorporation of JEM Brands, Inc.*
3.6 Bylaws of JEM Brands, Inc.*
3.7 Articles of Incorporation of Trappey's Fine Foods, Inc.*
3.8 Bylaws of Trappey's Fine Foods, Inc.*
3.9 Articles of Incorporation for Bloch & Guggenheimer, Inc.*
3.10 Bylaws of Bloch & Guggenheimer, Inc.*
3.11 Articles of Incorporation of RWBV Acquisition Corp.*
3.12 Bylaws of RWBV Acquisition Corp.*
3.13 Articles of Incorporation of RWBV Brands Company*
3.14 Bylaws of RWBV Brands Company*
3.15 Articles of Incorporation of Roseland Distribution Company*
3.16 Bylaws of Roseland Distribution Company*
3.17 Articles of Incorporation of BRH Holdings, Inc.*
3.18 Bylaws of BRH Holdings, Inc.*
3.19 Articles of Incorporation of Burns & Ricker, Inc.*
3.20 Bylaws of Burns & Ricker, Inc.*
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
4.1 Indenture dated as of August 11, 1997 between B&G Foods, Inc. (the "Company"), BGH
Holdings, Inc., RWBV Acquisition Corp., BRH Holdings, Inc., Bloch & Guggenheimer,
Inc., Roseland Distribution Company, Burns & Ricker, Inc., Roseland Manufacturing,
Inc., and RWBV Brands Company (collectively, the "Guarantors") and The Bank of New
York, as trustee (the "Trustee").
4.2 Form of the Company's 9 5/8% Senior Notes due 2007 (filed as Exhibit 4.1)
5.1 Opinion of Dechert Price & Rhoads re: legality *
10.1 Registration Rights Agreement dated as of August 11, 1997 by and among the Company,
the Guarantors party thereto, Lehman Brothers, Inc. and Lazard Freres & Co. LLC.
10.2 Purchase Agreement dated August 6, 1997 among the Company, the Guarantors party
thereto, Lehman Brothers, Inc. and Lazard Freres & Co. LLC
10.3 Second Amended and Restated Credit Agreement dated as of August 11, 1997 among the
Company, the guarantors party thereto, Heller Financial Inc., as agent and lender,
and the lenders party thereto.*
12.1 Computation of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Company and the Additional Registrants*
23.1 Consent of KPMG Peat Marwick LLP relating to B&G Foods, Inc.
23.2 Consent of KPMG Peat Marwick LLP relating to the Nabisco Brands
23.3 Consent of KPMG Peat Marwick LLP relating to JEM Brands, Inc.
23.4 Consent of Dechert Price & Rhoads (included in Exhibit 5.1) *
24 Power of Attorney (included on pages II-5 through II-9)
25 Statement of Eligibility and Qualification of The Bank of New York on Form T-1
99.1 Form of Letter of Transmittal *
99.2 Form of Notice of Guaranteed Delivery *
</TABLE>
- ------------------------
* To be filed by Amendment
(B) FINANCIAL STATEMENT SCHEDULES
Schedules not listed above are omitted because of the absence of the
conditions under which they are required or because the information required by
such omitted schedules is set forth in the financial statements or the notes
thereto.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
II-3
<PAGE>
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
corporation 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 Registrants
have duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized on November 7, 1997.
B&G FOODS, INC.
By: /s/ DAVID L. WENNER
-----------------------------------------
David L. Wenner
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BGH HOLDINGS, INC.
BRH HOLDINGS, INC.
BLOCH & GUGGENHEIMER, INC.
ROSELAND DISTRIBUTION COMPANY
ROSELAND MANUFACTURING, INC.
JEM BRANDS, INC.
TRAPPEY'S FINE FOODS, INC.
BURNS & RICKER, INC.
BY: /S/ DAVID L. WENNER
-----------------------------------------
David L. Wenner
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RWBV ACQUISITION CORP.
RWBV BRANDS COMPANY
BY: /S/ STEPHEN C. SHERRILL
-----------------------------------------
Stephen C. Sherrill
PRESIDENT
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of David L. Wenner and Robert C. Cantwell,
his or her true and lawful attorney-in-fact and agents, each acting alone, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any or all amendments
to this Registration Statement, including post-effective amendments, as well as
any related registration statement (or amendment thereto) filed pursuant to Rule
462 promulgated under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, and hereby ratifies and confirms all his or her said attorneys-in-fact
and agents or any of them or his or her substitute or substitutes may lawfully
do or cause to be done by virtue thereof.
II-5
<PAGE>
This Power of Attorney may be executed in multiple counterparts, each of
which shall be deemed an original, but which taken together shall constitute one
instrument.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
B&G FOODS, INC.
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
President, Chief Executive
/s/ DAVID L. WENNER Officer and Director
- ------------------------------ (Principal Executive November 7, 1997
David L. Wenner Officer)
Executive Vice President
of Finance and Chief
/s/ ROBERT C. CANTWELL Financial Officer
- ------------------------------ (Principal Financial November 7, 1997
Robert C. Cantwell Officer and Accounting
Officer)
/s/ THOMAS J. BALDWIN
- ------------------------------ Director November 7, 1997
Thomas J. Baldwin
/s/ ALFRED POE
- ------------------------------ Director November 7, 1997
Alfred Poe
/s/ HAROLD O. ROSSER II
- ------------------------------ Director November 7, 1997
Harold O. Rosser II
/s/ STEPHEN C. SHERRILL
- ------------------------------ Director November 7, 1997
Stephen C. Sherrill
/s/ LEONARD S. POLANER
- ------------------------------ Director November 7, 1997
Leonard S. Polaner
JEM BRANDS, INC.
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
President and Chief
/s/ DAVID L. WENNER Executive Officer
- ------------------------------ (Principal Executive November 7, 1997
David L. Wenner Officer)
Executive Vice President
/s/ ROBERT C. CANTWELL of Finance
- ------------------------------ (Principal Financial November 7, 1997
Robert C. Cantwell Officer and Accounting
Officer)
/s/ STEPHEN C. SHERRILL
- ------------------------------ Director November 7, 1997
Stephen C. Sherrill
II-6
<PAGE>
TRAPPEY'S FINE FOODS, INC.
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
President and Chief
/s/ DAVID L. WENNER Executive Officer
- ------------------------------ (Principal Executive November 7, 1997
David L. Wenner Officer)
Executive Vice President
of Finance and Chief
/s/ ROBERT C. CANTWELL Financial Officer
- ------------------------------ (Principal Financial November 7, 1997
Robert C. Cantwell Officer and Accounting
Officer)
/s/ STEPHEN C. SHERRILL
- ------------------------------ Director November 7, 1997
Stephen C. Sherrill
RWBV ACQUISITION CORP.
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
President, Secretary and
/s/ STEPHEN C. SHERRILL Director (Principal
- ------------------------------ Executive, Financial and November 7, 1997
Stephen C. Sherrill Accounting Officer)
Vice President of Finance
/s/ ROBERT C. CANTWELL and Treasurer (Principal
- ------------------------------ Financial Officer and November 7, 1997
Robert C. Cantwell Accounting Officer)
RWBV BRANDS COMPANY
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ STEPHEN SHERRILL President and Director
- ------------------------------ (Principal Executive November 7, 1997
Stephen Sherrill Officer)
Vice President and
/s/ ROBERT CANTWELL Treasurer (Principal
- ------------------------------ Financial Officer and November 7, 1997
Robert Cantwell Accounting Officer)
II-7
<PAGE>
<TABLE>
<C> <S> <C>
BURNS & RICKER, INC.
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
President and Chief
/s/ DAVID L. WENNER Executive Officer
- ------------------------------ (Principal Executive November 7, 1997
David L. Wenner Officer)
Executive Vice President
of Finance and Chief
/s/ ROBERT C. CANTWELL Financial Officer
- ------------------------------ (Principal Financial November 7, 1997
Robert C. Cantwell Officer and Accounting
Officer)
/s/ STEPHEN SHERRILL
- ------------------------------ Vice President and November 7, 1997
Stephen Sherrill Director
ROSELAND MANUFACTURING, INC.
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
President and Chief
/s/ DAVID L. WENNER Executive Officer
- ------------------------------ (Principal Executive November 7, 1997
David L. Wenner Officer)
Executive Vice President
of Finance and Chief
/s/ ROBERT C. CANTWELL Financial Officer
- ------------------------------ (Principal Financial November 7, 1997
Robert C. Cantwell Officer and Accounting
Officer)
/s/ STEPHEN C. SHERRILL
- ------------------------------ Vice President and November 7, 1997
Stephen C. Sherrill Director
ROSELAND DISTRIBUTION COMPANY
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
President and Chief
/s/ DAVID L. WENNER Executive Officer
- ------------------------------ (Principal Executive November 7, 1997
David L. Wenner Officer)
Executive Vice President
of Finance and Chief
/s/ ROBERT C. CANTWELL Financial Officer
- ------------------------------ (Principal Financial November 7, 1997
Robert C. Cantwell Officer and Accounting
Officer)
/s/ STEPHEN SHERRILL
- ------------------------------ Vice President and November 7, 1997
Stephen Sherrill Director
</TABLE>
II-8
<PAGE>
<TABLE>
<C> <S> <C>
BLOCH & GUGGENHEIMER, INC.
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
President and Chief
/s/ DAVID L. WENNER Executive Officer
- ------------------------------ (Principal Executive November 7, 1997
David L. Wenner Officer)
Executive Vice President
of Finance and Chief
/s/ ROBERT C. CANTWELL Financial Officer
- ------------------------------ (Principal Financial November 7, 1997
Robert C. Cantwell Officer and Accounting
Officer)
/s/ STEPHEN SHERRILL
- ------------------------------ Vice President and November 7, 1997
Stephen Sherrill Director
BRH HOLDINGS, INC.
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
President and Chief
/s/ DAVID L. WENNER Executive Officer
- ------------------------------ (Principal Executive November 7, 1997
David L. Wenner Officer)
Executive Vice President
of Finance and Chief
/s/ ROBERT C. CANTWELL Financial Officer
- ------------------------------ (Principal Financial November 7, 1997
Robert C. Cantwell Officer and Accounting
Officer)
/s/ STEPHEN SHERRILL
- ------------------------------ Vice President and November 7, 1997
Stephen Sherrill Director
BGH HOLDINGS, INC.
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
President and Chief
/s/ DAVID L. WENNER Executive Officer
- ------------------------------ (Principal Executive November 7, 1997
David L. Wenner Officer)
Executive Vice President
of Finance and Chief
/s/ ROBERT C. CANTWELL Financial Officer
- ------------------------------ (Principal Financial November 7, 1997
Robert C. Cantwell Officer and Accounting
Officer)
/s/ STEPHEN SHERRILL
- ------------------------------ Vice President and November 7, 1997
Stephen Sherrill Director
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT PAGE
- ----------- -------------------------------------------------------------------------------------------------- -----
<C> <S> <C>
3.1 Articles of Incorporation of B&G Foods, Inc.*
3.2 Bylaws of B&G Foods, Inc.*
3.3 Articles of Incorporation of BGH Holdings, Inc.*
3.4 Bylaws of BGH Holdings, Inc.*
3.5 Articles of Incorporation of JEM Brands, Inc.*
3.6 Bylaws of JEM Brands, Inc.*
3.7 Articles of Incorporation of Trappey's Fine Foods, Inc.*
3.8 Bylaws of Trappey's Fine Foods, Inc.*
3.9 Articles of Incorporation for Bloch & Guggenheimer, Inc.*
3.10 Bylaws of Bloch & Guggenheimer, Inc.*
3.11 Articles of Incorporation of RWBV Acquisition Corp.*
3.12 Bylaws of RWBV Acquisition Corp.*
3.13 Articles of Incorporation of RWBV Brands Company*
3.14 Bylaws of RWBV Brands Company*
3.15 Articles of Incorporation of Roseland Distribution Company*
3.16 Bylaws of Roseland Distribution Company*
3.17 Articles of Incorporation of BRH Holdings, Inc.*
3.18 Bylaws of BRH Holdings, Inc.*
3.19 Articles of Incorporation of Burns & Ricker, Inc.*
3.20 Bylaws of Burns & Ricker, Inc.*
4.1 Indenture dated as of August 11, 1997 between B&G Foods, Inc. (the "Company"), BGH Holdings, Inc.,
RWBV Acquisition Corp., BRH Holdings, Inc., Bloch & Guggenheimer, Inc., Roseland Distribution
Company, Burns & Ricker, Inc., Roseland Manufacturing, Inc., and RWBV Brands Company
(collectively, the "Guarantors") and The Bank of New York, as trustee (the "Trustee").
4.2 Form of the Company's 9 5/8% Senior Notes due 2007 (filed as Exhibit 4.1)
5.1 Opinion of Dechert Price & Rhoads re: legality *
10.1 Registration Rights Agreement dated as of August 11, 1997 by and among the Company, the Guarantors
party thereto, Lehman Brothers, Inc. and Lazard Freres & Co. LLC.
10.2 Purchase Agreement dated August 6, 1997 among the Company, the Guarantors party thereto, Lehman
Brothers, Inc. and Lazard Freres & Co. LLC
10.3 Second Amended and Restated Credit Agreement dated as of August 11, 1997 among the Company, the
guarantors party thereto, Heller Financial Inc., as agent and lender, and the lenders party
thereto.*
12.1 Computation of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Company and the Additional Registrants*
23.1 Consent of KPMG Peat Marwick LLP relating to B&G Foods, Inc
23.2 Consent of KPMG Peat Marwick LLP relating to the Nabisco Brands.
23.3 Consent of KPMG Peat Marwick LLP relating to JEM Brands, Inc.
23.4 Consent of Dechert Price & Rhoads (included in Exhibit 5.1) *
24 Power of Attorney (included on pages II-5 through II-9)
25 Statement of Eligibility and Qualification of The Bank of New York on Form T-1
99.1 Form of Letter of Transmittal *
99.2 Form of Notice of Guaranteed Delivery *
</TABLE>
- ------------------------
* To be filed by Amendment
<PAGE>
Exhibit 4.1
================================================================================
B&G FOODS, INC.
SERIES A AND SERIES B
9-5/8% SENIOR SUBORDINATED NOTES DUE 2007
INDENTURE
Dated as of August 11, 1997
THE BANK OF NEW YORK
Trustee
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section ndenture Section
310 (a)(1)........................................................ 7.10
(a)(2)........................................................ 7.10
(a)(3) ....................................................... N.A.
(a)(4)........................................................ N.A.
(a)(5)........................................................ 7.10
(b) .......................................................... 7.10
(c) .......................................................... N.A.
311 (a) .......................................................... 7.11
(b) .......................................................... 7.11
(c) .......................................................... N.A.
312 (a)........................................................... 2.05
(b)........................................................... 12.03
(c) .......................................................... 12.03
313 (a) .......................................................... 7.06
(b)(2) ....................................................... 7.07
(c) .......................................................... 7.06, 12.02
(d)........................................................... 7.06
314 (a) .......................................................... 4.03, 12.02
(c)(1) ....................................................... 12.04
(c)(2) ....................................................... 12.04
(c)(3) ....................................................... N.A.
(e) ......................................................... 12.05
(f)........................................................... N.A.
315 (a)............................................................ 7.01
(b)........................................................... 7.05, 12.02
(c) ......................................................... 7.01
(d)........................................................... 7.01
(e)........................................................... 6.11
316 (a)(last sentence) .......................................... 2.09
(a)(1)(A).................................................... 6.05
(a)(1)(B) ................................................... 6.04
(a)(2) ....................................................... N.A.
(b) .......................................................... 6.07
(c) .......................................................... 2.12
317 (a)(1) ...................................................... 6.08
(a)(2)........................................................ 6.09
(b) .......................................................... 2.04
318 (a)............................................................ 12.01
(b)........................................................... N.A.
(c)........................................................... 12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions............................................... 1
Section 1.02. Other Definitions......................................... 15
Section 1.03. Incorporation by Reference of Trust Indenture Act......... 15
Section 1.04. Rules of Construction..................................... 16
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating........................................... 16
Section 2.02. Execution and Authentication.............................. 17
Section 2.03. Registrar and Paying Agent................................ 18
Section 2.04. Paying Agent to Hold Money in Trust....................... 18
Section 2.05. Holder Lists.............................................. 19
Section 2.06. Transfer and Exchange..................................... 19
Section 2.07. Replacement Notes......................................... 30
Section 2.08. Outstanding Notes......................................... 30
Section 2.09. Treasury Notes............................................ 31
Section 2.10. Temporary Notes........................................... 31
Section 2.11. Cancellation.............................................. 31
Section 2.12. Defaulted Interest........................................ 31
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee........................................ 32
Section 3.02. Selection of Notes to Be Redeemed......................... 32
Section 3.03. Notice of Redemption...................................... 32
Section 3.04. Effect of Notice of Redemption............................ 33
Section 3.05. Deposit of Redemption Price............................... 33
Section 3.06. Notes Redeemed in Part.................................... 33
Section 3.07. Optional Redemption....................................... 34
Section 3.08. Mandatory Redemption...................................... 34
Section 3.09. Offer to Purchase by Application of Excess Proceeds....... 34
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.......................................... 36
Section 4.02. Maintenance of Office or Agency........................... 36
Section 4.03. Reports................................................... 37
i
<PAGE>
Section 4.04. Compliance Certificate.................................... 38
Section 4.05. Taxes..................................................... 38
Section 4.06. Stay, Extension and Usury Laws............................ 38
Section 4.07. Restricted Payments....................................... 38
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries.............................................. 40
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock..................................................... 41
Section 4.10. Asset Sales............................................... 43
Section 4.11. Transactions with Affiliates.............................. 44
Section 4.12. Liens..................................................... 45
Section 4.13. Business Activities....................................... 45
Section 4.14. Corporate Existence....................................... 45
Section 4.15. Offer to Repurchase Upon Change of Control................ 45
Section 4.16. No Senior Subordinated Debt............................... 46
Section 4.17. Sale and leaseback Transactions........................... 47
Section 4.18. Limitation on Issuances and Sales of Capital Stock of
Wholly Owned Subsidiaries................................. 47
Section 4.19. Additional Subsidiary Guarantees.......................... 47
Section 4.20. Payments for Consent...................................... 47
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.................. 48
Section 5.02. Successor Corporation Substituted......................... 48
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default......................................... 49
Section 6.02. Acceleration.............................................. 50
Section 6.03. Other Remedies............................................ 51
Section 6.04. Waiver of Past Defaults................................... 51
Section 6.05. Control by Majority....................................... 52
Section 6.06. Limitation on Suits....................................... 52
Section 6.07. Rights of Holders of Notes to Receive Payment............. 52
Section 6.08. Collection Suit by Trustee................................ 52
Section 6.09. Trustee May File Proofs of Claim.......................... 53
Section 6.10. Priorities................................................ 53
Section 6.11. Undertaking for Costs..................................... 53
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee......................................... 54
Section 7.02. Rights of Trustee......................................... 55
Section 7.03. Individual Rights of Trustee.............................. 55
ii
<PAGE>
Section 7.04. Trustee's Disclaimer...................................... 55
Section 7.05. Notice of Defaults........................................ 56
Section 7.06. Reports by Trustee to Holders of the Notes................ 56
Section 7.07. Compensation and Indemnity................................ 56
Section 7.08. Replacement of Trustee.................................... 57
Section 7.09. Successor Trustee by Merger, etc.......................... 58
Section 7.10. Eligibility; Disqualification............................. 58
Section 7.11. Preferential Collection of Claims Against Company......... 58
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance................................................ 58
Section 8.02. Legal Defeasance and Discharge............................ 58
Section 8.03. Covenant Defeasance....................................... 59
Section 8.04. Conditions to Legal or Covenant Defeasance................ 59
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions............. 60
Section 8.06. Repayment to Company...................................... 61
Section 8.07. Reinstatement............................................. 61
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes....................... 62
Section 9.02. With Consent of Holders of Notes.......................... 62
Section 9.03. Compliance with Trust Indenture Act....................... 63
Section 9.04. Revocation and Effect of Consents......................... 64
Section 9.05. Notation on or Exchange of Notes.......................... 64
Section 9.06. Trustee to Sign Amendments, etc........................... 64
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.................................. 64
Section 10.02. Certain Definitions....................................... 64
Section 10.03. Liquidation; Dissolution; Bankruptcy...................... 65
Section 10.04. Default on Designated Senior Debt......................... 66
Section 10.05. Acceleration of Notes..................................... 66
Section 10.06. When Distribution Must Be Paid Over....................... 66
Section 10.07. Notice by Company......................................... 67
Section 10.08. Subrogation............................................... 67
Section 10.09. Relative Rights........................................... 67
Section 10.10. Subordination May Not Be Impaired by Company.............. 68
Section 10.11. Distribution or Notice to Representative.................. 68
Section 10.12. Rights of Trustee and Paying Agent........................ 68
Section 10.13. Authorization to Effect Subordination..................... 68
iii
<PAGE>
Section 10.14. Amendments................................................ 69
Section 10.15. Continued Effectiveness................................... 69
Section 10.16. No Contest; No Security................................... 69
Section 10.17. Cumulative Rights; No Waivers............................. 69
Section 10.18. Trustee................................................... 69
ARTICLE 11
SUBSIDIARY GUARANTEES
Section 11.01. Subsidiary Guarantee...................................... 70
Section 11.02. Execution and Delivery of Subsidiary Guarantee............ 71
Section 11.03. Guarantors May Consolidate, etc., on Certain Terms........ 71
Section 11.04. Releases Following Sale of Assets......................... 72
Section 11.05. Limitation on Guarantor Liability......................... 72
Section 11.06. Trustee to Include Paying Agent........................... 72
Section 11.07. Subordination of Subsidiary Guarantee..................... 73
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.............................. 73
Section 12.02. Notices................................................... 73
Section 12.03. Communication by Holders of Notes with Other
Holders of Notes.......................................... 74
Section 12.04. Certificate and Opinion as to Conditions Precedent........ 75
Section 12.05. Statements Required in Certificate or Opinion............. 75
Section 12.06. Rules by Trustee and Agents............................... 75
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders................................ 75
Section 12.08. Governing Law............................................. 76
Section 12.09. No Adverse Interpretation of Other Agreements............. 76
Section 12.10. Successors................................................ 76
Section 12.11. Severability.............................................. 76
Section 12.12. Counterpart Originals..................................... 76
Section 12.13. Table of Contents, Headings, etc.......................... 76
iv
<PAGE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING
INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E FORM OF SUBSIDIARY GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
v
<PAGE>
INDENTURE dated as of August 11, 1997 between B&G Foods, Inc., a Delaware
corporation (the "Company"), BGH Holdings, Inc., a Delaware corporation, RWBV
Acquisition Corp., a Delaware corporation, BRH Holdings, Inc. a Delaware
corporation, Bloch & Guggenheimer, Inc., a Delaware corporation, Roseland
Distribution Company, Burns & Ricker, Inc., a Delaware corporation, Roseland
Manufacturing, Inc., a Delaware corporation and RWBV Brands Company, a Delaware
Corporation (collectively, the "Guarantors") and The Bank of New York as trustee
(the "Trustee").
The Company, the Guarantor and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the 9-5/8%
Series A Subordinated Notes due 2007 (the Series A Notes") and the 9-5/8% Series
B Senior Subordinated Notes due 2007 (the "Series B Notes" and, together with
the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means the global note in the form of Exhibit A-1 hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with and registered in the name of the Depositary or its nominee that will be
issued in a denomination equal to the outstanding principal amount of the Notes
sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person: (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person; provided that, the
amount of Acquired Debt only at the time so acquired shall include the accreted
value together with any interest thereon that is more than 30 days past due.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"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 redemption date of the redemption price of such
Note at August 1, 2002 (such redemption price being set forth in Section 3.07
hereof) plus all required interest payments due on such Note through August 1,
2002, such present value computed using a discount rate equal to the Treasury
Rate plus 50 basis points over (B) the principal amount of such Note.
<PAGE>
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than in the ordinary course of business consistent with past
practices (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole shall be governed by the Sections 4.15 and 5.01 hereof and not by the
provisions of Section 4.10 hereof) and (ii) the issue or sale by the Company or
any of its Subsidiaries of Equity Interests of any of the Company's
Subsidiaries, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $1.0 million or (b) for Net Proceeds in excess of $1.0
million. Notwithstanding the foregoing: (i) a transfer of assets by the Company
to a Wholly Owned Subsidiary of the Company that is a Guarantor or by a Wholly
Owned Subsidiary of the Company to the Company or to another Wholly Owned
Subsidiary of the Company that is a Guarantor, (ii) an issuance or sale of
Equity Interests by a Subsidiary of the Company to the Company or to another
Wholly Owned Subsidiary of the Company that is a Guarantor, (iii) a disposition
of obsolete equipment or equipment that is no longer useful in the conduct of
business of the Company and its Subsidiaries and that is disposed of in the
ordinary course of business; provided, however, that such dispositions do not
exceed $500,000 per annum, (iv) a Restricted Payment that is permitted by
Section 4.07 hereof and (v) a disposition of inventory or Cash Equivalents in
the ordinary course of business shall not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"BRS" means Bruckmann, Rosser, Sherrill & Co., L.P., a Delaware limited
partnership.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participation, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
2
<PAGE>
"Cash Equivalents" means (i) United States dollars, (ii) 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 that six
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of not more than one year from the date
of acquisition, bankers' acceptances with maturities of not more than one year
from the date of acquisition and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500.0 million
and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or one of the two highest ratings from Standard & Poor's with
maturities of not more than one year from the date of acquisition, (vi)
investment funds investing 95% of their assets in securities of the types
described in clauses (i)-(v) above, and (vii) readily marketable direct
obligations issued by any State of the United States of America or any political
subdivision thereof having maturities of not more than one year from the date of
acquisition and having one of the two highest rating categories obtainable from
either Moody's Investors Service, Inc. or Standard & Poor's.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) (other than persons who are, or groups of persons who are, made up entirely
of Principals or their Related Parties) other than in the ordinary course of
business; (ii) the adoption of a plan relating to the liquidation or dissolution
of the Company; (iii) prior to the first public offering of Voting Stock of the
Company, the consummation of any transaction the result of which is that the
Principals or the Related Parties cease to be the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of majority voting power of the Voting Stock of the Company
(measured by voting power rather than number of shares), whether as a result of
issuance of securities of the Company, any merger, consolidation, liquidation or
dissolution of the Company, any direct or indirect transfer of securities by any
Principal or Related Party or otherwise (for purposes of this clause (iii) and
(iv) below, the Principals and Related Parties shall be deemed to have
"beneficial ownership" of the Voting Stock of a Person (the "specified
corporation") held by any other Person (the "parent corporation") so long as the
Principals or Related Parties beneficially own (as so defined) directly or
indirectly, a majority of the voting power of the Voting Stock of the parent
corporation); (iv) following the first Public Equity Offering of Voting Stock of
the Company, the consummation of any transaction the result of which is that any
"person" (as such term is defined in Sections 13(d) and 14(d) of the Exchange
Act), other than one or more Principals or Related Parties becomes the
"beneficial owner" (as such term is defined in clause (iii) above, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or is exercisable only after the passage of time or upon the
occurrence of a subsequent condition), directly or indirectly, of more than 35%
of the Voting Stock of the Company, provided that the Principals and Related
Parties beneficially own (as defined in clause (iii) above), directly or
indirectly, in the aggregate a lesser percentage of the total voting power of
the Voting Stock of the Company 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 (for purposes of
this clause (iv), 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 clause (iii) above), directly or
3
<PAGE>
indirectly, more than 35% of the voting power of the Voting Stock of such parent
corporation and the Principals and the Related Parties "beneficially own" (as
defined in clause (iii) above), directly or indirectly, in the aggregate a
lesser percentage of the total voting power of the Voting Stock of such parent
corporation 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 such parent corporation); (v) the first
day on which a majority of the members of the Board of Directors of the Company
are not Continuing Directors; or (vi) the Company consolidates with, or merges
with or into, any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which any of
the outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such transaction where the
Voting Stock of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to such
conversion or exchange).
"Company" means B&G Foods, Inc. and any and all successors thereto.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) Fixed Charges, to the extent that any such Fixed Charge was deducted
in computing such Consolidated Net Income, plus (iv) depreciation and
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation and amortization were deducted in computing such Consolidated
Net Income, minus (v) non-cash items increasing such Consolidated Net Income for
such period, in each case, on a consolidated basis and determined in accordance
with GAAP.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries (for such
period, on a consolidated basis, determined in accordance with GAAP); provided
that (i) the Net Income (but not loss) of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in
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respect of the year of such declaration and payment, but only to the extent of
any cash received by such Person upon issuance of such preferred stock, less (x)
all write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the date hereof in
the book value of any asset owned by such Person or a consolidated Subsidiary of
such Person, (y) all investments as of such date in unconsolidated Subsidiaries
and in Persons that are not Subsidiaries (except, in each case, Permitted
Investments) and (z) all unamortized debt discount and expense and unamortized
deferred charges as of such date, all of the foregoing determined in accordance
with GAAP.
"Continuing Director" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of this Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means the Second Amended and Restated Credit Agreement,
dated as of August 11, 1997, among the Company, Heller Financial, Inc. and the
lenders from time to time party thereto (the "Heller Agreement"), as such
agreement may be amended, restated, modified, renewed, refunded, replaced or
refinanced from time to time thereafter, including any appendices, exhibits or
schedules to any of the foregoing, as the same may be in effect from time to
time, in each case, as such agreements may be amended, modified, supplemented,
renewed, refunded, replaced, refinanced, extended or restated from time to time
(whether with the original agents and lenders or other agents and lenders or
otherwise, and whether provided under the original credit agreement or other
credit agreements or otherwise), including any appendices, exhibits or schedules
to any of the foregoing.
"Credit Facilities" means, with respect to the Company, one or more debt
facilities (including, without limitation, the Credit Agreement) or commercial
paper facility with banks or other institutional lenders providing for revolving
credit loans, receivables financing (including through the sale of receivables
to such lenders or to special purpose entities formed to borrow from such
lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
"Default" means any event that is or with the passage of time or the giving
of notice (or both) would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.07 hereof, in the form of
Exhibit A-1 hereto except that such Note shall not bear the Global Note Legend
and shall not have the "Schedule of Exchanges of Interests in the Global Note"
attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon
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the happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature, except to the extent that such Capital Stock is
solely redeemable with, or solely exchangeable for, any Capital Stock of such
Person that is not Disqualified Stock.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant to
Section 2.06(f).
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Indebtedness" means up to $1.0 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Credit Agreement and the Notes) in existence on the date
hereof until such amounts are repaid.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings under any Credit Facility)
or issues preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but on or prior to the date
on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by the Company or any of its
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the definition
of Consolidated Net Income, (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, and
(iii) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Subsidiaries following the Calculation Date.
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"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of debt issuance costs and original issue discount
(other than issuance costs and discounts incurred on the date hereof), non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), (ii) the consolidated interest of
such Person and its Subsidiaries that was capitalized during such period, (iii)
any interest expense on Indebtedness of another Person that is Guaranteed by
such Person or one of its Subsidiaries or secured by a Lien on assets of such
Person or one of its Subsidiaries (whether or not such Guarantee or Lien is
called upon) and (iv) the product of (a) all dividend payments, whether or not
in cash, on any series of preferred stock of such Person or any of its
Subsidiaries, other than dividend payments on Equity Interests payable solely in
Equity Interests of the Company (other than Disqualified Stock), times (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
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the statements and pronouncements of
the Financial Accounting Standards Board and such other statements by such other
entities as have been approved by a significant segment of the accounting
profession, which are in effect on the date of determination.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Global Notes" means, individually and collectively, each of the Restricted
Global Notes and the Unrestricted Global Notes, in the form of Exhibit A hereto
issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f)
hereof.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the net payment
Obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means B&G Foods Holdings Corp.
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"IAI Global Note" means the global Note in the form of Exhibit A-1 hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its nominee
that will be issued in a denomination equal to the outstanding principal amount
of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all Indebtedness of others
secured by a Lien on any asset of such Person (whether or not such Indebtedness
is assumed by such Person), and, to the extent not otherwise included, the
Guarantee by such Person of any Indebtedness of any other Person, and any
liability, whether or not contingent, whether or not it appears on the balance
sheet of such Person. The amount of any Indebtedness outstanding as of any date
shall be the accreted value thereof, in the case of any Indebtedness that does
not require current payments of interest.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other Obligations),
advances or capital contributions (excluding commission, travel and
entertainment, moving, and similar advances to officers and employees made in
the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP. If Holdings, the Company or any of their
respective Subsidiaries sells or otherwise disposes of any Equity Interests of
any direct or indirect Subsidiary of Holdings or the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a direct
or indirect Subsidiary of Holdings or the Company, Holdings, the Company, or
such Subsidiary, as the case may be, shall be deemed to have made an Investment
on the date of any such sale or disposition equal to the fair market value of
the Equity Interests of such Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of Section 4.09 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
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"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in any asset and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), or (b)
the disposition of any securities by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries, and (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds or Cash Equivalents
received by the Company or any of its Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
all costs relating to such Asset Sale (including, without limitation, legal,
accounting, investment banking and brokers fees, and sales and underwriting
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of Indebtedness (other than Indebtedness under any
Credit Facility) secured by a Lien on the asset or assets that were the subject
of such Asset Sale and any reserve for adjustment in respect of the sale price
of such asset or assets established in accordance with GAAP.
"Non-U.S. Person" means a person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Notes" has the meaning assigned to it in the preamble to this Indenture.
"Obligations" means any principal, premium (if any), interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to Holdings, the Company or their Subsidiaries whether
or not a claim for post-filing interest is allowed in such proceeding),
penalties, fees, charges, expenses, indemnifications, reimbursement obligations,
damages (including Liquidated Damages), guarantees and other liabilities or
amounts payable under the documentation governing any Indebtedness or in respect
thereof.
"Offering" means the Offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
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"Officers' Certificate" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Section 12.05
hereof.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 12.05 hereof.
The counsel may be an employee of or counsel to the Company or any Subsidiary of
the Company.
"Participant" means, with respect to DTC, Euroclear or Cedel, a Person who
has an account with DTC, Euroclear or Cedel, respectively (and, with respect to
DTC, shall include Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the Registration
Rights Agreement.
"Permitted Business" means the lines of business conducted by the Company
on the date hereof and businesses reasonably related thereto.
"Permitted Investments" means (a) any Investment in the Company or in
a Wholly Owned Subsidiary of the Company that is a Guarantor; (b) any Investment
in Cash Equivalents; (c) any Investment by the Company or any Subsidiary of the
Company in a Person engaged in a Permitted Business, if as a result of such
Investment (i) such Person becomes a Wholly Owned Subsidiary of the Company and
a Guarantor or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Subsidiary of the Company that is
a Guarantor; (d) any Restricted Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof; (e) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock) of
Holdings; (f) other Investments by the Company or any of its Subsidiaries in any
Person having an aggregate fair market value (measured as of the date made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (f) that are at the time
outstanding, not to exceed $4.0 million; (g) intercompany loans to the extent
permitted by the Section 4.09 hereof and (h) loans by the Company in an
aggregate principal amount not exceeding $1.0 million to employees of the
Company or its Subsidiaries to finance the sale of Holdings Capital Stock by
Holdings to such employees; provided that the net cash proceeds from such sales
respecting such loaned amounts will not be included in the calculation described
in clause (c) of the second paragraph of Section 4.07 hereof.
"Permitted Liens" means (i) Liens on assets of the Company or any of the
Guarantors to secure Senior Debt permitted hereby to be incurred; (ii) Liens on
the assets of the Company or any of the Guarantors to secure Hedging Obligations
with respect to Indebtedness under any Credit Facility permitted hereby to be
incurred; (iii) Liens on property of a Person existing at the time such Person
is merged into or consolidated with the Company or any Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company; (iv) Liens on
property existing at the time of acquisition thereof by the Company or any
Subsidiary of the Company, provided that such Liens were in existence prior to
the contemplation of such acquisition and only extend to the property so
acquired; (v) Liens existing on the date hereof; (vi) Liens to secure any
Permitted Refinancing Indebtedness incurred to refinance any Indebtedness
secured by any Lien referred to in the foregoing clauses (i) through (v),
provided, however, that such new Lien shall be limited to all or part
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of the same property that secured the original Lien (provided that such Liens
may extend to after-acquired property, including any assets or Capital Stock of
any subsequently formed or acquired Subsidiary, if such original Lien included
such property or assets as collateral) and the Indebtedness secured by such Lien
at such time is not increased to any amount greater than permitted under clauses
(i) and (xii) of Section 4.09 hereof in the case of Senior Debt under any Credit
Facility, or, in the case of other Indebtedness, the outstanding principal
amount or, if greater, committed amount of the Indebtedness described under
clauses (i) through (v), as the case may be, at the time the original Lien
became a Permitted Lien, (vii) Liens in favor of the Company or any Wholly Owned
Subsidiary that is a Guarantor; (viii) Liens incurred in the ordinary course of
business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million in the aggregate at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Subsidiary; (ix) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds, deposits to secure the performance of bids, trade contracts, government
contracts, leases or licenses or other obligations of a like nature incurred in
the ordinary course of business (including, without limitation, landlord Liens
on leased properties); (x) Liens for taxes, assessments or governmental charges
or claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently prosecuted,
provided that any reserve or other appropriate provision as shall be required to
conform with GAAP shall have been made therefor; (xi) Liens to secure
Indebtedness (including Capital Lease Obligations) permitted by clause (v) of
the second paragraph of the Section 4.09 hereof covering only the assets
acquired with such Indebtedness; (xii) carriers', warehousemen's, mechanics',
landlords', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business in respect of obligations not overdue for a period
in excess of 60 days or which are being contested in good faith by appropriate
proceedings promptly instituted and diligently prosecuted; provided that any
reserve or other appropriate provision as shall be required to conform with GAAP
shall have been made therefor; (xiii) easements, rights-of-way, zoning and
similar restrictions and other similar encumbrances or title defects incurred,
or leases or subleases granted to others, in the ordinary course of business,
which do not in any case materially detract from the value of the property
subject thereto or do not interfere with or adversely affect in any material
respect the ordinary conduct of the business of the Company and its Subsidiaries
taken as a whole; (xiv) Liens in favor of customs and revenue authorities to
secure payment of customs duties in connection with the importation of goods in
the ordinary course of business and other similar Liens arising in the ordinary
course of business; (xv) leases or subleases granted to third Persons not
interfering with the ordinary course of business of Holdings, the Company or any
of their respective Subsidiaries; (xvi) Liens (other than any Lien imposed by
ERISA or any rule or regulation promulgated thereunder) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance, and other types of social security; (xvii)
deposits, in an aggregate not to exceed $250,000, made in the ordinary course of
business to secure liability to insurance carriers; (xviii) Liens for purchase
money obligations (including refinancings thereof permitted under provided that
(a) the Indebtedness secured by any such Lien is permitted under Section 4.09
hereof and (b) any such Lien encumbers only the asset so purchased; (xix) any
attachment or judgment Lien not constituting an Event of Default under clause
(i) of the first paragraph of Section 4.09 hereof; (xx) any interest or title of
a lessor or sublessor under any operating lease; and (xxi) Liens under licensing
agreements for use of Intellectual Property entered into in the ordinary course
of business.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries (other than
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intercompany Indebtedness); provided that: (i) the principal amount (or accreted
value, if applicable) of such Permitted Refinancing Indebtedness does not exceed
the amount permitted by clause (i) of the second paragraph of Section 4.09, plus
accrued and unpaid interest thereon in the case of the Credit Agreement, or the
principal amount of (or accreted value, if applicable), plus accrued and unpaid
interest on, any other Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or a Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Principals" means BRS, any equity owner of Holdings on the date hereof,
and the members of management of the Company or Holdings or any of their
respective Subsidiaries as of the date hereof.
"Private Placement Legend" means the legend set forth in Section 2.06(g)(i)
to be placed on all Notes issued under this Indenture except where otherwise
permitted by the provisions of this Indenture.
"Proceeding" means any voluntary or involuntary insolvency, bankruptcy,
receivership, custodianship, liquidation, dissolution, reorganization,
assignment for the benefit of creditors, appointment of a custodian, receiver,
trustee or other officer with similar powers or any other proceeding for the
liquidation, dissolution or other winding up of a Person (including, without
limitation, any such proceeding under the Bankruptcy Law).
"Public Equity Offering" means any underwritten primary public offering of
the Common Stock or other Voting Stock of the Company or Holdings, pursuant to
an effective registration statement (other than a registration statement on Form
S-4, Form S-8, or any successor or similar form) under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of August 11, 1997, by and among the Company and the other parties
named on the signature pages thereof, as such agreement may be amended, modified
or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
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"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in the
form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in the
form of Exhibit A-2 hereto bearing the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes initially sold in reliance on Rule 903 of Regulation S.
"Related Party" means, with respect to any Principal, (A) any spouse or
immediate family member (in the case of an individual) of such Principal or (B)
a trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners or Persons beneficially holding a 662/3% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (A).
"Representative" means the agent under the Credit Agreement or its
successor thereunder or any similar agent for any Designated Senior Debt.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
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"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"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 of
this Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the Credit Agreement or other
original documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock 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 such
Person and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or an entity described in clause (i) and
related to such Person or (b) the only general partners of which are such Person
or one or more entities described in clause (i) and related to such Person (or
any combination thereof).
"Subsidiary Guarantee" means the Guarantee of the Notes by each of the
Guarantors pursuant to Article 11 hereof and in the form of Guarantee endorsed
on the form of Note attached as Exhibit A hereto and any additional Guarantee of
the Notes to be executed by any Subsidiary of the Company pursuant to Section
4.19 hereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb)
as in effect on the date on which this Indenture is qualified under the TIA.
"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 such
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 such redemption date to August 1, 2002; provided, however, that if
the period from such redemption date to August 1, 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 above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note in the form of
Exhibit A-1 attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
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"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" means a Subsidiary, 100% of the outstanding
Capital Stock and other Equity Interests of which is directly or indirectly
owned by the Company or Holdings.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"........................................ 4.11
"Asset Sale"................................................... 4.10
"Asset Sale Offer"............................................. 3.09
"Bankruptcy Law"............................................... 4.01
"Change of Control Offer"...................................... 4.15
"Change of Control Payment".................................... 4.15
"Change of Control Payment Date"............................... 4.15
"Covenant Defeasance".......................................... 8.03
"Custodian".................................................... 4.13
"Designated Senior Debt"....................................... 10.02
"Event of Default"............................................. 6.01
"Excess Proceeds".............................................. 4.10
"incur"........................................................ 4.09
"Legal Defeasance" ............................................ 8.02
"Offer Amount"................................................. 3.09
"Offer Period"................................................. 3.09
"Paying Agent"................................................. 2.03
"Payment Default".............................................. 6.01
"Permitted Debt"............................................... 4.09
"Permitted Junior Securities".................................. 10.02
"Purchase Date"................................................ 3.09
"Registrar".................................................... 2.03
"Restricted Payments".......................................... 4.07
"Senior Debt".................................................. 10.02
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
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The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor upon the
Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include the
singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement of successor sections or rules adopted
by the SEC from time to time.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby. However, to the extent
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any provision of any Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
Notes issued in global form shall be substantially in the form of Exhibits
A-1 or A-2 attached hereto (including the Global Note Legend and the "Schedule
of Exchanges in the Global Note" attached thereto). Notes issued in definitive
form shall be substantially in the form of Exhibit A-1 attached hereto (but
without the Global Note Legend and without the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Each Global Note shall
represent such of the outstanding Notes as shall be specified therein and each
shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Notes represented
thereby shall be made by the Trustee or the Note Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its New York office, as custodian for the Depositary, and registered
in the name of the Depositary or the nominee of the Depositary for the accounts
of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed
by the Company and authenticated by the Trustee as hereinafter provided. The
Restricted Period shall be terminated upon the receipt by the Trustee of (i) a
written certificate from the Depositary, together with copies of certificates
from Euroclear and Cedel Bank certifying that they have received certification
of non-United States beneficial ownership of 100% of the aggregate principal
amount of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Note or an IAI Global Note bearing a Private Placement Legend, all as
contemplated by Section 2.06(b)(ii) hereof), and (ii) an Officers' Certificate
from the Company. Following the termination of the Restricted Period, beneficial
interests in the Regulation S Temporary Global Note shall be exchanged for
beneficial interests in Regulation S Permanent Global Notes pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary
Global Note. The aggregate principal amount of the Regulation S Temporary Global
Note and the Regulation S Permanent Global Notes may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depositary or its nominee, as the case may be, in connection with transfers of
interest as hereinafter provided.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes that are held by the
Agent Members through Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature.
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If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided in
Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and an office or
agency where Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Liquidated Damages, if any, or interest on the Notes, and will notify
the Trustee of any default by the Company in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all money
held by it to the Trustee. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
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SECTION 2.05. HOLDER 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
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee 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 the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule 903
under the Securities Act. Upon the occurrence of either of the preceding events
in (i) or (ii) above, Definitive Notes shall be issued in such names as the
Depositary shall instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.11 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to Section 2.07 or 2.11 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period transfers of
beneficial interests in the Temporary Regulation S Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person (other
than an Initial Purchaser). Beneficial interests in any Unrestricted Global
Note may be transferred only to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note. No
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written orders or instructions shall be required to be delivered to the
Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests (other than a transfer of a beneficial interest in a Global Note
to a Person who takes delivery thereof in the form of a beneficial interest
in the same Global Note), the transferor of such beneficial interest must
deliver to the Registrar either (A) (1) a written order from a Participant
or an Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or (B)
(1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Registrar containing information regarding
the Person in whose name such Definitive Note shall be registered to effect
the transfer or exchange referred to in (1) above; provided that in no
event shall Definitive Notes be issued upon the transfer or exchange of
beneficial interests in the Regulation S Temporary Global Note prior to (x)
the expiration of the Restricted Period and (y) the receipt by the
Registrar of any certificates required pursuant to Rule 903 under the
Securities Act. Upon an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall
be deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the Holder
of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture, the Notes
and otherwise applicable under the Securities Act, the Trustee shall adjust
the principal amount of the relevant Global Note(s) pursuant to Section
2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of clause (ii) above and the Registrar
receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of the
Regulation S Temporary Global Note or the Regulation S Global Note,
then the transferor must deliver a certificate in the form of Exhibit
B hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion Counsel required by item
(3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
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transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of clause (ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer, is
not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Registrar
to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to
the principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) If any holder of a beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in
the form of a Definitive Note, then, upon receipt by the Registrar of the
following documentation:
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(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Definitive Note, a certificate from such holder in the form of Exhibit
C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
(A) exchanged for a Definitive Note prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903(c)(3)(B) under the Securities Act or (B)
transferred to a Person who takes delivery thereof in the form of a
Definitive Note prior to the conditions set forth in clause (A) above
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or unless the transfer is pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Notwithstanding 2.06(c)(i) hereof, a holder of a beneficial
interest in a Restricted Global Note may exchange such beneficial interest
for an Unrestricted Definitive Note or may transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company,
to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act.
(iv) If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a
Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then,
upon satisfaction of the conditions set forth in Section 2.06(b)(ii)
hereof, the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions
a Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iv) shall be registered in such name or names and in
such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names
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such Notes are so registered. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this section 2.06(c)(iv) shall
not bear the Private Placement Legend. A beneficial interest in an
Unrestricted Global Note cannot be exchanged for a Definitive Note
bearing the Private Placement Legend or transferred to a Person who
takes delivery thereof in the form of a Definitive Note bearing the
Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global
Note or to transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Definitive Note is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such Definitive Note is being transferred pursuant to
an exemption from the registration requirements of the Securities
Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(E) if such Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
(F) if such Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such Definitive Note is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A)
above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (C) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
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(ii) A Holder of a Restricted Definitive Note may exchange such
Note for a beneficial interest in an Unrestricted Global Note or
transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit C hereto, including the certifications
in item (1)(c) thereof;
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications
in item (4) thereof; and
(3) in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to
the Company to the effect that such exchange or transfer is
in compliance with the Securities Act, that the restrictions
on transfer contained herein and in the Private Placement
Legend are not required in order to maintain compliance with
the Securities Act, and such Definitive Notes are being
exchanged or transferred in compliance with any applicable
blue sky securities laws of any State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive
Notes and increase or cause to be increased the aggregate principal
amount of the Unrestricted Global Note.
(iii) A Holder of an Unrestricted Definitive Note may exchange
such Note for a beneficial interest in an Unrestricted Global Note or
transfer such Definitive Notes to a Person who takes delivery thereof
in the form of a beneficial interest in an Unrestricted Global Note at
any time. Upon receipt of a request for such an exchange or transfer,
the Trustee shall cancel the applicable Unrestricted Definitive Note
and increase or cause to be increased the aggregate principal amount
of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D)
or (iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an
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aggregate principal amount equal to the principal amount of beneficial
interests transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii)
above.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.06(e), the Registrar shall register
the transfer or exchange of Definitive Notes. Prior to such registration of
transfer or exchange, the requesting Holder shall present or surrender to
the Registrar the Definitive Notes duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, pursuant to the
provisions of this Section 2.06(e).
(i) Restricted Definitive Notes may be transferred to and
registered in the name of Persons who take delivery thereof if the
Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item
(2) thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications, certificates
and Opinion of Counsel required by item (3) thereof, if
applicable.
(ii) Any Restricted Definitive Note may be exchanged by the
Holder thereof for an Unrestricted Definitive Note or transferred to a
Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the form
of Exhibit C hereto, including the certifications in item
(1)(b) thereof;
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(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit
B hereto, including the certifications in item (4) thereof;
and
(3) in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to
the Company to the effect that such exchange or transfer is
in compliance with the Securities Act, that the restrictions
on transfer contained herein and in the Private Placement
Legend are not required in order to maintain compliance with
the Securities Act, and such Restricted Definitive Note is
being exchanged or transferred in compliance with any
applicable blue sky securities laws of any State of the
United States.
(iii) A Holder of Unrestricted Definitive Notes may transfer
such Notes to a Person who takes delivery thereof in the form of
an Unrestricted Definitive Note. Upon receipt of a request for
such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holder
thereof. Unrestricted Definitive Notes cannot be exchanged for or
transferred to Persons who take delivery thereof in the form of a
Restricted Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of (A) an authentication order in accordance with Section
2.02 and (B) an Opinion of Counsel opining as to the enforceability of the
Series B Notes and the guarantees thereof, the Trustee shall authenticate
(i) one or more Unrestricted Global Notes in an aggregate principal amount
equal to the principal amount of the beneficial interests in the Restricted
Global Notes tendered for acceptance by persons that are not (x)
broker-dealers, (y) Persons participating in the distribution of the
Exchange Notes or (z) Persons who are affiliates (as defined in Rule 144)
of the Company and accepted for exchange in the exchange Offer and (ii)
Definitive Notes in an aggregate principal amount equal to the principal
amount of the Restricted Definitive Notes accepted for exchange in the
Exchange Offer. Concurrent with the issuance of such Notes, the Trustee
shall cause the aggregate principal amount of the applicable Restricted
Global Notes to be reduced accordingly, and the Company shall execute and
the Trustee shall authenticate and deliver to the Persons designated by the
Holders of Definitive Notes so accepted Definitive Notes in the appropriate
principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this
Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (b) below, each
Global Note and each Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the legend
in substantially the following form:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER STATE SECURITIES LAWS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER: REPRESENTS
THAT (1) IT IS (A) A "QUALIFIED INSTITUTIONAL BUYER" (AS
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DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),(2),(3) OR (7)
UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C)
NOT A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN
OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE NOTE EVIDENCED HEREBY EXCEPT TO (A) THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144 UNDER THE SECURITIES ACT, (C) AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFER
IS PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE BANK OF NEW YORK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES," AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to
this Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement
Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07
OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
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CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the
following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER
THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY
GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed,
repurchased or cancelled in whole and not in part, each such Global Note
shall be returned to or retained and cancelled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest
in another Global Note or for Definitive Notes, the principal amount of
Notes represented by such Global Note shall be reduced accordingly and an
endorsement shall be made on such Global Note, by the Trustee or by the
Depositary at the direction of the Trustee, to reflect such reduction; and
if the beneficial interest is being exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased
accordingly and an endorsement shall be made on such Global Note, by the
Trustee or by the Depositary at the direction of the Trustee, to reflect
such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate
Global Notes and Definitive Notes upon the Company's order
or at the Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a
Definitive Note for any registration of transfer or
exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other
than any such transfer taxes or similar governmental
charge payable upon exchange or transfer pursuant to
Sections 2.10, 3.06, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption
in whole or in part, except the unredeemed portion of any
Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or
Definitive Notes shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the
same benefits under this
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Indenture, as the Global Notes or Definitive Notes
surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange Notes during a
period beginning at the opening of business 15 days before
the day of any selection of Notes for redemption under
Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or
to exchange any Note so selected for redemption in whole
or in part, except the unredeemed portion of any Note
being redeemed in part or (C) to register the transfer of
or to exchange a Note between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the
Company may deem and treat the Person in whose name any
Note is registered as the absolute owner of such Note for
the purpose of receiving payment of principal of and
interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a transfer or exchange may be
submitted by facsimile.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon the written order of
the Company signed by two Officers of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
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If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes 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 considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return such
cancelled Notes to the Company. Certification of the destruction of all
cancelled Notes shall be delivered to the Company. The Company may not issue new
Notes to replace Notes that it has paid or that have been delivered to the
Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders
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a notice that states the special record date, the related payment date and the
amount of such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 45
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption shall be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or in accordance with any other method the Trustee considers fair and
appropriate. In the event of partial redemption by lot, the particular Notes to
be redeemed shall be selected, unless otherwise provided herein, not less than
30 nor more than 60 days prior to the redemption date by the Trustee from the
outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000.
Except as provided in the preceding sentence, provisions of this Indenture that
apply to Notes called for redemption also apply to portions of Notes called for
redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes (including CUSIP numbers) to be
redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
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(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant to
which the Notes called for redemption are being redeemed; and
(h) 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 Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price. A notice of redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
No later than 10:00 A.M Eastern Standard Time on the redemption date, the
Company shall deposit with the Trustee or with the Paying Agent money sufficient
to pay the redemption price of and accrued interest on all Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
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SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clauses (b) and (c) of this Section 3.07, the
Notes shall not be redeemable at Company option prior to August 1, 2002.
Thereafter, the Notes will be subject to redemption at any time at the option of
the Company in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on August 1 of the
years indicated below:
Year Percentage
2002................................ 104.813%
2003................................ 103.208%
2004................................ 101.604%
2005 and thereafter................. 100.000%
(b) Notwithstanding the foregoing, during the first 36 months after the
date of the Offering Memorandum, the Company may on any one or more occasions
redeem an aggregate of up to 35% of the original aggregate principal amount of
Notes at a redemption price of 109.625% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date, with the net cash proceeds of any Public Equity Offering of
common stock of the Company or a capital contribution to the Company's common
equity of the net cash proceeds of a concurrent Public Equity Offering of common
stock by the Company's direct parent; provided that at least 65% of the original
aggregate principal amount of Notes remain outstanding immediately after each
occurrence of such redemption; and provided, further, that each such redemption
shall occur within 60 days of the date of the closing of such Public Equity
Offering.
(c) Notwithstanding the foregoing, at any time on or prior to August 1,
2002, the Notes also may 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 may such redemption date
occur 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 and Liquidated Damages, 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).
(d) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it shall follow the procedures specified below.
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The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by Holders
exceeds the Offer Amount, the Company shall select the Notes to be purchased on
a pro rata basis (with such
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adjustments as may be deemed appropriate by the Company so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee, upon written request from the Company shall authenticate and mail or
deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Standard Time on the due date money deposited by
the Company in immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due. The Company shall pay
all Liquidated Damages, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar)
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where Notes may be surrendered for registration of transfer or for exchange and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or 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 for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to each of the
Holders of Notes (i) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the Company and
any consolidated Subsidiaries and, with respect to the annual information only,
reports thereon by the Company's independent public accountants (which shall be
firm(s) of established national reputation) and (ii) all information that would
be required to be filed with the SEC on Form 8-K if the Company were required to
file such reports. All such information and reports shall be filed with the SEC
on or prior to the dates on which such filings would have been required to be
made had the Company been subject to the rules and regulations of the SEC. In
addition, whether or not required by the rules and regulations of the SEC, the
Company shall file a copy of all such information and reports with the SEC for
public availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request; provided, however, that if prior to the effectiveness of the Exchange
Offer Registration Statement, the information that would be required to be filed
in a Form 10-K, 10-Q or 8-K pursuant to this sentence is filed as part of the
Exchange Offer Registration Statement, such filing shall be deemed to satisfy
the requirements of this sentence; and, provided further, that the quarterly
information required to be filed for the quarter ended June 30, 1997 shall not
be required to be so filed until 90 days after the Closing Date (unless the
Exchange Offer Registration Statement shall have already been filed, in which
event such filing for the quarter ended June 30, 1997 shall not be required).
The Company shall at all times comply with TIA ss. 314(a).
(b) For so long as any Notes remain outstanding, the Company and the
Guarantors shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
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SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
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The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Company's or any of its Subsidiaries'
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company) or to the direct or indirect
holders of the Company's or any of its Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company); (ii) purchase, redeem
or otherwise acquire or retire for value (including without limitation, in
connection with any merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent of the Company or
other Affiliate of the Company (other than any such Equity Interests owned by a
Wholly Owned Subsidiary of the Company); (iii) make any payment on or with
respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Notes except a payment of
interest or principal at Stated Maturity; or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company or any of its Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted
by clauses (ii), (iii) or (vi) of the next succeeding paragraph), is less
than the sum of (i) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) from the beginning of the first
fiscal quarter immediately following the date of this Indenture to the end
of the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment
(or, if such Consolidated Net Income for such period is a deficit, less
100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds
received by the Company as a contribution to its capital or from the issue
or sale since the date of this Indenture of Equity Interests of the Company
(other than Disqualified Stock and other than as provided in clause (h) of
the definition of Permitted Investments), or of Disqualified Stock or debt
securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made by the Company or any of its
Subsidiaries after the date of this Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital
with respect to such Restricted Investment (less the cost of disposition,
if any) and (B) the initial amount of such Restricted Investment.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Indebtedness which is subordinated to the Notes or Equity
Interests of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the
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Company) of, other Equity Interests of the Company (other than any Disqualified
Stock); provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c)(ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of Indebtedness which is
subordinated to the Notes with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend or
distribution by a Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis; (v) the repurchase, redemption or other
acquisition or retirement for value of Equity Interests of the Company or
Holdings held by any former employee, director or consultant of the Company or
any Subsidiary or Holdings issued pursuant to any management equity plan or
stock option plan or any other management or employee benefit plan or agreement;
provided, however, that the aggregate amount of Restricted Payments made under
this clause (v) does not exceed (A) $1.0 million in any calendar year and (B)
$3.0 million in the aggregate since the date hereof; provided further, that
cancellation of Indebtedness owing to the Company from members of management of
the Company or any of its Subsidiaries in connection with a repurchase of Equity
Interests of the Company will not be deemed to constitute a Restricted Payment
for purposes of this covenant or any other provision of this Indenture; (vi)
repurchases of Equity Interests deemed to occur upon exercise of stock options
upon surrender of Equity Interests to pay the exercise price of such option;
(vii) the payment by the Company of dividends to Holdings for the purpose of (A)
permitting Holdings to satisfy federal, state and local income tax obligations
to the extent such obligations are actually due and owing and are a direct
result of the net income of the Company being included on a consolidated,
combined or unitary income tax return filed by Holdings or otherwise being
attributed to Holdings for tax purposes and (B) permitting Holdings to pay the
necessary fees and expenses to maintain its corporate existence and good
standing (which shall not exceed $500,000 per annum); provided that the amount
of dividends described in this clause (vii) shall be excluded from the
calculation of the amounts of Restricted Payments hereunder; and (viii)
reasonable and customary directors' fees to the members of Holdings' or the
Company's board of directors, provided that with respect to clauses (ii), (iii),
(v), (vi) and (vii) above, no Default or Event of Default shall have occurred
and be continuing immediately after such transaction.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary of the
Company, pursuant to the Restricted Payment. The fair market value of any
non-cash Restricted Payment shall be determined by the Board of Directors of the
Company whose resolution with respect thereto shall be delivered to the Trustee,
not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this Section 4.07 were computed, together with a copy of any
fairness opinion or appraisal required by this Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary of the
Company to (i)(x) pay dividends or make any other distributions to the Company
or any of its respective Subsidiaries that are Guarantors (1) on its Capital
Stock or (2) with respect to any other interest or participation in, or measured
by, its profits, or (y) pay any Indebtedness owed to the Company or any of its
Subsidiaries, (ii) make loans or advances to the Company or any of its
respective Subsidiaries or (iii) transfer any of its properties or assets to the
Company or any of its respective Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (a) this Indenture, the Notes and
the Credit Agreement as in effect on the date hereof, (b) applicable law,
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(c) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Company or any of its Subsidiaries as in effect at the time of such
acquisition (except with respect to Indebtedness incurred in connection with or
in contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, provided that,
in the case of Indebtedness, such Indebtedness was permitted by the terms hereof
to be incurred, (d) restrictions of the nature described in clause (iii) above
by reason of customary non-assignment, sub-letting and restriction on transfer
provisions in contracts, agreements, and leases entered into in the ordinary
course of business and consistent with past practices, (e) purchase money
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, (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 of the Capital Stock or assets of such Subsidiary pending the closing of
such sale or disposition, (g) agreements relating to secured Indebtedness
otherwise permitted to be incurred pursuant to Section 4.09 and 4.12 hereof that
limit the right of the debtor to dispose of assets securing such Indebtedness,
(h) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business, and (i)
Permitted Refinancing Indebtedness in respect of Indebtedness referred to in
clause (a), (c) and (e) of this paragraph, provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock if the Company's Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.00 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant shall not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company of term Indebtedness, revolving
credit Indebtedness and indebtedness under letters of credit (with letters
of credit being deemed to have a principal amount equal to the maximum
potential liability of the Company thereunder) under any Credit Facility
(and the Guarantee thereof by the Guarantors); provided that, subject to
clause (xii) below, the aggregate principal amount of all Indebtedness and
letters of credit outstanding at any one time under all Credit Facilities
after giving effect to such incurrence, does not exceed $50.0 million less
the aggregate amount of all permanent repayments from Net Proceeds of Asset
Sales or as stated amortization of a term loan, if applicable, optional or
mandatory, of the principal of any Indebtedness under a Credit Facility (or
any such Permitted Refinancing Indebtedness) that have been made since the
date hereof; provided that such deduction will not exceed, in the
aggregate, $25.0 million;
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(ii) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by the
Notes and the incurrence by the Guarantors of the Subsidiary Guarantees;
(iv) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the
Company or such Subsidiary, in an aggregate principal amount, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
Indebtedness incurred pursuant to this clause (iv), not to exceed $5.0
million at any time outstanding;
(v) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness;
(vi) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Subsidiaries that are Guarantors; provided, however, that (i) if the
Company is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes and this Indenture, (ii) if a Subsidiary of the
Company is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of such Subsidiary's
Subsidiary Guarantee and (iii)(A) any subsequent event or issuance or
transfer of Equity Interests that results in any such Indebtedness being
held by a Person other than the Company or a Subsidiary of the Company and
(B) any sale or other transfer of any such Indebtedness to a Person that is
not either the Company or a Subsidiary of the Company that is a Guarantor
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Subsidiary, as the case may be, that
was not permitted by this clause (vi);
(vii) the issuance by a Subsidiary that is a Guarantor of preferred
stock to the Company or to any of its Subsidiaries that are Guarantors;
provided, however, that any subsequent event or issuance or transfer of any
Equity Interests that results in the owner of such preferred stock ceasing
to be the Company or one of its Subsidiaries that are Guarantors or any
subsequent transfer of such preferred stock to a Person other than the
Company or any of its Subsidiaries that are Guarantors, shall be deemed to
be an issuance of preferred stock by such Subsidiary that was not permitted
by this clause (vii).
(viii) the incurrence by the Company or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms hereof to be outstanding;
(ix) Indebtedness arising from agreements of the Company or a
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred in connection with the
disposition of any business, assets or a Subsidiary, other than the
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or a Subsidiary for the purpose of
financing such acquisition; provided, however, that (A) such Indebtedness
is not reflected on the balance sheet of the Company or any Subsidiary
(contingent obligations referred to in a footnote to financial statements
and not otherwise reflected on the
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balance sheet will not be deemed to be reflected on such balance sheet for
purposes of this clause (A)) and (B) the maximum assumable liability in
respect of all such Indebtedness shall at no time exceed the gross proceeds
including noncash proceeds (the fair market value of such noncash proceeds
being measured at the time received and without giving effect to any
subsequent changes in value) actually received by the Company and its
Subsidiaries in connection with such disposition;
(x) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Subsidiary of the Company that was
permitted to be incurred by another provision of this Section 4.09;
(xi) the incurrence of Indebtedness by one of the Company's
Subsidiaries evidenced by the promissory notes (the "Eagle Rock Notes")
issued and issuable under the certain Lease Agreement date April 19, 1986,
as amended by a Memorandum of Agreement dated February 26, 1993, between
one of the Company's Subsidiaries (as successor in interest to DSD, Inc.)
and 426 Eagle Rock Avenue Associates; or
(xii) the incurrence by the Company of additional Indebtedness in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (xii), not to exceed $10.0 million; provided that such
additional Indebtedness may be Senior Debt under any Credit Facility.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xii) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this Section 4.09. Accrual of interest, the accretion
of accreted value and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes
of this Section 4.09.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Subsidiaries to,
consummate an Asset Sale unless (i) the Company or such Subsidiary receives
consideration at the time of such Asset Sale at least equal to the fair market
value (which, in the case of any Asset Sale involving shares or assets having a
fair market value in excess of $2.0 million, shall be determined in good faith
by the Company's Board of Directors) of the assets or Equity Interests issued or
sold or otherwise disposed of and (ii) at least 75% of the consideration
therefor received by the Company or such Subsidiary is in the form of cash or
Cash Equivalents; provided that the amount of (x) any Senior Debt of the Company
or any Subsidiary of the Company that is assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the Company or
such Subsidiary from further liability thereon and (y) any securities, notes or
other obligations received by the Company or any such Subsidiary from such
transferee that are immediately converted by the Company or such Subsidiary into
cash (to the extent of the cash received), shall be deemed to be cash for
purposes of this provision; and provided, further, that any Asset Sale pursuant
to a condemnation, appropriation or other similar taking, including by deed in
lieu of condemnation, or pursuant to the foreclosure or other enforcement of a
Permitted Lien or exercise by the related lienholder of rights with respect
thereto, including by deed or assignment in lieu of foreclosure shall not be
required to satisfy the conditions set forth in clauses (i) and (ii) of this
paragraph.
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Within 270 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to repay
Indebtedness under any Credit Facility (and to correspondingly permanently
reduce the commitments with respect thereto; provided that the Company shall not
be required to effect such permanent reductions from the Issue Date in excess of
an aggregate of $25.0 million) or (b) to acquire or make a controlling
Investment in or with respect to a Permitted Business or the acquisition of all
or substantially all of the assets of a Permitted Business, or the making of a
capital expenditure or the acquisition of other long-term assets in a Permitted
Business. Pending the final application of any such Net Proceeds, the Company
may temporarily reduce Indebtedness under any Credit Facility or otherwise
invest such Net Proceeds in any manner that is not prohibited hereby. Any Net
Proceeds from an Asset Sale that are not applied or invested as provided in the
first sentence of this paragraph shall be deemed to constitute "Excess Proceeds"
from an Asset Sale. When the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall be required to make an offer to all Holders of Notes
(an "Asset Sale Offer") to purchase the maximum principal amount of Notes that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase, in
accordance with the procedures set forth herein. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or Guarantee with, or for the benefit of, any Affiliate of any such
Person (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Subsidiary with an unrelated Person and (ii)
the Company delivers to the Trustee (a) with respect to any Affiliate
Transaction or series of related Affiliated Transactions involving aggregate
consideration in excess of $1.0 million, a resolution of its Board of Directors
set forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of its Board of Directors
and (b) with respect to any Affiliate Transaction or series of related
Affiliated Transactions involving aggregate consideration in excess of $5.0
million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an investment banking firm
(or, if an investment banking firm is generally not qualified to give such an
opinion, by an appraisal firm) of national standing; provided that none of the
following shall be deemed to be Affiliate Transactions: (1) any employment
agreement entered into by the Company or any of its Subsidiaries in the ordinary
course of business and consistent with the past practice of the Company or such
Subsidiary, as the case may be, (2) transactions between or among the Company
and/or its Subsidiaries that are Guarantors, (3) Restricted Payments that are
permitted by Section 4.07 hereof and payments made under the Eagle Rock Notes
permitted by Section 4.09 hereof, (4) fees and compensation paid to members of
the Board of Directors of the Company and of its Subsidiaries in their capacity
as such, to the extent such fees and compensation are reasonable and customary,
(5) advances to employees for moving, entertainment and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business and
consistent with past practices; (6) management or similar fees payable to BRS or
an Affiliate
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thereof (to the extent such fees do not, in the aggregate, exceed 2.0% of the
actual Consolidated Cash Flow of the Company for the period in respect of which
such fees are paid); (7) fees payable to BRS or its Affiliate under a
transaction services agreement in effect on the date hereof; (8) maintenance in
the ordinary course of business of customary 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 and (9) fees and compensation paid to, and indemnity provided on
behalf of, officers, directors or employees of the Company or any of its
Subsidiaries, as determined by the Board of Directors of the Company or of any
such Subsidiary, shall not be deemed to be Affiliate Transactions.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Subsidiaries to,
create, incur, assume or otherwise cause or suffer to exist or become effective
any Lien of any kind securing Indebtedness or trade payables (other than
Permitted Liens) upon any of their property or assets, now owned or hereafter
acquired, unless all payments due under this Indenture and the Notes are secured
on an equal and ratable basis with the obligations so secured until such time as
such obligations are no longer secured by a Lien.
SECTION 4.13. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly engage in any line of business other than a Permitted
Business, except to such extent as would not be material to the Company and its
Subsidiaries taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment").
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder stating: (1) that the Change of Control Offer is being
made pursuant to this Section 4.15 and that all Notes tendered will be accepted
for payment; (2) the purchase price and the purchase date, which shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change
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of Control Payment Date"); (3) that any Note not tendered will continue to
accrue interest; (4) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of Control
Payment Date; (5) that Holders electing to have any Notes purchased pursuant to
a Change of Control Offer will be required to surrender the Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Change of Control
Payment Date; (6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have the Notes purchased; and (7) that
Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof. The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of Notes as a result of a Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. Prior to complying
with the provisions of this Section 4.15 but in any event within 90 days
following a Change of Control, the Company shall either repay all outstanding
Senior Debt or obtain the requisite consents, if any, under all agreements
governing outstanding Senior Debt to permit the repurchase of Notes required by
this covenant. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(c) The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth herein applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
SECTION 4.16. NO SENIOR SUBORDINATED DEBT.
Notwithstanding the any other provision hereof, (i) the Company shall not
incur, create, issue, assume, guarantee or otherwise become liable directly or
indirectly for any Indebtedness (including Acquired Debt) that is subordinate or
junior in right of payment to any Senior Debt and senior in any respect in right
of payment to the Notes, and (ii) no Guarantor shall incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness (including
Acquired Debt) that is subordinate or junior in right of payment to any Senior
Debt of a Guarantor and senior in any respect in right of payment to the
Subsidiary Guarantees.
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SECTION 4.17. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any sale and leaseback transaction; provided that the Company may
enter into a sale and leaseback transaction if (i) the Company could have
incurred Indebtedness in an amount equal to the Attributable Debt relating to
such sale and leaseback transaction pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.09 hereof and (ii) the gross
cash proceeds of such sale and leaseback transaction are at least equal to the
fair market value (as determined in good faith by the Board of Directors and set
forth in an Officers' Certificate delivered to the Trustee if such fair market
value exceeds $2.5 million) of the property that is the subject of such sale and
leaseback transaction and (iii) the transfer of assets in such sale and
leaseback transaction is permitted by, and the Company applies the proceeds of
such transaction in compliance with, Section 4.10 hereof, if applicable.
SECTION 4.18. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY
OWNED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly Owned Subsidiary
of the Company to, transfer, convey, sell, lease or otherwise dispose of any
Capital Stock of any Wholly Owned Subsidiary of the Company to any Person (other
than the Company or a Wholly Owned Subsidiary of the Company that is a
Guarantor), unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Capital Stock of such Wholly Owned Subsidiary and (b)
the cash Net Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with Section 4.10 hereof and (ii) shall
not permit any Wholly Owned Subsidiary of the Company to issue any of its Equity
Interests (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 of the Company that is a Guarantor.
SECTION 4.19. ADDITIONAL SUBSIDIARY GUARANTEES.
If the Company or any of its Subsidiaries shall acquire or create another
Subsidiary after the date hereof, then such newly acquired or created Subsidiary
shall (i) execute a supplemental indenture in form and substance satisfactory to
the Trustee providing that such Subsidiary will become a Guarantor under this
Indenture and (ii) deliver an Opinion of Counsel to the effect, inter alia, that
such supplemental indenture has been duly authorized and executed by such
Subsidiary.
SECTION 4.20. PAYMENTS FOR CONSENT.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or is paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
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ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or not the
Company is the surviving corporation) or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless (i) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such merger, consolidation or sale of assets (if
other than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation organized
or existing under the laws of the United States, any state thereof or the
District of Columbia, (ii) the entity or Person formed by or surviving any such
merger, consolidation or sale of assets (if other than the Company) or the
entity or Person to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made assumes all the obligations of the
Company under the Notes and this Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee, (iii) immediately after such
transaction no Default or Event of Default exists and (iv) except in the case of
a merger of the Company with or into a Wholly Owned Subsidiary of the Company,
the Company or the entity or Person formed by or surviving any such merger,
consolidation or sale of assets (if other than the Company), or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made (A) shall have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) shall, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes and such default continues
for a period of 30 days (whether or not prohibited by Article 10 hereof);
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to
purchase) or otherwise (whether or not prohibited by Article 10 hereof);
(c) the Company or any of its Subsidiaries fails to comply with any of
the provisions of Section 5.01 hereof;
(d) the Company or any of its Subsidiaries fails to comply with any of
the provisions of Sections 4.07, 4.09, 4.10 and 4.15 for 30 days after
notice to the Company by the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding;
(e) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Notes
for 60 days after notice to the Company by the Trustee or the Holders of at
least 25% in aggregate principal amount of the Notes then outstanding;
(f) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of this Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been so
accelerated, aggregates without duplication $5.0 million or more and such
default shall not have been cured or acceleration rescinded within a five
business day period;
(g) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company
or any of its Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary and such
judgment or judgments remain undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate of all such undischarged judgments exceeds $5.0 million;
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(h) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary in an
involuntary case;
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary or for all
or substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days; or
(i) except as permitted herein, any Subsidiary Guarantee
shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acing on behalf of any
Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in clause
(h) or (i) of Section 6.01 hereof with respect to the Company, any Significant
Subsidiary or any group of Significant Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary) occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately; provided, that so
long as any Indebtedness permitted to be incurred pursuant to clause (i) of the
second paragraph of Section 4.09 hereof shall be outstanding, such acceleration
shall not be effective until the earlier of (i) an acceleration under any such
other Indebtedness or (ii) five Business Days after receipt by the Company of
written notice of such acceleration of the Notes. Upon any such declaration, the
Notes shall become due and payable
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immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof occurs with respect to the Company, any
of its Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary, all outstanding Notes shall be
due and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.
If an Event of Default occurs on or after August 1, 2002 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Notes pursuant to
Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium
shall also become and be immediately due and payable, to the extent permitted by
law, anything in this Indenture or in the Notes to the contrary notwithstanding.
If an Event of Default occurs prior to August 1, 2002 by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding the prohibition on redemption of the Notes prior to
such date, then, upon acceleration of the Notes, an additional premium shall
also become and be immediately due and payable in an amount, for each of the
years beginning on August 1 of the years set forth below, as set forth below
(expressed as a percentage of the aggregate principal amount to the date of
payment that would otherwise be due but for the provisions of this sentence):
Year Percentage
1997................................... 112.833%
1998................................... 111.229%
1999................................... 109.625%
2000................................... 108.021%
2001................................... 106.417%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note 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. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase); provided,
however, that the Holders of a majority
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in aggregate principal amount of the then outstanding Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture that the Trustee determines may be unduly prejudicial
to the rights of other Holders of Notes or that may involve the Trustee in
personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then outstanding
Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Notes do not give the Trustee a direction inconsistent
with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), 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 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further
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amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to 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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such 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 to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Company or to such party as a court of competent jurisdiction
shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
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 a
Trustee, a court in its discretion may require
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the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of
more than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, 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 liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible 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 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers
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under this Indenture at the request of any Holders, unless such Holder shall
have offered to the Trustee security and indemnity satisfactory to it against
any loss, liability or expense.
(f) 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. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon 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 or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or any Affiliate of the
Company with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue as
trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. 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 Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any
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Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a 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, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA ss. 313(a) (but if no event described in TIA ss.
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA ss. 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such compensation
for its acceptance of this Indenture and services hereunder as the parties shall
agree from time to time. 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 promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation for
its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. 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 shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
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The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the
extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10,
such Holder of a Note may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
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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
Holders of the Notes. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100.0
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to 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 therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness
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represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive solely from the trust fund described
in Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due, (b) the Company's obligations with respect to such Notes
under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (d) this Article 8. Subject to compliance with this
Article 8, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.03 hereof, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, Sections 6.01(d) through
6.01(f) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium and Liquidated
Damages, if any, and interest on the outstanding Notes on the stated date
for payment thereof or on the applicable redemption date, as the case may
be;
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(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of this Indenture, there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal 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;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of
the outstanding Notes 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;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Notes pursuant to this
Article 8 concurrently with such incurrence) or insofar as Sections 6.01(h)
or 6.01(i) hereof is concerned, at any time in the period ending on the
91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that on the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall
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be held in trust and applied by the Trustee, in accordance with the provisions
of such Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as Paying Agent) as the Trustee may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Note and remaining unclaimed for two years after such principal,
and premium, if any, or interest has become due and payable shall be paid to the
Company on its request or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Note shall thereafter, as a secured creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S dollars or
non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
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ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee
may amend or supplement this Indenture or the Notes without the consent of any
Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes in the case of a merger, consolidation or sale of assets
pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal rights
hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture (including Section 3.09, 4.10 and 4.15
hereof) and the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding
(including consents obtained in connection with a tender offer or exchange offer
for the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium, if any, or interest on the Notes, except a
payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for the Notes). Without the consent of at least 75% in
principal amount of the Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for such Notes), no waiver or
amendment to this Indenture may make any change in the provisions of Article 10
hereof that adversely affects the rights of any Holder of Notes.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the
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Trustee of evidence satisfactory to the Trustee of the consent of the Holders of
Notes as aforesaid, and upon receipt by the Trustee of the documents described
in Section 7.02 hereof, the Trustee shall join with the Company in the execution
of such amended or supplemental Indenture unless such amended or supplemental
Indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the then outstanding Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to waivers
of past Defaults or the rights of Holders of Notes to receive payments of
principal of or interest on the Notes; or
(g) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental Indenture that complies with the TIA as then
in effect.
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SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01) shall be fully
protected in relying upon, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that the
Indebtedness evidenced by the Notes is subordinated in right of payment, to the
extent and in the manner provided in this Article 10, to the prior payment in
full in cash or Cash Equivalents of all Senior Debt (whether outstanding on the
date hereof or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of Senior Debt.
SECTION 10.02. CERTAIN DEFINITIONS.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Credit Agreement and (ii) any other Senior Debt permitted hereunder the
principal amount of which is $15.0 million or more and that has been designated
by the Company as "Designated Senior Debt."
"Permitted Junior Securities" means (i) Equity Interests in the Company or
any Guarantor which, to the extent received by any Holder in connection with any
bankruptcy, reorganization,
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insolvency or similar proceeding in which any Equity Interests are also
exchanged for or distributed in respect of Senior Debt, are either common equity
securities or are subordinated to all such Equity Interests so exchanged or
distributed to substantially the same extent as, or to a greater extent than,
the Notes are subordinated to Senior Debt pursuant hereto, and (ii) debt
securities that are subordinated to all Senior Debt (and any debt securities
issued in exchange for Senior Debt) to substantially the same extent as, or to a
greater extent than, the Notes are subordinated to Senior Debt pursuant hereto.
"Senior Debt" means (i) all Obligations from time to time outstanding under
the Credit Agreement, including all Hedging Obligations with respect thereto and
any Permitted Refinancing Indebtedness thereunder (and, for purposes of this
Indenture, any such Senior Debt shall be considered to be outstanding whenever
any loan commitment under the Credit Agreement is outstanding), (ii) any other
Indebtedness of the Company or any Guarantor that is a Subsidiary of the Company
that is permitted to be incurred by the Company or such Guarantor pursuant to
this Indenture unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes, and (iii) all Obligations of the Company or any Guarantor
that is a Subsidiary of the Company with respect to any of the foregoing.
Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not
include (v) any Obligation of the Company to any Subsidiary of the Company or
any of its Affiliates, (w) any liability for federal, state, local or other
taxes owed or owing by the Company (other than such taxes owed or owing to the
lenders under the Credit Agreement), (x) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities), (y) any
Obligations in respect of Capital Stock of the Company or (z) that portion of
the principal amount of any Indebtedness (and any obligations with respect to
such incremental principal amount) which at the time of incurrence is incurred
in violation of this Indenture.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive payment in
full in cash or Cash Equivalents of all Obligations due in respect of such
Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt) before
Holders of the Notes shall be entitled to receive any payment with respect
to the Notes (except that Holders may receive (i) Permitted Junior
Securities and (ii) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof); and
(2) until all Obligations with respect to Senior Debt (as provided in
subsection (1) above) are paid in full in cash or Cash Equivalents, any
distribution to which Holders would be entitled but for this Article 10
shall be made to holders of Senior Debt (except that Holders of Notes may
receive (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section
8.01 hereof), as their interests may appear.
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If a distribution is made to holder of the Notes that, due to the
subordination provisions, should not have been made to them, such holder shall
be required to hold such distribution in trust for the holders of Senior Debt
and pay it over to them (pursuant to such written instructions as the holders of
Senior Debt or a representative on their behalf may provide to such holders of
the Notes) as their interests may appear.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution to the Trustee or any
Holder in respect of Obligations with respect to the Notes and may not acquire
from the Trustee or any Holder any Notes for cash or property (other than (i)
Permitted Junior Securities and (ii) payments and other distributions made from
any defeasance trust created pursuant to Section 8.01 hereof) until all
principal and other Obligations with respect to the Senior Debt have been paid
in full in cash and Cash Equivalents if:
(i) a default in the payment of any principal or other Obligations
with respect to Designated Senior Debt occurs and is continuing beyond any
applicable grace period in the agreement, indenture or other document
governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated Senior
Debt occurs and is continuing that then permits holders of the Designated
Senior Debt to accelerate its maturity and the Trustee receives a notice of
the default (a "Payment Blockage Notice") from a Person who may give it
pursuant to Section 10.12 hereof, which notice states it is a Payment
Blockage Notice under this Indenture. If the Trustee receives any such
Payment Blockage Notice, no subsequent Payment Blockage Notice shall be
effective for purposes of this Section unless and until at least 360 days
shall have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice. No nonpayment default that existed or was continuing on
the date of delivery of any Payment Blockage Notice to the Trustee shall
be, or be made, the basis for a subsequent Payment Blockage Notice unless
such default shall have been waived for a period of not less than 90 days.
The Company may and shall resume payments on and distributions in respect
of the Notes and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 10.04(ii) hereof,
179 days pass after notice is received if the maturity of such Designated
Senior Debt has not been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when such payment is prohibited
by Section 10.04 hereof, such payment shall be
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held by the Trustee or such Holder, in trust for the benefit of, and shall be
paid forthwith over and delivered, upon written request, to, the holders of
Senior Debt as their interests may appear or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of all Obligations with respect to Senior Debt remaining unpaid to the
extent necessary to pay such Obligations in full in accordance with their terms,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.07. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article 10, but failure to give such notice
shall not affect the subordination of the Notes to the Senior Debt as provided
in this Article 10.
SECTION 10.08. SUBROGATION.
After all Senior Debt is paid in full in cash or Cash Equivalents and until
the Notes are paid in full, Holders of Notes shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Notes) to the rights of
holders of Senior Debt to receive distributions applicable to Senior Debt to the
extent that distributions otherwise payable to the Holders of Notes have been
applied to the payment of Senior Debt. A distribution made under this Article 10
to holders of Senior Debt that otherwise would have been made to Holders of
Notes is not, as between the Company and Holders, a payment by the Company on
the Notes.
SECTION 10.09. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and holders
of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior Debt;
or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of Notes.
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If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any Holder or by the failure of the Company or any Holder
to comply with this Indenture.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on the Notes, unless the Trustee shall have received at its Corporate Trust
Office at least five Business Days prior to the date of such payment written
notice of facts that would cause the payment of any Obligations with respect to
the Notes to violate this Article 10. Only the Company or a Representative may
give the notice. Nothing in this Article 10 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representative is hereby authorized to file an appropriate claim
for and on behalf of the Holders of the Notes.
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SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified without
the written consent of the holders of all Senior Debt.
SECTION 10.15. CONTINUED EFFECTIVENESS.
The terms of this Indenture, the subordination effected hereby, and the
rights and other obligations of the Holders of the Notes of the holders of
Senior Debt arising hereunder, shall not be affected, modified or impaired in
any manner or to any extent by: (i) any amendment or modification of or
supplement to the Credit Agreement (to the extent not prohibited by this
Indenture); (ii) the validity and enforceability of any of such documents; or
(iii) any exercise or non-exercise of any right, power or remedy under or in
respect of the Senior Debt or the Obligations evidenced by the Notes or any of
the instruments or documents referred to in clause (i) above. Each Holder of
Notes hereby acknowledges that the provisions of this Indenture are intended to
be enforceable at all times, whether before the commencement of, in connection
with or premised on the occurrence of a Proceeding.
SECTION 10.16. NO CONTEST; NO SECURITY.
The Holders of the Notes agree that they will not at any time contest the
validity, perfection, priority or enforceability of the Senior Debt, the Credit
Agreement or the security interest securing the Credit Agreement. The Holders of
the Notes shall not accept any collateral as security for the Obligations in
respect of the Notes at any time.
SECTION 10.17. CUMULATIVE RIGHTS; NO WAIVERS.
Subject to Section 10.15, each and every right, remedy and power granted to
the Representative for the Credit Agreement or the holders of Senior Debt
hereunder shall be cumulative and in addition to any other right, remedy or
power specifically granted herein, in the Credit Agreement or now or hereafter
existing in equity, at law, by virtue of statute or otherwise, and may be
exercised by the Representative for the Credit Agreement or the holders of
Senior Debt, from time to time, concurrently or independently and as often and
in such order as such Representative or the holders of Senior Debt may deem
expedient (subject to the limits provided in Section 10.04 with respect to
payment blockages). Any failure or delay on the part of the Representative for
the Credit Agreement or the holders of Senior Debt in exercising any such right,
remedy or power, or abandonment or discontinuance of steps to enforce the same,
shall not operate as a waiver thereof or affect the rights of such
Representative or the holders of Senior Debt thereafter to exercise the same,
and any single or partial exercise of any such right, remedy or power shall not
preclude any other or further exercise thereof or the exercise of any other
right, remedy or power, and no such failure, delay, abandonment or single or
partial exercise of the rights of the Representative for the Credit Agreement or
the holders of Senior Debt hereunder shall be deemed to establish a custom or
course of dealing or performance among the parties hereto.
SECTION 10.18. TRUSTEE.
Any Representative for the Credit Agreement shall be entitled to send any
notices required or permitted to be delivered to the Holders of the Notes to the
Trustee on behalf of such holders and any such notice so delivered to the
Trustee shall be deemed to have been delivered to all Holders of Notes.
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ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.01. SUBSIDIARY GUARANTEE.
Subject to Section 11.05 hereof, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes and
the Obligations of the Company hereunder and thereunder, that: (a) the principal
of, premium, if any, interest and Liquidated Damages, if any, on the Notes will
be promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration, redemption or otherwise, and interest on
the overdue principal, premium, if any, (to the extent permitted by law)
interest on any interest, if any, and Liquidated Damages, if any, on the Notes,
and all other payment Obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full and performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other Obligations, the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration, redemption or otherwise. Failing
payment when so due of any amount so guaranteed or any performance so guaranteed
for whatever reason the Guarantors will be jointly and severally obligated to
pay the same immediately. An Event of Default under this Indenture or the Notes
shall constitute an event of default under the Subsidiary Guarantees, and shall
entitle the Holders to accelerate the Obligations of the Guarantors hereunder in
the same manner and to the same extent as the Obligations of the Company. The
Guarantors hereby agree that their Obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that this
Subsidiary Guarantee will not be discharged except by complete performance of
the Obligations contained in the Notes and this Indenture. If any Holder or the
Trustee is required by any court or otherwise to return to the Company, the
Guarantors, or any Note Custodian, Trustee, liquidator or other similar official
acting in relation to either the Company or the Guarantors, any amount paid by
the Company or any Guarantor to the Trustee or such Holder, this Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor agrees that it shall not be entitled to, and
hereby waives, any right of subrogation in relation to the Holders in respect of
any Obligations guaranteed hereby. Each Guarantor further agrees that, as
between the 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 6 hereof for the purposes of its Subsidiary
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed thereby, and (y) in
the event of any declaration of acceleration of such Obligations as provided in
Article 6 hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantor for the purpose of its
Subsidiary Guarantee. The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does not
impair the rights of the Holders under the Subsidiary Guarantees.
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SECTION 11.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01 hereof,
each Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form of Exhibit E hereto shall be endorsed by manual or
facsimile signature by an Officer of such Guarantor on each Note authenticated
and delivered by the Trustee and that this Indenture shall be executed on behalf
of such Guarantor, by manual or facsimile signature, by an Officer of such
Guarantor.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in
Section 11.01 hereof shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth
in this Indenture on behalf of the Guarantors.
SECTION 11.03. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Except as set forth in Articles 4 and 5 hereof, nothing contained in
this Indenture shall prohibit a merger between a Guarantor and another Guarantor
or a merger between a Guarantor and the Company.
(b) No Guarantor shall consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person) or sell all or substantially all of
its assets to, another corporation, Person or entity whether or not affiliated
with such Guarantor unless, other than with respect to a merger or sale of
assets between a Guarantor and another Guarantor or a merger between a Guarantor
and the Company, (i) subject to the provisions of Section 11.04 hereof, the
Person formed by or surviving any such merger or consolidation, or to which such
sale of assets shall have been made (if other than such Guarantor) assumes all
the Obligations of such Guarantor, pursuant to a supplemental indenture
substantially in the form of Exhibit F hereto, under this Indenture; (ii)
immediately after giving effect to such transaction, no Default or Event of
Default exists; (iii) such Guarantor, or any Person formed by or surviving any
such merger or consolidation or to which such sale of assets shall have been
made, would have Consolidated Net Worth (immediately after giving effect to such
transaction) equal to or greater than the Consolidated Net Worth of such
Guarantor immediately preceding the transaction; and (iv) the Company would be
permitted by virtue of the Company's pro forma Fixed Charge Coverage Ratio,
immediately after giving effect to such transaction, to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 4.09 hereof or (b) would have a pro forma Fixed Charge Coverage
Ratio that is greater than the actual Fixed Charge Coverage Ratio for the same
four-quarter period.
Notwithstanding the foregoing paragraph, (i) any Guarantor may consolidate
with, merge into or transfer all or a part of its properties and assets to the
Company or any other Guarantor and (ii) any Guarantor may merge with an
Affiliate that has no significant assets or liabilities and was incorporated
solely for purpose of reincorporating such Guarantor in another State of the
United States; provided that such merged entity continues to be a Guarantor.
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(c) In the case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and substantially in the form of Exhibit F hereto,
of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor; provided that, solely for purposes of computing
Consolidated Net Income for purposes of clause (b) of the first paragraph of
Section 4.07 hereof, the Consolidated Net Income of any Person other than the
Company and its Subsidiaries shall only be included for periods subsequent to
the effective time of such merger, consolidation, combination or transfer of
assets. Such successor Person thereupon may cause to be signed any or all of the
Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Trustee. All of the Subsidiary Guarantees so issued shall in all respects have
the same legal rank and benefit under this Indenture as the Subsidiary
Guarantees theretofore and thereafter issued in accordance with the terms of
this Indenture as though all of such Subsidiary Guarantees had been issued at
the date of the execution hereof.
SECTION 11.04. RELEASES FOLLOWING SALE OF ASSETS.
In the event of (i) a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or (ii) a sale or other
disposition of all of the capital stock of any Guarantor then such Guarantor
shall be released and relieved of any obligations under its Subsidiary
Guarantee; provided that (i) the Net Proceeds from such sale or other
disposition are treated in accordance with the provisions of Section 4.10 hereof
and (ii) the Company is in compliance with all other provisions of this
Indenture applicable to such disposition. Upon delivery by the Company to the
Trustee of an Officers' Certificate to the effect of the foregoing, the Trustee
shall execute any documents reasonably required in order to evidence the release
of any Guarantor from its Obligation under its Subsidiary Guarantee. Any
Guarantor not released from its Obligations under its Subsidiary Guarantee shall
remain liable for the full amount of principal of, premium, if any, interest and
Liquidated Damages, if any, on the Notes and for the other Obligations of such
Guarantor under this Indenture as provided in this Article 11.
SECTION 11.05. LIMITATION ON GUARANTOR LIABILITY.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Notes and this Indenture and (ii) the amount, if any, which would not have (A)
rendered such Guarantor "insolvent" (as such term is defined in the Bankruptcy
Law and in the Debtor and Creditor Law of the State of New York) or (B) left
such Guarantor with unreasonably small capital at the time its Subsidiary
Guarantee of the Notes was entered into; provided that, it will be a presumption
in any lawsuit or other proceeding in which a Guarantor is a party that the
amount guaranteed pursuant to the Subsidiary Guarantee is the amount set forth
in clause (i) above unless any creditor, or representative of creditors of such
Guarantor, or debtor in possession or trustee in bankruptcy of the Guarantor,
otherwise proves in such a lawsuit that the aggregate liability of the Guarantor
is the amount set forth in clause (ii) above. In making any determination as to
solvency or sufficiency of capital of a Guarantor in accordance with the
previous sentence, the right of such Guarantor to contribution from other
Guarantors, and any other rights such Guarantor may have, contractual or
otherwise, shall be taken into account.
SECTION 11.06. TRUSTEE TO INCLUDE PAYING AGENT.
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In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article 11 shall in each case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully and for all intents and purposes as if such Paying Agent were
named in this Article 11 in place of the Trustee.
SECTION 11.07. SUBORDINATION OF SUBSIDIARY GUARANTEE.
The obligations of each Guarantor under its Subsidiary Guarantee pursuant
to this Article 11 shall be junior and subordinated to the Senior Debt of such
Guarantor on the same basis as the Notes are junior and subordinated to Senior
Debt. For the purposes of the foregoing sentence, the Trustee and the Holders of
Notes shall have the right to receive and/or retain payments by any of the
Guarantors only at such times as they may receive and/or retain payments in
respect of the Notes pursuant to this Indenture, including Article 10 hereof. In
the event that the Trustee or any Holder shall have received any Guarantor
payment that is prohibited by the foregoing sentence, such Guarantor payment
shall be paid over and delivered forthwith to the holders of the Senior Debt
remaining unpaid, to the extent necessary to pay all Senior Debt in full in cash
or Cash Equivalents.
Each Holder of a Note by its acceptance thereof (a) agrees to and shall be
bound by the provisions of this Section 11.07, (b) authorizes and directs the
Trustee on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee its
attorney-in-fact for any and all such purposes. Consistent with the
subordination of the Subsidiary Guarantees, for purposes of any applicable
fraudulent transfer or similar laws, Indebtedness incurred under any Credit
Facility will be deemed to have been incurred prior to the incurrence by any
Guarantor of its liability under its Subsidiary Guarantee.
ARTICLE 12 MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss.318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company or the Trustee to the others is
duly given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
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B&G Foods, Inc.
426 Eagle Rock Avenue
Roseland, New Jersey 07068
Telecopier No.: (201) 228-7461
Attention: Chief Financial Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York
Telecopier No.: (212) 698-3599
Attention: Glyndwr P. Lobo
If to the Trustee:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Administration
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. 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 within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
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Holders may communicate pursuant to TIA ss. 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read
such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she 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
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
75
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SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART 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.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures Page(s) Follow]
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SIGNATURES
Dated as of August 11, 1997
B&G FOODS, INC.
By: /s/ David Wenner
-------------------------------------------
Name: David Wenner
Title: President
BGH HOLDINGS, INC.
By: /s/ David Wenner
-------------------------------------------
Name: David Wenner
Title: President
RWBV ACQUISITION CORP.
By: /s/ David Wenner
-------------------------------------------
Name: David Wenner
Title: President
BRH HOLDINGS, INC.
By: /s/ David Wenner
-------------------------------------------
Name: David Wenner
Title: President
BLOCH & GUGGENHEIMER, INC.
By: /s/ David Wenner
-------------------------------------------
Name: David Wenner
Title: President
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ROSELAND DISTRIBUTION COMPANY
By: /s/ David Wenner
-------------------------------------------
Name: David Wenner
Title: President
BURNS & RICKER, INC.
By: /s/ David Wenner
-------------------------------------------
Name: David Wenner
Title: President
ROSELAND MANUFACTURING, INC.
By: /s/ David Wenner
-------------------------------------------
Name: David Wenner
Title: President
RWBV BRANDS COMPANY
By: /s/ David Wenner
-------------------------------------------
Name: David Wenner
Title: President
THE BANK OF NEW YORK
By: /s/ Walter Gitlan
-------------------------------------------
Name: Walter Gitlan
Title: Vice President
78
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EXHIBIT A-1
(Face of Note)
================================================================================
CUSIP/CINS ____________
9-5/8% [Series A] [Series B] Senior Subordinated Notes due 2007
No. $
--- -------------
B&G FOODS, INC.
promises to pay to CEDE & Co.
------------------------
or registered assigns,
the principal sum of
------------------------
Dollars on August 1, 2007.
Interest Payment Dates: February 1, and August 1
Record Dates: January 15, and July 15
B&G FOODS, INC.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By: Dated: , , 1997
------------------------- ----------------- ---
================================================================================
A1-1
<PAGE>
(Back of Note)
9-5/8% [Series A] [Series B] Senior Subordinated Notes due 2007
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. B&G Foods, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 9-5/8% per
annum from August 11, 1997 until maturity and shall pay the Liquidated Damages
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Company will pay interest and Liquidated Damages semi-annually in
arrears on February 1 and August 1 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be February 1, 1998. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate 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. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the January 15 or July 15 next
preceding the Interest Payment Date, even if such Notes are cancelled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium and Liquidated Damages, if any, and interest
at the office or agency of the Company maintained for such purpose within the
City and State of New York, or, at the option of the Company, payment of
interest and Liquidated Damages may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided that payment
by wire transfer of immediately available funds will be required with respect to
principal of and interest, premium and Liquidated Damages on, all Global Notes
and all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
A1-2
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4. INDENTURE. The Company issued the Notes under an Indenture dated as of
August 11, 1997 ("Indenture") between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling. The
Notes are obligations of the Company limited to $120.0 million in aggregate
principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraphs (b) and (c) of this Paragraph 5,
the Notes shall not be redeemable at Company option prior to August 1, 2002.
Thereafter, the Notes will be subject to redemption at any time at the option of
the Company in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on August 1 of the
years indicated below:
Year Percentage
2002................................ 104.813%
2003................................ 103.208%
2004................................ 101.604%
2005 and thereafter................. 100.000%
(b) Notwithstanding the foregoing, during the first 36 months after the
date of the Offering Memorandum, the Company may on any one or more occasions
redeem an aggregate of up to 35% of the original aggregate principal amount of
Notes at a redemption price of 109.625% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date, with the net cash proceeds of any Public Equity Offering of
common stock of the Company or a capital contribution to the Company's common
equity of the net cash proceeds of a concurrent Public Equity Offering of common
stock by the Company's direct parent; provided that at least 65% of the original
aggregate principal amount of Notes remain outstanding immediately after each
occurrence of such redemption; and provided, further, that each such redemption
shall occur within 60 days of the date of the closing of such Public Equity
Offering.
(c) Notwithstanding the foregoing, at any time on or prior to August 1,
2002, the Notes also may 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 may such redemption date
occur 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 and Liquidated Damages, 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. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
A1-3
<PAGE>
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within five
days of each date on which the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall commence an offer to all Holders of Notes (as "Asset
Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the date of purchase, in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate amount of Notes tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Company (or such
Subsidiary) may use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. 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 whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the
A1-4
<PAGE>
Company's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (a) default in the
payment when due of interest on, or Liquidated Damages with respect to, the
Notes and such default continues for a period of 30 days (whether or not
prohibited by Article 10 of the Indenture); (b) default in the payment when due
of principal of or premium, if any, on the Notes when the same becomes due and
payable at maturity, upon redemption (including in connection with an offer to
purchase) or otherwise (whether or not prohibited by Article 10 of the
Indenture); (c) failure by the Company or any of its Subsidiaries to comply with
any of the provisions of Section 5.01 of the Indenture; (d) failure by the
Company or any of its Subsidiaries to comply with any of the provisions of
Sections 4.07, 4.09, 4.10 and 4.15 of the Indenture for 30 days after notice to
the Company by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding; (e) failure by the Company to observe or
perform any other covenant, representation, warranty or other agreement in the
Indenture or the Notes for 60 days after notice to the Company by the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding; (f) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Subsidiaries,
whether such Indebtedness or guarantee now exists, or is created after the date
of the Indenture (a) is caused by a failure to pay principal of or premium, if
any, or interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates without duplication $5.0 million or more and such
default shall not have been cured or acceleration rescinded within a five
business day period; (g) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction against the
Company or any of its Significant Subsidiaries or any group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary and such
judgment or judgments remain undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the aggregate of all
such undischarged judgments exceeds $5.0 million; (h) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; or (i) except as permitted in the Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acing on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately; provided that so long as any Indebtedness permitted
to be incurred pursuant to clause (i) of the second paragraph of Section 4.09
hereof shall be outstanding, such acceleration shall not be effective until the
earlier of (i) an acceleration under any such other Indebtedness or (ii) five
Business Days after receipt by the Company of written notice of such
acceleration of the Notes. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice
A1-5
<PAGE>
is in their interest. The Holders of a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Notes. The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator
or stockholder, of the Company, as such, shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the A/B Exchange Registration
Rights Agreement dated as of August 11, 1997, between the Company and the
parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. 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 Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
B&G Foods, Inc.
426 Eagle Rock Avenue
Roseland, New Jersey 07068
Telecopier No.: (201) 228-7461
Attention: Chief Financial Officer
A1-6
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
-----------------------
Your Signature:
-----------------------
(Sign exactly as your name appears on
the face of this Note)
SIGNATURE GUARANTEE
--------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution"
meeting the requirements of the
Registrar, which requirements include
membership or participation in the
Security Transfer Agent Medallion
Program ("STAMP") or such other
"signature guarantee program" as may
be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.
A1-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you
elect to have purchased: $-----------
Date:
--------------------------
Your Signature:
-----------------------
(Sign exactly as your name appears on
the face of this Note)
Tax Identification No.:
---------------
SIGNATURE GUARANTEE
--------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution"
meeting the requirements of the
Registrar, which requirements include
membership or participation in the
Security Transfer Agent Medallion
Program ("STAMP") or such other
"signature guarantee program" as may
be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.
A1-8
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE1
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------------- ----------------------- ------------------------ ------------------------ ----------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
1 This should be included only if the Debenture is issued in global form.
A1-9
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
================================================================================
CUSIP/CINS U07409AA0
9-5/8% [Series A] [Series B] Senior Subordinated Notes due 2007
No. $
--- -------------
B&G FOODS, INC.
promises to pay to CEDE & Co.
------------------------
or registered assigns,
the principal sum of
------------------------
Dollars on August 1, 2007.
Interest Payment Dates: February 1, and August 1
Record Dates: January 15, and July 15
B&G FOODS, INC.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By: Dated: , , 1997
------------------------- ----------------- ---
================================================================================
A2-1
<PAGE>
(Back of Regulation S Temporary Global Note)
9-5/8% [Series A] [Series B] Senior Subordinated Notes due 2007
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), 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 MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE 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.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE
HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE.
A2-2
<PAGE>
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. B&G Foods, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 9-5/8% per
annum from August 11, 1997 until maturity and shall pay the Liquidated Damages
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Company will pay interest and Liquidated Damages semi-annually in
arrears on February 1 and August 1 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be February 1, 1998. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or more
Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to
receive payments of interest hereon; until so exchanged in full, this Regulation
S Temporary Global Note shall in all other respects be entitled to the same
benefits as other Notes under the Indenture.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the January 15 or July 15 next
preceding the Interest Payment Date, even if such Notes are cancelled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium and Liquidated Damages, if any, and interest
at the office or agency of the Company maintained for such purpose within the
City and State of New York, or, at the option of the Company, payment of
interest and Liquidated Damages may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided that payment
by wire transfer of immediately available funds will be required with respect to
principal of and interest, premium and Liquidated Damages on, all Global Notes
and all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of
August 11, 1997 ("Indenture") between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders
are
A2-3
<PAGE>
referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling. The
Notes are obligations of the Company limited to $120.0 million in aggregate
principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraphs (b) and (c) of this Paragraph 5,
the Notes shall not be redeemable at Company option prior to August 1, 2002.
Thereafter, the Notes will be subject to redemption at any time at the option of
the Company in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on August 1 of the
years indicated below:
Year Percentage
2002................................ 104.813%
2003................................ 103.208%
2004................................ 101.604%
2005 and thereafter................. 100.000%
(b) Notwithstanding the foregoing, during the first 36 months after the
date of the Offering Memorandum, the Company may on any one or more occasions
redeem an aggregate of up to 35% of the original aggregate principal amount of
Notes at a redemption price of 109.625% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date, with the net cash proceeds of any Public Equity Offering of
common stock of the Company or a capital contribution to the Company's common
equity of the net cash proceeds of a concurrent Public Equity Offering of common
stock by the Company's direct parent; provided that at least 65% of the original
aggregate principal amount of Notes remain outstanding immediately after each
occurrence of such redemption; and provided, further, that each such redemption
shall occur within 60 days of the date of the closing of such Public Equity
Offering.
(c) Notwithstanding the foregoing, at any time on or prior to August 1,
2002, the Notes also may 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 may such redemption date
occur 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 and Liquidated Damages, 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. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
A2-4
<PAGE>
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within five
days of each date on which the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall commence an offer to all Holders of Notes (as "Asset
Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the date of purchase, in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate amount of Notes tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Company (or such
Subsidiary) may use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. 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 whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or in part
for one or more Global Notes only (i) on or after the termination of the 40-day
restricted period (as defined in Regulation S) and (ii) upon presentation of
certificates (accompanied by an Opinion of Counsel, if applicable) required by
Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global
Note for one or more Global Notes, the Trustee shall cancel this Regulation S
Temporary Global Note.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
A2-5
<PAGE>
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (a) default in the
payment when due of interest on, or Liquidated Damages with respect to, the
Notes and such default continues for a period of 30 days (whether or not
prohibited by Article 10 of the Indenture); (b) default in the payment when due
of principal of or premium, if any, on the Notes when the same becomes due and
payable at maturity, upon redemption (including in connection with an offer to
purchase) or otherwise (whether or not prohibited by Article 10 of the
Indenture); (c) failure by the Company or any of its Subsidiaries to comply with
any of the provisions of Section 5.01 of the Indenture; (d) failure by the
Company or any of its Subsidiaries to comply with any of the provisions of
Sections 4.07, 4.09, 4.10 and 4.15 of the Indenture for 30 days after notice to
the Company by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding; (e) failure by the Company to observe or
perform any other covenant, representation, warranty or other agreement in the
Indenture or the Notes for 60 days after notice to the Company by the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding; (f) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Subsidiaries,
whether such Indebtedness or guarantee now exists, or is created after the date
of the Indenture (a) is caused by a failure to pay principal of or premium, if
any, or interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates without duplication $5.0 million or more and such
default shall not have been cured or acceleration rescinded within a five
business day period; (g) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction against the
Company or any of its Significant Subsidiaries or any group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary and such
judgment or judgments remain undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the aggregate of all
such undischarged judgments exceeds $5.0 million; (h) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; or (i) except as permitted in the Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acing on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately; provided, that so long as any Indebtedness
permitted to be incurred pursuant to clause (i) of the second paragraph of
Section 4.09 hereof shall be outstanding, such acceleration shall not be
effective until the earlier of (i) an acceleration under any such other
A2-6
<PAGE>
Indebtedness or (ii) five Business Days after receipt by the Company of written
notice of such acceleration of the Notes. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, ma y make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and m ay otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator
or stockholder, of the Company, as such, shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and rel ease are part of the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the A/B Exchange Registration
Rights Agreement dated as of August 11, 1997, between the Company and the
parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. 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 Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
A2-7
<PAGE>
B&G Foods, Inc.
426 Eagle Rock Avenue
Roseland, New Jersey 07068
Telecopier No.: (201) 228-7461
Attention: Chief Financial Officer
A2-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
-----------------------
Your Signature:
-----------------------
(Sign exactly as your name appears on
the face of this Note)
SIGNATURE GUARANTEE
--------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution"
meeting the requirements of the
Registrar, which requirements include
membership or participation in the
Security Transfer Agent Medallion
Program ("STAMP") or such other
"signature guarantee program" as may
be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.
A2-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you
elect to have purchased: $-----------
Date:
--------------------------
Your Signature:
-----------------------
(Sign exactly as your name appears on
the face of this Note)
Tax Identification No.:
---------------
SIGNATURE GUARANTEE
--------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution"
meeting the requirements of the
Registrar, which requirements include
membership or participation in the
Security Transfer Agent Medallion
Program ("STAMP") or such other
"signature guarantee program" as may
be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.
A2-10
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE1
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------------- --------------------- --------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
A2-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
B&G Foods, Inc.
426 Eagle Rock Avenue
Roseland, New Jersey 07068
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Re: 9-5/8% Senior Subordinated Notes due 2007
-----------------------------------------
Reference is hereby made to the Indenture, dated as of August 11, 1997 (the
"Indenture"), between B&G Foods, Inc., as issuer (the "Company"), BGH Holdings,
Inc., a Delaware corporation, RWBV Acquisition Corp., a Delaware corporation,
BRH Holdings, Inc. a Delaware corporation, Bloch & Guggenheimer, Inc., a
Delaware corporation, Roseland Distribution Company, a Delaware corporation,
Burns & Ricker, Inc., a Delaware corporation, Roseland Manufacturing, Inc., a
Delaware corporation, and RWBV Brands Company, a Delaware corporation
(collectively, as the "Guarantors") and The Bank of New York, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] Check if Transferee will take delivery of a beneficial interest in the
144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] Check if Transferee will take delivery of a beneficial interest in the
Temporary Regulation S Global Note, the Regulation S Global Note or a Definitive
Note pursuant to Regulation S. The Transfer is being effected pursuant to and in
accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly,
the Transferor hereby further certifies that (i) the Transfer is not being made
to
B-1
<PAGE>
a person in the United States and (x) at the time the buy order was originated,
the Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act and (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on Transfer enumerated in the Private
Placement Legend printed on the Regulation S Global Note, the Temporary
Regulation S Global Note and/or the Definitive Note and in the Indenture and the
Securities Act.
3. [ ] Check and complete if Transferee will take delivery of a beneficial
interest in the IAI Global Note or a Definitive Note pursuant to any provision
of the Securities Act other than Rule 144A or Regulation S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption claimed, which
certification is supported by (1) a certificate executed by the Transferee in
the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of
a principal amount of Notes at the time of transfer of less than $250,000, an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of which
the Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI Global
Note and/or the Definitive Notes and in the Indenture and the Securities Act.
B-2
<PAGE>
4. [ ] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) [ ] Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) [ ] Check if Transfer is Pursuant to Regulation S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(c) [ ] Check if Transfer is Pursuant to Other Exemption. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-----------------------------
[Insert Name of Transferor]
By:
--------------------------
Name:
Title:
Dated: ,
------------------ ----
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] Regulation S Global Note (CUSIP ), or
(iii) [ ] IAI Global Note (CUSIP ); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] Regulation S Global Note (CUSIP ), or
(iii) [ ] IAI Global Note (CUSIP ); or
(iv) [ ] Unrestricted Global Note (CUSIP ); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
B&G Foods, Inc.
426 Eagle Rock Avenue
Roseland, New Jersey 07068
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Re: 9-5/8% Senior Subordinated Notes due 2007
-----------------------------------------
(CUSIP )
------------
Reference is hereby made to the Indenture, dated as of August 11, 1997 (the
"Indenture"), between B&G Foods, Inc., as issuer (the "Company"), BGH Holdings,
Inc., a Delaware corporation, RWBV Acquisition Corp., a Delaware corporation,
BRH Holdings, Inc. a Delaware corporation, Bloch & Guggenheimer, Inc., a
Delaware corporation, Roseland Distribution Company, a Delaware corporation,
Burns & Ricker, Inc., a Delaware corporation, Roseland Manufacturing, Inc., a
Delaware corporation, and RWBV Brands Company, a Delaware corporation
(collectively, as the "Guarantors") and The Bank of New York, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
____________________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) [ ] Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) [ ] Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive
C-1
<PAGE>
Note is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(c) [ ] Check if Exchange is from Restricted Definitive Note to beneficial
interest in an Unrestricted Global Note. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes for Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes
(a) [ ] Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) [ ] Check if Exchange is from Restricted Definitive Note to beneficial
interest in a Restricted Global Note. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
|_| 144A Global Note, |_| Regulation S Global Note, |_| IAI Global Note with an
equal principal amount, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer
C-2
<PAGE>
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
[Insert Name of Owner]
By:
-------------------------------
Name:
Title:
Dated: ,
------------------ ---
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
B&G Foods, Inc.
426 Eagle Rock Avenue
Roseland, New Jersey 07068
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Re: 9-5/8% Senior Subordinated Notes due 2007
-----------------------------------------
Reference is hereby made to the Indenture, dated as of August 11, 1997 (the
"Indenture"), between B&G Foods, Inc., as issuer (the "Company"), BGH Holdings,
Inc., a Delaware corporation, RWBV Acquisition Corp., a Delaware corporation,
BRH Holdings, Inc. a Delaware corporation, Bloch & Guggenheimer, Inc., a
Delaware corporation, Roseland Distribution Company, a Delaware corporation,
Burns & Ricker, Inc., a Delaware corporation, Roseland Manufacturing, Inc., a
Delaware corporation, and RWBV Brands Company, a Delaware corporation
(collectively, as the "Guarantors") and The Bank of New York, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any interest
therein is subject to certain restrictions and conditions set forth in the
Indenture and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Notes or any interest therein except in compliance
with, such restrictions and conditions and the United States Securities Act of
1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and
D-1
<PAGE>
an Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect. We further understand that any subsequent
transfer by us of the Notes or beneficial interest therein acquired by us must
be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased by
us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company 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 proceedings or official inquiry with
respect to the matters covered hereby.
------------------------------------
[Insert Name of Accredited Investor]
By:
-----------------------------------
Name:
Title:
Dated: ,
------------------ ----
D-2
<PAGE>
EXHIBIT E
FORM OF SUBSIDIARY GUARANTEE
Subject to Section 11.05 of the Indenture, each Guarantor hereby, jointly
and severally, unconditionally guarantees to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Notes and
the Obligations of the Company under the Notes or under the Indenture, that: (a)
the principal of, premium, if any, interest and Liquidated Damages, if any, on
the Notes will be promptly paid in full when due, subject to any applicable
grace period, whether at maturity, by acceleration, redemption or otherwise, and
interest on overdue principal, premium, if any, (to the extent permitted by law)
interest on any interest, if any, and Liquidated Damages, if any, on the Notes
and all other payment Obligations of the Company to the Holders or the Trustee
under the Indenture or under the Notes will be promptly paid in full and
performed, all in accordance with the terms thereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
payment Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise. Failing payment when so due of any amount so guaranteed
or any performance so guaranteed for whatever reason, the Guarantors will be
jointly and severally obligated to pay the same immediately.
The obligations of the Guarantor to the Holders and to the Trustee pursuant
to this Subsidiary Guarantee and the Indenture are expressly set forth in
Article 11 of the Indenture, and reference is hereby made to such Indenture for
the precise terms of this Subsidiary Guarantee. The terms of Article 11 of the
Indenture are incorporated herein by reference. This Subsidiary Guarantee is
subject to release as and to the extent provided in Section 11.04 of the
Indenture.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon each Guarantor and its respective successors and
assigns to the extent set forth in the Indenture until full and final payment of
all of the Company's Obligations under the Notes and the Indenture and shall
inure 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 herein conferred upon that party shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof. This is a Subsidiary Guarantee of
payment and not a guarantee of collection.
Each Guarantor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Subsidiary Guarantee
will not be discharged except by complete performance of the Obligations
contained in the Notes and the Indenture.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Subsidiary
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Notes and the Indenture and (ii) the amount, if any, which would not have (A)
rendered such Guarantor "insolvent" (as such term is defined in the Bankruptcy
Law and in the Debtor and Creditor Law of the State of New York) or (B) left
such
E-1
<PAGE>
Guarantor with unreasonably small capital at the time its Subsidiary Guarantee
of the Notes was entered into; provided that, it will be a presumption in any
lawsuit or other proceeding in which a Guarantor is a party that the amount
guaranteed pursuant to the Subsidiary Guarantee is the amount set forth in
clause (i) above unless any creditor, or representative of creditors of such
Guarantor, or debtor in possession or trustee in bankruptcy of such Guarantor,
otherwise proves in such a lawsuit that the aggregate liability of the Guarantor
is limited to the amount set forth in clause (ii) above. The Indenture provides
that, in making any determination as to the solvency or sufficiency of capital
of a Guarantor in accordance with the previous sentence, the right of such
Guarantors to contribution from other Guarantors and any other rights such
Guarantors may have, contractual or otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the Indenture
unless otherwise indicated.
Dated: August 11, 1997.
B&G FOODS, INC.
By:
--------------------------------
Name:
Title:
[NEW GUARANTOR]
By:
--------------------------------
Name:
Title:
BGH HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
RWBV ACQUISITION CORP.
By:
--------------------------------
Name:
Title:
E-2
<PAGE>
BRH HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
BLOCH & GUGGENHEIMER, INC.
By:
--------------------------------
Name:
Title:
ROSELAND DISTRIBUTION COMPANY
By:
--------------------------------
Name:
Title:
BURNS & RICKER, INC.
By:
--------------------------------
Name:
Title:
ROSELAND MANUFACTURING, INC.
By:
--------------------------------
Name:
Title:
E-3
<PAGE>
RWBV BRANDS COMPANY
By:
--------------------------------
Name:
Title:
E-4
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
___________, ____ among B&G Foods, Inc., a Delaware corporation (the "Company"),
BGH Holdings, Inc., a Delaware corporation, RWBV Acquisition Corp., a Delaware
corporation, BRH Holdings, Inc. a Delaware corporation, Bloch & Guggenheimer,
Inc., a Delaware corporation, Roseland Distribution Company, a Delaware
corporation, Burns & Ricker, Inc., a Delaware corporation, Roseland
Manufacturing, Inc., a Delaware corporation, and RWBV Brands Company, a Delaware
corporation (collectively, the "Guarantors"), [New Guarantor] (the "New
Guarantor"), a subsidiary of the Company and The Bank of New York, as trustee
under the indenture referred to below (the "Trustee"). Capitalized terms used
herein and not defined herein shall have the meaning ascribed to them in the
Indenture (as defined below).
W I T N E S S E T H
WHEREAS, the Company and the Guarantors have heretofore executed and
delivered to the Trustee an indenture (the "Indenture"), dated as of August 11,
1997, providing for the issuance of an aggregate principal amount of
$120,000,000 of 9-5/8% Senior Subordinated Notes due 2007 (the "Notes");
WHEREAS, Article 11 of the Indenture provides that under certain
circumstances the Company may or must cause certain of its subsidiaries to
execute and deliver to the Trustee a supplemental indenture pursuant to which
such subsidiaries shall unconditionally guarantee all of the Company's
Obligations under the Notes pursuant to a Subsidiary Guarantee on the terms and
conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Company, the New Guarantor and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO SUBSIDIARY GUARANTEE. The New Guarantor hereby agrees,
jointly and severally with all other Guarantors, to guarantee the Company's
Obligations under the Notes and the Indenture on the terms and subject to the
conditions set forth in Article 11 of the Indenture and to be bound by all other
applicable provisions of the Indenture.
3. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, shareholder or agent of any Guarantor, as such,
shall have any liability for any obligations of the Company or any Guarantor
under the Notes, any Subsidiary Guarantees, the Indenture or this Supplemental
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
<PAGE>
4. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.
5. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience only
and shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Guarantor.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ________________
B&G FOODS, INC.
By:
--------------------------------
Name:
Title:
[NEW GUARANTOR]
By:
--------------------------------
Name:
Title:
BGH HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
RWBV ACQUISITION CORP.
By:
--------------------------------
Name:
Title:
BRH HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
<PAGE>
BLOCK & GUGGENHEIMER, INC.
By:
--------------------------------
Name:
Title:
ROSELAND DISTRIBUTION COMPANY
By:
---------------------------------
Name:
Title:
BURNS & RICKER, INC.
By:
--------------------------------
Name:
Title:
ROSELAND MANUFACTURING, INC.
By:
--------------------------------
Name:
Title:
RWBV BRANDS COMPANY
By:
--------------------------------
Name:
Title:
THE BANK OF NEW YORK
as Trustee
By:
-------------------------
Name:
Title:
<PAGE>
Exhibit 10.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of August 11, 1997
by and among
B&G Foods, Inc.,
as Issuer, and
BGH Holdings, Inc., RWBV Acquisition Corp., BRH Holdings, Inc.,
Bloch & Guggenheimer, Inc., Roseland Distribution Company,
Burns & Ricker, Inc., RWBV Brands Company
and Roseland Manufacturing, Inc.,
as Guarantors
and
Lehman Brothers Inc. and
Lazard Freres & Co. LLC
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of August 11, 1997, by and among B&G Foods, Inc., a Delaware corporation
(the "Company"), BGH Holdings, Inc., a Delaware corporation, RWBV Acquisition
Corp., a Delaware corporation, BRH Holdings, Inc., a Delaware corporation, Bloch
& Guggenheimer, Inc., a Delaware corporation, Burns & Ricker, Inc., a Delaware
corporation, Roseland Distribution Company, a Delaware corporation, Roseland
Manufacturing, Inc., a Delaware corporation, and RWBV Brands Company, a Delaware
corporation (collectively, the "Guarantors"), and Lehman Brothers Inc. and
Lazard Freres & Co. LLC (each an "Initial Purchaser" and, collectively, the
"Initial Purchasers"), each of whom has agreed to purchase the Company's 95/8%
Series A Senior Notes due 2007 (the "Series A Notes") pursuant to the Purchase
Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated August 6,
1997, (the "Purchase Agreement"), by and among the Company, the Guarantors and
the Initial Purchasers. In order to induce the Initial Purchasers to purchase
the Series A Notes, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 7 of
the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Business Day: Any day except a Saturday,Sunday or other day in the City of
New York, or in the city of the corporate trust office of the Trustee, on which
banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: Series B Notes that are
acquired by a Broker- Dealer in the Exchange Offer in exchange for Series A
Notes that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its affiliates).
Certificated Securities: As defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of
this Agreement upon the occurrence of (a) the filing and effectiveness under the
Act of the Exchange Offer Registration Statement relating to the Series B Notes
to be issued in the Exchange Offer, (b) the maintenance of such Registration
Statement continuously effective and the keeping of the Exchange Offer open for
a period not less than the period required pursuant to Section 3(b) hereof and
(c) the delivery by the Company to the Registrar under the Indenture of Series B
Notes in the same aggregate principal
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<PAGE>
amount as the aggregate principal amount of Series A Notes tendered by Holders
thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each Interest
Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the Series
B Notes pursuant to the Exchange Offer Registration Statement pursuant to which
the Company shall offer the Holders of all outstanding Series A Notes the
opportunity to exchange all such outstanding Series A Notes tendered by such
Holders in such exchange offer for a like principal amount of Series B Notes.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose to
sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, and to certain "institutional
accredited investors," as such term is defined in Rule 501(a)(1), (2), (3) and
(7) of Regulation D under the Act.
Global Noteholder: As defined in the Indenture.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated the Closing Date, among the Company, the
Guarantors and The Bank of New York, as trustee (the "Trustee"), pursuant to
which the Notes are to be issued, as such Indenture is amended or supplemented
from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes.
Person: An individual, partnership, corporation, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement at the time
such Registration Statement is declared effective, as amended or supplemented by
any prospectus supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by reference into such
Prospectus.
Record Holder: With respect to any Damages Payment Date, each Person who is
a Holder of Notes on the record date with respect to the Interest Payment Date
on which such Damages Payment Date shall occur.
2
<PAGE>
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company and the
Guarantors relating to (a) an offering of Series B Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) which is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Series B Notes: The Company's 95/8% Series B Senior Notes due 2007 to be
issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) upon the
request of any Holder of Series A Notes covered by a Shelf Registration
Statement, in exchange for such Series A Notes.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in
effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in the Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note has
been disposed of in accordance with a Shelf Registration Statement, (c) the date
on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in which
securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 90 days after the Closing Date, the Exchange Offer Registration Statement,
(ii) use its reasonable best efforts to cause such Exchange Offer Registration
Statement to become effective at the earliest possible time, but in no event
later than 150 days after the Closing Date, (iii) in connection with the
foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such Exchange Offer
Registration Statement to become effective, (B)
3
<PAGE>
file, if applicable, a post-effective amendment to such Exchange Offer
Registration Statement pursuant to Rule 430A under the Act and (C) cause all
necessary filings, if any, in connection with the registration and qualification
of the Series B Notes to be made under the Blue Sky laws of such jurisdictions
as are reasonably requested by the Holders and necessary to permit Consummation
of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The Exchange
Offer shall be on the appropriate form permitting registration of the Series B
Notes to be offered in exchange for the Series A Notes that are Transfer
Restricted Securities and to permit sales of Broker-Dealer Transfer Restricted
Securities by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their respective best efforts
to cause the Exchange Offer Registration Statement to be effective continuously,
and shall keep the Exchange Offer open for a period of not less than the minimum
period required under applicable federal and state securities laws to Consummate
the Exchange Offer; provided, however, that in no event shall such period be
less than 20 Business Days. The Company and the Guarantors shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Notes shall be included in the Exchange Offer
Registration Statement. The Company and the Guarantors shall use their
respective reasonable best efforts to cause the Exchange Offer to be Consummated
on the earliest practicable date after the Exchange Offer Registration Statement
has become effective, but in no event later than 30 Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Series A Notes that are Transfer
Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Series A Notes (other than Transfer Restricted
Securities acquired directly from the Company or any Affiliate of the Company)
pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be
an "underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of any Series B Notes received by such Broker-Dealer in the Exchange Offer,
which prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer Restricted
Securities by Broker-Dealers that the Commission may require in order to permit
such sales pursuant thereto, but such "Plan of Distribution" shall not name any
such Broker- Dealer or disclose the amount of Notes held by any such
Broker-Dealer, except to the extent required by the Commission as a result of a
change in policy, rules or regulations after the date of this Agreement.
The Company and the Guarantors shall use their respective best efforts to
keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 6(c) below to
the extent necessary to ensure that it is available for sales of Broker- Dealer
Transfer Restricted Securities by Broker-Dealers, and to ensure that such
Registration Statement conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from time
to time, for a period of one year from the date on which the Exchange Offer
Registration Statement is declared effective.
4
<PAGE>
The Company and the Guarantors shall promptly provide sufficient copies of
the latest version of such Prospectus to such Broker-Dealers promptly upon
request, and in no event later than one Business Day after such request, at any
time during such one-year period in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement with respect to the Series B Notes because
the Exchange Offer is not permitted by applicable law or Commission policy
(after the procedures set forth in Section 6(a)(i) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 20 days following the Consummation of the Exchange Offer that (A)
such Holder was prohibited by law or Commission policy from participating in the
Exchange Offer or (B) such Holder may not resell the Series B Notes acquired by
it in the Exchange Offer to the public without delivering a prospectus and the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (C) such Holder is a
Broker-Dealer and holds Series A Notes acquired directly from the Company or any
of its Affiliates, then the Company and the Guarantors shall use their
reasonable best efforts to:
(x) cause to be filed on or prior to 30 days after the date on which the
Company determines that it is not required to file the Exchange Offer
Registration Statement pursuant to clause (i) above or 30 days after the date on
which the Company receives the notice specified in clause (ii) above, a shelf
registration statement pursuant to Rule 415 under the Act (which may be an
amendment to the Exchange Offer Registration Statement (in either event, the
"Shelf Registration Statement")), relating to all Transfer Restricted Securities
the Holders of which shall have provided the information required pursuant to
Section 4(b) hereof, and
(y) cause such Shelf Registration Statement to become effective on or
prior to 45 days after the date on which the Company becomes obligated to file
such Shelf Registration Statement.
If, after the Company has filed an Exchange Offer Registration
Statement which satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer shall not be permitted under applicable federal law,
then the filing of the Exchange Offer Registration Statement shall be deemed to
satisfy the requirements of clause (x) above. Such an event shall have no effect
on the requirements of clause (y) above.
The Company and the Guarantors shall use their respective best efforts
to keep any Shelf Registration Statement required by this Section 4(a)
continuously effective, supplemented and amended as required by and subject to
the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure
that it is available for sales of Transfer Restricted Securities by the Holders
thereof entitled to the benefit of this Section 4(a), and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (as extended pursuant to Section 6(c)(i)) following
the date on which such Shelf Registration Statement first becomes effective
under the Act or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold.
5
<PAGE>
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 15 days after receipt of a request therefor, the
information specified in Item 507 of Regulation S-K of the Act and such
information as the Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein. No Holder of Transfer Restricted Securities shall be entitled to
Liquidated Damages pursuant to Section 5 hereof unless and until such Holder
shall have used its best efforts to provide all such information. Each Holder as
to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any such Registration Statement has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 30 Business Days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable in connection with resales of Transfer Restricted Securities during the
periods specified herein and is not succeeded within 30 days by another
effective Registration Statement by a post-effective amendment to such
Registration Statement that cures such failure and that is itself declared
effective immediately; provided that such Registration Statement shall not cease
to be effective or useable in connection with resales of Transfer Restricted
Securities for more than 30 days in any calendar year (each such event referred
to in clauses (i) through (iv), a "Registration Default"), then the Company and
the Guarantors hereby jointly and severally agree to pay liquidated damages to
each Holder of Transfer Restricted Securities with respect to the first 90-day
period immediately following the occurrence of such Registration Default, in an
amount equal to $.05 per week per $1,000 principal amount of Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues. The amount of the liquidated damages shall
increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.25 per week per $1,000 principal amount of Transfer
Restricted Securities; provided that the Company and the Guarantors shall in no
event be required to pay liquidated damages for more than one Registration
Default at any given time. Notwithstanding anything to the contrary set forth
herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
6
<PAGE>
All accrued liquidated damages shall be paid to the Global Note Holder
by wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Securities on each Damages Payment Date by wire transfer
to the accounts specified by them or by mailing checks to their registered
addresses if no such accounts have been specified. All obligations of the
Company and the Guarantors set forth in the preceding paragraph that are
outstanding with respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and the Guarantors shall comply with all applicable
provisions of Section 6(c) below, shall use their respective best efforts to
effect such exchange and to permit the sale of Broker-Dealer Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, such that in the reasonable opinion of counsel to the
Company there is a substantial question as to whether the Exchange Offer
is permitted by applicable federal law, the Company and the Guarantors
hereby agree to seek a no-action letter or other favorable decision from
the Commission allowing the Company and the Guarantors to Consummate an
Exchange Offer for such Series A Notes. The Company and the Guarantors
hereby agree to pursue the issuance of such a decision to the Commission
staff level but shall not be required to take commercially unreasonable
action to effect a change of Commission policy. In connection with the
foregoing, the Company and the Guarantors hereby agree to take all such
other reasonable actions as are requested by the Commission or otherwise
required in connection with the issuance of such decision, including
without limitation (A) participating in telephonic conferences with the
Commission, (B) delivering to the Commission staff an analysis prepared by
counsel to the Company setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer should be permitted
and (C) diligently pursuing a resolution (which need not be favorable) by
the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation of the Exchange Offer, a written representation
to the Company and the Guarantors (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to
the effect that (A) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
Series B Notes to be issued in the Exchange Offer and (C) it is acquiring
the Series B Notes in its ordinary course of business. In addition, all
such Holders of Transfer Restricted Securities shall otherwise reasonably
cooperate in the Company's and the Guarantors' preparations for the
Exchange Offer. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(1) could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
7
<PAGE>
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained pursuant
to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of Series B Notes obtained by such
Holder in exchange for Series A Notes acquired by such Holder directly
from the Company or an Affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as
interpreted in the Commission's letter to Shearman & Sterling dated July
2, 1993, and, if applicable, any no-action letter obtained pursuant to
clause (i) above, (B) including a representation that neither the Company
nor any Guarantor has entered into any arrangement or understanding with
any Person to distribute the Series B Notes to be received in the Exchange
Offer and that, to the best of the Company's and each Guarantor's
information and belief, each Holder participating in the Exchange Offer is
acquiring the Series B Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer and (C)
any other undertaking or representation required by the Commission as set
forth in any no-action letter obtained pursuant to clause (i) above, if
applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their respective best efforts to
effect such registration to permit the sale of the Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof (as indicated in the information furnished to the Company
pursuant to Section 4(b) hereof), and pursuant thereto the Company and the
Guarantors will prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Act, which form
shall be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) General Provisions. In connection with any Shelf Registration
Statement and any related Prospectus required by this Agreement, and to the
extent that an Exchange Offer Registration Statement is required to be available
to permit sales of Broker-Dealer Transfer Restricted Securities by Broker-
Dealers, the Company and the Guarantors shall:
(i) use their respective reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained therein
(A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company and the Guarantors
shall file promptly an appropriate amendment to such Registration
Statement, (1) in the case of clause (A),
8
<PAGE>
correcting any such misstatement or omission, and (2) in the case of
clauses (A) and (B), use their respective best efforts to cause such
amendment to be declared effective and such Registration Statement and the
related Prospectus to become usable for their intended purpose(s) as soon
as practicable thereafter.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep the applicable Registration Statement effective for
the applicable period set forth in Section 3 or 4 hereof, as the case may
be, or such shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been sold; cause
the Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the Act, and
to comply fully with Rules 424, 430A and 462, as applicable, under the Act
in a timely manner; and comply with the provisions of the Act with respect
to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended
method or methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment thereto,
when the same has become effective, (B) of any request by the Commission
for amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding purposes, (D)
of the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws,
the Company and the Guarantors shall use their respective reasonable best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(iv) furnish to the Initial Purchasers, each selling Holder
named in any Registration Statement or Prospectus and each of the
underwriter(s) in connection with such sale, if any, before filing with
the Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such Registration
Statement or Prospectus (including all documents incorporated by reference
after the initial filing of such Registration Statement), which documents
will be subject to the review and comment of such Holders and
underwriter(s) in connection with such sale, if any, for a period of at
least five Business Days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or supplement to any
such
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Registration Statement or Prospectus (including all such documents
incorporated by reference) to which the selling Holders of the Transfer
Restricted Securities covered by such Registration Statement or the
underwriter(s) in connection with such sale, if any, shall reasonably
object within five Business Days after the receipt thereof. A selling
Holder or underwriter, if any, shall be deemed to have reasonably objected
to such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission or fails to comply with the applicable
requirements of the Act;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s) in connection with such sale, if any, make the Company's
and the Guarantors' representatives available for discussion of such
document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such selling
Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any managing underwriter participating in any disposition
pursuant to such Registration Statement and any attorney or accountant
retained by such selling Holders or any of such underwriter(s), all
financial and other records, pertinent corporate documents of the Company
and the Guarantors and cause the Company's and the Guarantors' officers,
directors and employees to supply all information reasonably requested by
any such selling Holder, underwriter, attorney or accountant in connection
with such Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s)
in connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being
sold to such underwriter(s), the purchase price being paid therefor and
any other terms of the offering of the Transfer Restricted Securities to
be sold in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(viii) furnish to each selling Holder and each of the
underwriter(s) in connection with such sale, if any, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(ix) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company and the
Guarantors hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each of the selling
Holders and each of the underwriter(s), if any, in connection with the
offering and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
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(x) enter into such agreements (including an underwriting
agreement) and make such representations and warranties and take all such
other actions in connection therewith in order to expedite or facilitate
the disposition of the Transfer Restricted Securities pursuant to any
applicable Registration Statement contemplated by this Agreement as may be
reasonably requested by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any
applicable Registration Statement and in such connection, whether or not
an underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Company and the
Guarantors shall:
(A) upon written request, furnish (or in the case of paragraphs
(2) and (3), use its best efforts to furnish) to each selling Holder
and each underwriter, if any, upon the effectiveness of the Shelf
Registration Statement or, in the event that an Exchange Offer
Registration Statement is required to be available to permit sales of
Broker-Dealer Transfer Restricted Securities by Broker-Dealers, to
each Broker-Dealer upon Consummation of the Exchange Offer:
(1) a certificate, dated, in the event that an Exchange
Offer Registration Statement is required to be available to
permit sales of Broker-Dealer Transfer Restricted Securities by
Broker-Dealers, the date of Consummation of the Exchange Offer
or the date of effectiveness of the Shelf Registration
Statement, as the case may be, signed on behalf of the Company
and each Guarantor by (x) the President or any Vice President
and (y) a principal financial or accounting officer of the
Company and such Guarantor, confirming, as of the date thereof,
the matters set forth in paragraphs (g), (h), (i) and (l) of
Section 7 of the Purchase Agreement and such other similar
matters as the Holders, underwriter(s) and/or Broker Dealers may
reasonably request;
(2) an opinion, dated, in the event that an Exchange Offer
Registration Statement is required to be available to permit
sales of Broker-Dealer Transfer Restricted Securities by
Broker-Dealers, the date of Consummation of the Exchange Offer,
or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for the Company and
the Guarantors covering matters similar to those set forth in
paragraph (d) of Section 7 of the Purchase Agreement and such
other matter as the Holders, underwriters and/or Broker Dealers
may reasonably request, and in any event including a statement
to the effect that such counsel has participated in conferences
with officers and other representatives of the Company and the
Guarantors, representatives of the independent public
accountants for the Company and the Guarantors and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the
basis of the foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by officers and other
representatives of the Company and the Guarantors) and without
independent check or verification), no facts came to such
counsel's attention that caused such counsel to believe that the
applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became
effective and, in the case of the Exchange Offer Registration
Statement, as of the date of Consummation of the Exchange Offer,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the
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Prospectus contained in such Registration Statement as of its
date and, in the case of the opinion dated the date of
Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material fact
or omitted 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. Without limiting the
foregoing, such counsel may state further that such counsel
assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the
financial statements, notes and schedules and other financial
data included in any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) a customary comfort letter, dated, in the event that
an Exchange Offer Registration Statement is required to be
available to permit sales of Broker-Dealer Transfer Restricted
Securities by Broker-Dealers, the date of Consummation of the
Exchange Offer, or as of the date of effectiveness of the Shelf
Registration Statement, as the case may be, from the Company's
independent accountants, in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with primary underwritten offerings,
and affirming the matters set forth in the comfort letters
delivered pursuant to Section 7(f) of the Purchase Agreement
without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement the indemnification
provisions and procedures of Section 8 hereof with respect to all
parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by the selling Holders, the underwriter(s), if
any, and Broker Dealers, if any, to evidence compliance with clause
(A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company
and the Guarantors pursuant to this clause (x).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any
time the representations and warranties of the Company and the Guarantors
contemplated in (A)(1) above cease to be true and correct in any material
respect, the Company and the Guarantors shall so advise the
underwriter(s), if any, the selling Holders and each Restricted
Broker-Dealer promptly and if requested by such Persons, shall confirm
such advice in writing;
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities
or Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s), if any, may request and do any and all other acts or
things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that neither the
Company nor any Guarantor shall be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
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(xii) issue, upon the request of any Holder of Series A Notes
covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to
the aggregate principal amount of Series A Notes surrendered to the
Company by such Holder in exchange therefor or being sold by such Holder;
such Series B Notes to be registered in the name of such Holder or in the
name of the purchaser(s) of such Notes, as the case may be; in return, the
Series A Notes held by such Holder shall be surrendered to the Company for
cancellation;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold and
not bearing any restrictive legends; and to register such Transfer
Restricted Securities in such denominations and such names as the Holders
or the underwriter(s), if any, may request at least two Business Days
prior to such sale of Transfer Restricted Securities;
(xiv) use their respective reasonable best efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriter(s), if any, to consummate the
disposition of such Transfer Restricted Securities, subject to the proviso
contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain 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;
(xvi) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration Statement
covering such Transfer Restricted Securities and provide the Trustee under
the Indenture with printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with the Depository
Trust Company;
(xvii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that
is required to be retained in accordance with the rules and regulations of
the NASD, and use their respective best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies
or authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities; provided that neither the Company nor the
Guarantors shall take any position during review by the NASD that would,
in any manner, create the implication that the offering of the Series A
Notes on the Closing Date by the Company and the Guarantors should be or
is subject to the rules and regulations of the NASD;
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(xviii) otherwise use their respective best efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xix) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement required
by this Agreement and, in connection therewith, cooperate with the Trustee
and the Holders of Notes to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the
terms of the TIA; and execute and use its best efforts to cause the
Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner;
and
(xx) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(i) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is advised in writing by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus (the "Advice"). If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of either such notice. In the
event the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section 6(c)(i)
or Section 6(c)(iii)(D) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof
or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
filings made by any Purchaser or Holder with the NASD (and, if applicable, the
fees and expenses of any "qualified independent underwriter") and its counsel
that may be required by the rules and regulations of the NASD); (ii) all fees
and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the Series B Notes to be
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issued in the Exchange Offer and printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Company, the Guarantors and, subject to Section 7(b) below, the Holders of
Transfer Restricted Securities; (v) all application and filing fees in
connection with listing the Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Company and the
Guarantors (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Purchasers and the Holders of Transfer Restricted Securities
being tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder and (ii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Holder"), to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including without limitation and
as incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, including the
reasonable fees and expenses of counsel to any Indemnified Holder) directly or
indirectly caused by, related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary prospectus or Prospectus
(or any amendment or supplement thereto), or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by an untrue statement or omission
or alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to any of the Holders furnished in writing
to the Company by or on behalf of any of the Holders expressly for use therein.
In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
of the Indemnified Holders with respect to which
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indemnity may be sought against the Company or the Guarantors, such Indemnified
Holder (or the Indemnified Holder controlled by such controlling person) shall
promptly notify the Company and the Guarantors in writing (provided, that the
failure to give such notice shall not relieve the Company or the Guarantors of
their obligations pursuant to this Agreement except to the extent it has been
materially prejudiced by such failure). Such Indemnified Holder shall have the
right to employ its own counsel in any such action but the fees and expenses of
such counsel shall be paid by the indemnified party unless (i) the employment
thereof has been specifically authorized by the indemnifying party in writing,
(ii) such indemnified party shall have been advised by such counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party and in the reasonable
judgment of such counsel it is advisable for such indemnified party to employ
separate counsel or (iii) the indemnifying party has failed to assume the
defense of such action and employ counsel reasonably satisfactory to the
indemnified party (regardless of whether it is ultimately determined that an
Indemnified Holder is not entitled to indemnification hereunder). The Company
and the Guarantors shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for such Indemnified Holders, which firm shall be designated by the Holders of a
majority in principal amount of Notes entitled to such indemnification. The
Company and the Guarantors shall be liable for any settlement of any such action
or proceeding effected with the Company's prior written consent, which consent
shall not be withheld unreasonably, and the Company and the Guarantors agree to
indemnify and hold harmless each Indemnified Holder from and against any loss,
claim, damage, liability or expense by reason of any settlement of any action
effected with the written consent of the Company.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Company and the Guarantors,
and their respective directors, officers, and any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company,
and the respective officers, directors, partners, employees, representatives and
agents of each such person, to the same extent as the foregoing indemnity from
the Company and the Guarantors to each of the Indemnified Holders, but only with
respect to claims and actions based on information relating to such Holder
furnished in writing by or on behalf of such Holder expressly for use in any
Registration Statement. In case any action or proceeding shall be brought
against the Company, any Guarantor or its directors or officers or any such
controlling person in respect of which indemnity may be sought against a Holder
of Transfer Restricted Securities, such Holder shall have the rights and duties
given the Company and the Guarantors, and the Company, such Guarantor, such
directors or officers or such controlling person shall have the rights and
duties given to each Holder by the preceding paragraph. In no event shall any
Holder be liable or responsible for any amount in excess of the amount by which
the total received by such Holder with respect to its sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities and (ii) the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, 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, claims, damages, liabilities or expenses
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in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantors, on the one hand, and the Holders, on the
other hand, from their sale of Transfer Restricted Securities or if such
allocation is not permitted by applicable law, the relative fault of the Company
and the Guarantors, on the one hand, and of the Indemnified Holder, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company and the Guarantors,
on the one hand, and of the Indemnified Holder, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or such Guarantor
or by the Indemnified Holder and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 8(a),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
The Company, the Guarantors and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 8(c) were determined by pro rata allocation (even if
the Holders were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or expenses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, 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 8, no Holder or its related Indemnified Holders shall
be required to contribute, in the aggregate, any amount in excess of the amount
by which the total received by such Holder with respect to the sale of its
Transfer Restricted Securities pursuant to a Registration Statement exceeds the
sum of (A) the amount paid by such Holder for such Transfer Restricted
Securities plus (B) the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(c) are several in proportion to the respective principal amount of
Series A Notes held by each of the Holders hereunder and not joint.
SECTION 9. RULE 144A
The Company and each Guarantor hereby agrees with each Holder, for so
long as any Transfer Restricted Securities remain outstanding and during any
period in which the Company or such Guarantor is not subject to Section 13 or
15(d) of the Securities Exchange Act, to make available, upon request of any
Holder of Transfer Restricted Securities, to any Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A.
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SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required under the terms
of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment
bankers and manager or managers for any Underwritten Offering that will
administer such offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided that such investment bankers and managers must be
reasonably satisfactory to the Company. Such investment bankers and managers are
referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise
all rights provided herein, in the Indenture, the Purchase Agreement or granted
by law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company and the
Guarantors agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by them of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
Except for the Debt Registration Rights Agreement, the Equity Registration
Rights Agreement and the Securities Purchase and Holders Agreement dated as of
March 27, 1997 among Holdings and the shareholders of Holdings, neither the
Company nor any Guarantor has previously entered into any agreement granting any
registration rights with respect to its securities to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's and the
Guarantors' securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. Neither the Company nor any
Guarantor will take any action, or voluntarily permit any change to occur, with
respect to the Notes that would materially and adversely affect the ability of
the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the
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outstanding principal amount of Transfer Restricted Securities. Notwithstanding
the foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities subject to such Exchange
Offer.
(e) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantors on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(f) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telecopier, or air courier
guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Guarantors:
B&G Foods, Inc.
426 Eagle Rock Avenue
Roseland, NJ 07068
Telecopier No.: (201) 228-7461
Attention: Chief Financial Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Glyndwr P. Lobo
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Transfer Restricted Securities
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in violation of the terms hereof or of the Purchase Agreement or the
Indenture. If any transferee of any Holder shall acquire Transfer Restricted
Securities in any manner, whether by operation of law or otherwise, such
Transfer Restricted Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Transfer Restricted Securities such
Person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the Purchase Agreement,
and such Person shall be entitled to receive the benefits hereof.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(k) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(l) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
B&G FOODS, INC.
By: /s/ David Wenner
----------------------------------
Name: David Wenner
Title: President
BGH HOLDINGS, INC.
By
Name:
Title:
RWBV ACQUISITION CORP.
By
Name:
Title:
BRH HOLDINGS, INC.
By
Name:
Title:
21
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BLOCH & GUGGENHEIMER, INC.
By
Name:
Title:
ROSELAND DISTRIBUTION COMPANY
By
Name:
Title:
BURNS & RICKER, INC.
By
Name:
Title:
ROSELAND MANUFACTURING, INC.
By
Name:
Title:
RWBV BRANDS COMPANY
By
Name:
Title:
22
<PAGE>
Accepted:
LEHMAN BROTHERS INC.
LAZARD FRERES & CO. LLC
By: LEHMAN BROTHERS INC.
By /s/ Michael Goldberg
----------------------------------
Name: Michael Goldberg
Title: Vice President
23
<PAGE>
Exhibit 10.2
B&G FOODS, INC.
95/8% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
August 6, 1997
LEHMAN BROTHERS INC.
LAZARD FRERES & CO. LLC
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
B&G Foods, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to you (the "Initial Purchasers") $120.0 million in aggregate
principal amount of its 95/8% Senior Subordinated Notes due 2007 (the "Series A
Notes"). The payment of principal, premium, interest and Liquidated Damages (as
defined below) if any, on the Series A Notes and the Company's 95/8% Senior
Subordinated Notes due 2007 to be issued in the Registered Exchange Offer
referred to below (the "Series B Notes" and, together with the Series A Notes,
the "Notes") will be unconditionally guaranteed (the "Subsidiary Guarantees") on
a senior subordinated basis by BGH Holdings, Inc., RWBV Acquisition Corp., BRH
Holdings, Inc., Bloch & Guggenheimer, Inc., Roseland Distribution Company, Burns
& Ricker, Inc., Roseland Manufacturing, Inc. and RWBV Brands Company
(collectively, the "Guarantors"), which are all of the Company's current
subsidiaries (the "Subsidiaries"). The Series A Notes are to be issued pursuant
to the terms of an indenture to be dated as of August 11, 1997 (the "Closing
Date") between the Company, The Bank of New York as trustee (the "Trustee"), and
the Guarantors (the "Indenture").
The Series A Notes will be offered and sold to you pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the "Act"). The Company has prepared a preliminary offering
memorandum (the "Preliminary Offering Memorandum"), dated July 23, 1997 and a
final offering memorandum (the "Offering Memorandum"), dated August 6, 1997,
relating to the Company and the Series A Notes. As described in the Offering
Memorandum, the Company will use all of the net proceeds from the offering of
the Series A Notes to redeem $23.0 million in aggregate principal amount of its
outstanding 12% Senior Subordinated Notes due 1997 (the "Interim Notes"), to
refinance approximately $76.54 million of outstanding senior debt under the
credit agreement dated June 17, 1997 with Heller Financial, Inc. (the "Existing
Credit Agreement") and to pay the fees and expenses in connection therewith. In
addition, the Company's wholly owned subsidiary BGH Holdings, Inc. ("BGH") has
agreed to purchase Trappey's Fine Foods, Inc. ("Trappey's") to be acquired from
E. McIlhenny's Son Corporation ("McIlhenny") pursuant to the Transaction
Agreement (defined herein).
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Series A Notes
(and all securities issued in exchange therefor or in substitution thereof)
shall bear the following legend:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE U.S.SECURITIES ACT OF 1933, AS AMENDED THE
<PAGE>
"SECURITIES ACT"), OR ANY OTHER STATE SECURITIES LAWS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER: REPRESENTS
THAT (1) IT IS (A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),(2),(3) OR (7)
UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C)
NOT A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN
OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE NOTE EVIDENCED HEREBY EXCEPT TO (A) THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144 UNDER THE SECURITIES ACT, (C) AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144A UNDER THE SECURITIES
ACT (IF AVAILABLE) OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OR ANY OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF
THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK OF NEW YORK,
AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES," AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
You have represented and warranted to the Company that you will make
offers (the "Exempt Resales") of the Series A Notes purchased by you hereunder
on the terms set forth in the Offering Memorandum, as amended or supplemented,
solely (i) to persons whom you reasonably believe to be "qualified institutional
buyers" as defined in Rule 144A under the Act ("QIBs"), (ii) to a limited number
of other institutional "accredited investors," as defined in Rule 501(a) (1),
(2), (3) and (7) under the Act, who execute a letter containing certain
representations and agreements in the form set forth as Annex A to the Offering
Memorandum (each, an "Accredited Institution") and (iii) outside the United
States to persons other than U.S. Persons in offshore transactions meeting the
requirements of Rule 904
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<PAGE>
of Regulation S ("Regulations S") under the Act (such persons specified in
clauses (i) through (iii) being referred to herein as the "Eligible
Purchasers"). As used herein, the terms "offshore transaction," "United States"
and "U.S. person" have the respective meanings given to them in Regulation S.
You will offer the Series A Notes to Eligible Purchasers initially at a price
equal to 100% of the principal amount thereof. Such price may be changed at any
time without notice.
Holders (including subsequent transferees) of the Series A Notes will
have the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated as of the Closing Date, in the
form of Exhibit A hereto, for so long as such Series A Notes constitute
"Transfer Restricted Securities" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company will
agree to file with the Securities and Exchange Commission (the "Commission")
under the circumstances set forth therein, (i) a registration statement under
the Act (the "Exchange Offer Registration Statement") relating to the Series B
Notes to be offered in exchange for the Series A Notes, (such offer to exchange
being referred to collectively as the "Registered Exchange Offer") and (ii) a
shelf registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement") relating to the resale by certain holders of the Series
A Notes, and to use its best efforts to cause such Registration Statements to be
declared effective. This Agreement, the Indenture and the Registration Rights
Agreement are hereinafter referred to collectively as the "Operative Documents."
This is to confirm the agreements concerning the purchase of the Series A Notes
from the Company by you.
1. Representations, Warranties and Agreements of the Company and the
Guarantors. The Company and each Guarantor represents, warrants and agrees as
follows (all such representations, warranties and agreements, and all references
to the Company in this section shall be deemed to include Trappey's):
(a) The Preliminary Offering Memorandum and Offering Memorandum have
been prepared by the Company for use by the Initial Purchasers in connection
with the Exempt Resales. No order or decree preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any order
asserting that the transactions contemplated by this Agreement are subject to
the registration requirements of the Act has been issued and no proceeding for
that purpose has commenced or is pending or, to the knowledge of the Company, is
contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum as
of their respective dates and the Offering Memorandum as of the Closing Date,
did not and will not at any time contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements, in
light of the circumstances under which they were made, not misleading, except
that this representation and warranty does not apply to statements in or
omissions from the Preliminary Offering Memorandum and Offering Memorandum made
in reliance upon and in conformity with information relating to the Initial
Purchasers furnished to the Company in writing by or on behalf of the Initial
Purchasers expressly for use therein.
(c) The market-related and customer-related data and estimates included
in the Preliminary Offering Memorandum and the Offering Memorandum are based on
or derived from sources which the Company believes to be reliable and accurate.
(d) The Company is a corporation duly incorporated and validly existing
and in good standing under the laws of Delaware with full corporate power and
authority to own, lease and operate its properties and to conduct its business,
and is duly registered and qualified to conduct its business and
3
<PAGE>
is in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify or to be in
good standing does not have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Company and its Subsidiaries, taken as a whole (a "Material Adverse
Effect").
(e) Each Guarantor is a corporation duly incorporated and validly
existing and in good standing under the laws of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct its
business, and is duly registered and qualified to conduct its business and is in
good standing in each jurisdiction or place where the nature of its properties
or the conduct of its business requires such registration or qualification,
except where the failure so to register or qualify or to be in good standing
does not have a Material Adverse Effect.
(f) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement, the Indenture, the
Notes and the Registration Rights Agreement.
(g) Each Guarantor has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement, the Indenture, the
Registration Rights Agreement and the Subsidiary Guarantees.
(h) This Agreement has been duly and validly authorized, executed and
delivered by the Company and each Guarantor and, assuming due authorization,
execution and delivery by the Initial Purchasers, constitutes the valid and
binding agreement of the Company and each Guarantor, enforceable against the
Company and each Guarantor in accordance with its terms, except as the
enforcement hereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing and except as rights to indemnity and
contribution hereunder may be limited by Federal or state securities laws or
principles of public policy.
(i) The Registration Rights Agreement has been duly and validly
authorized by the Company and each Guarantor and, upon its execution and
delivery by the Company and each Guarantor and, assuming due authorization,
execution and delivery by the Initial Purchasers, will constitute the valid and
binding agreement of the Company and each Guarantor, enforceable against the
Company and each Guarantor in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing and except as rights to indemnity and
contribution thereunder may be limited by Federal or state securities laws or
principles of public policy.
(j) The Indenture has been duly and validly authorized by the Company
and each Guarantor, and upon its execution and delivery and, assuming due
authorization, execution and delivery by the Trustee, will constitute the valid
and binding agreement of the Company and each Guarantor, enforceable against the
Company and each Guarantor in accordance with its terms, except as the
enforcement hereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of
4
<PAGE>
good faith and fair dealing; no qualification of the Indenture under the 1939
Act is required in connection with the offer and sale of the Series A Notes
contemplated hereby or in connection with the Exempt Resales other than in
connection with the performance of the Company's obligations under the
Registration Rights Agreement.
(k) The Series A Notes have been duly and validly authorized by the
Company and when duly executed by the Company in accordance with the terms of
the Indenture and, assuming due authentication of the Series A Notes by the
Trustee, upon delivery to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, except as the enforcement hereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(l) The Subsidiary Guarantees to be endorsed on the Series A Notes have
been duly and validly authorized by each Guarantor and when duly executed by
each Guarantor in accordance with the terms of the Indenture and, assuming due
authentication of the Series A Notes by the Trustee, upon delivery to the
Initial Purchasers against payment therefor in accordance with the terms hereof,
will have been validly issued and delivered, and will constitute valid and
binding obligations of each of the Guarantor, entitled to the benefits of the
Indenture, enforceable against each of the Guarantors in accordance with their
terms, except as the enforcement hereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(m) On or prior to the Closing Date, the Series B Notes will have been
duly authorized and, if and when executed and delivered by the Company, and if
and when the Series B Notes have been issued and authenticated in accordance
with the terms of the Registration Rights Agreement and the Indenture, the
Series B Notes will be the legally valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement hereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing.
(n) On or prior to the Closing Date, the Subsidiary Guarantees to be
endorsed on the Series B Notes will have been duly authorized and, if and when
executed and delivered by the Guarantors, and if and when the Series B Notes
have been issued and authenticated in accordance with the terms of the
Registration Rights Agreement and the Indenture, the Subsidiary Guarantees to be
endorsed on the Series B Notes will be the legally valid and binding obligation
of each Guarantor, enforceable against each Guarantor in accordance with its
terms, except as the enforcement hereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(o) The Company has all requisite corporate power and authority to
enter into (i) the credit agreement (the "New Credit Agreement"), dated August
11, 1997, by and among the Company and Heller Financial, Inc. and (ii) any and
all other agreements and instruments ancillary to or entered
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into in connection with the transaction contemplated by the New Credit Agreement
(collectively, the "Credit Documents").
(p) (i) Each of the New Credit Agreement and the other Credit Documents
has been duly and validly authorized, executed and delivered by the Company and,
assuming due authorization, execution and delivery by the other parties thereto,
constitutes the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as the enforcement hereof may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing; and
(ii) all representations and warranties made by the Company in Section 5 of the
New Credit Agreement are true and correct in all material respects as of the
date hereof.
(q) BGH has all requisite corporate power and authority to enter into
(i) the Stock Purchase Agreement (the "Transaction Agreement"), dated July 20,
1997, by and among McIlhenny and BGH, and (ii) any and all other agreements and
side letters ancillary to or entered into in connection with the transaction
contemplated by the Transaction Agreement.
(r) (i) The Transaction Agreement has been duly and validly authorized,
executed and delivered by BGH and, assuming due authorization, execution and
delivery by the other parties thereto, constitutes the valid and binding
agreement of BGH, enforceable against BGH in accordance with its terms, subject
to the qualification that the enforceability of BGH's obligations thereunder may
be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles and (ii) all representation and warranties
made by BGH in Section 4 of the Transaction Agreement are true and correct in
all material respects as of the date hereof.
(s) All the shares of capital stock of the Company outstanding prior to
the issuance of the Series A Notes have been duly authorized and validly issued
and are fully paid and nonassessable and the authorized capital stock of the
Company conforms to the description thereof under the caption "Capitalization"
in the Offering Memorandum.
(t) Neither the Company nor its direct parent, B&G Foods Holdings Corp.
("Holdings") nor any of the Subsidiaries owns capital stock of any corporation
or entity other than the Subsidiaries. All the outstanding shares of capital
stock of each of the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable, and are wholly owned by the Company directly,
or indirectly through one of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance (except pursuant
to the New Credit Agreement).
(u) Except for the Debt Registration Rights Agreement and the Equity
Registration Rights Agreement, both dated June 17, 1997, among LB I Group Inc.,
the Company, Holdings and the Guarantors hereto, and the Securities Purchase and
Holders Agreement dated as of March 27, 1997 among Holdings and the shareholders
of Holdings, there are no contracts, agreements or understandings between the
Company or any Guarantor and any person granting such person the right to
require the Company or any Guarantor to file a registration statement under the
Act with respect to any securities of the Company or any Guarantor owned or to
be owned by such person or to require the Company or any Guarantor to include
such securities in the securities registered pursuant to the Exchange Offer
Registration Statement, the Shelf Registration Statement or in any securities
being registered pursuant to any other registration statement filed by the
Company or any Guarantor under the Act.
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(v) Since the date as of which information is given in the Offering
Memorandum through the date hereof, and except as may otherwise be disclosed in
the Offering Memorandum, neither not in the ordinary course of business or (iii)
declared or paid any dividend on its capital stock.
(w) There are no legal or governmental proceedings pending or, to the
knowledge of the Company or any of the Guarantors, threatened, against the
Company or any of the Guarantors or to which any of their respective properties
(or any of the properties to be acquired by the Company upon consummation of the
transactions contemplated by the Transaction Agreement), is subject, that are
not disclosed in the Offering Memorandum and which, if adversely decided, are
reasonably likely to cause a Material Adverse Effect or to materially affect the
issuance of the Notes or the consummation of the other transactions contemplated
by the Operative Documents. Neither the Company nor any of the Guarantors is
involved in any strike, job action or labor dispute with any group of employees,
and, to the Company's knowledge, no such action or dispute is imminent which
could reasonably be expected to have a Material Adverse Effect.
(x) No material relationship, direct or indirect, exists between or
among the Company or any of the Guarantors on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or any of the
Guarantors on the other hand which is required to be described in the Offering
Memorandum, which is not so described pursuant to Regulation S-K of the
Commission (assuming Regulation S-K is applicable to the Offering Memorandum).
(y) Neither the Company nor any of its Subsidiaries (i) is in violation
of its certificate of incorporation, by-laws or other organizational documents,
(ii) is in default in any material respect in the due performance or observance
of any term, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which any of them is a
party or by which any of them is bound or to which any of their respective
properties or assets is subject that is material to the Company's consolidated
financial condition or prospects (collectively, the "Material Agreements") and
(iii) is in violation in any material respect of any law, statute or ordinance,
or any rule, regulation, injunction or decree of any court or governmental
agency to which their respective property or assets may be subject or has failed
to obtain any material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its property
or to the conduct of its business, except in the case of (i), (ii) or (iii), as
would not, individually, or in the aggregate, have a Material Adverse Effect.
(z) Except to the extent the failure to obtain any such consent,
approval, authorization or order or to make any such filing or registration
would not individually or in the aggregate, have a Material Adverse Effect, none
of the issuance, offer or sale of the Series A Notes, the execution, delivery or
performance by the Company or any Subsidiary of this Agreement, the Subsidiary
Guarantees or the other Operative Documents, compliance by the Company or such
Subsidiaries with the provisions hereof or thereof nor consummation by the
Company or such Subsidiaries of the transactions contemplated hereby or thereby;
except to the extent the failure to obtain any such consent, approval,
authorization or order or to make any such filing or registration would not
individually or in the aggregate, have a Material Adverse Effect, none of the
execution, delivery or performance by the Company of the New Credit Agreement or
the other Credit Documents, compliance by the Company with the provisions
thereof nor consummation by the Company of the transactions contemplated
thereby; and none of the execution, delivery or performance by BGH of the
Transaction Agreement, compliance by BGH with the provisions thereof nor
consummation by BGH of the transactions contemplated thereby (i) requires any
consent, approval, authorization or other order of, or registration or filing
with, any court, regulatory body,
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<PAGE>
administrative agency or other governmental body, agency or official (except
such as may be required in connection with the registration under the Act of the
Series B Notes in accordance with the Registration Rights Agreement,
qualification of the Indenture under the 1939 Act and compliance with the
securities or Blue Sky laws of various jurisdictions and except as required by
the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended), or
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, the certificate of incorporation or bylaws, or other
organizational documents, of the Company or (ii) conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under any Material
Agreement or will violate any law, statute, ordinance or any rule, regulation,
injunction or decree of any court or governmental agency to which it or its
property or assets may be subject or will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company
(except for liens arising under the New Credit Agreement) pursuant to the terms
of any agreement or instrument to which it is a party or by which it may be
bound or to which any of its property or assets is subject.
(aa) The accountants, KPMG Peat Marwick LLP, who have certified certain
of the financial statements included as part of the Offering Memorandum, are
independent public accountants under Rule 101 of the AICPA's Code of
Professional Conduct, and its interpretation and rulings during the periods
covered by the financial statements on which they reported contained in the
Offering Memorandum.
(ab) The consolidated historical and pro forma financial statements,
together with related notes, set forth in the Offering Memorandum comply as to
form in all material respects with the requirements of Regulation S-X under the
Act applicable to registration statements on Form S-1 under the Act. Such
historical financial statements fairly present the financial position of the
Company at the respective dates indicated and the results of operations and cash
flows for the respective periods indicated, in accordance with GAAP consistently
applied throughout such periods. Such pro forma financial statements have been
prepared on a basis consistent with such historical statements, except for the
pro forma adjustments specified therein, and give effect to assumptions made on
a reasonable basis and in good faith and present fairly the historical and
proposed transactions contemplated by the Offering Memorandum and this
Agreement. The other financial and statistical information and data included in
the Offering Memorandum, historical and pro forma, are, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(ac) Except as disclosed in, or specifically contemplated by, the
Offering Memorandum, subsequent to the date of the latest audited financial
statements included in the Offering Memorandum, neither the Company nor any
Guarantor has incurred any liability or obligation, direct or contingent, or
entered into any transaction, in each case not in the ordinary course of
business, that is material to the Company or such Guarantor, as the case may be,
and there has not been any material change in the capital stock, or material
increase in the short-term or long-term debt, of the Company or such Guarantor
or any material adverse change, or any development involving or which would
reasonably be expected to involve a prospective material adverse change, in the
condition (financial or other), business, properties, net worth, results of
operations or prospects of the Company or such Guarantor.
(ad) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific
8
<PAGE>
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(ae) The Company and each Guarantor has good and marketable title to
all property (real and personal) described in the Offering Memorandum as being
owned by it, free and clear of all liens, claims, security interests or other
encumbrances except such as are described in the Offering Memorandum or as do
not materially affect the value of such property and do not materially interfere
with the use made of such property by the Company or any Guarantor and all the
material property described in the Offering Memorandum as being held under lease
by the Company or any Guarantor is held by it under valid, subsisting and
enforceable leases, with only such exceptions as in the aggregate are not
materially burdensome and do not interfere with the conduct of the business of
the Company or any Guarantor.
(af) The Company and each Guarantor owns or possesses, free and clear
of all Liens (other than Permitted Liens), defects, restrictions or equities of
any kind whatsoever, all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "Intellectual
Property") presently employed by it in connection with its respective business
now operated by it, except where the failure to own or possess or have the
ability to acquire such Intellectual Property would not, singly or in the
aggregate, result in a Material Adverse Effect. The use of such Intellectual
Property in connection with the business and operations of the Company and the
Guarantors does not, to the Company's knowledge, infringe on the rights or
claimed rights of any person. Neither the Company nor any of the Subsidiaries
has received any notice of infringement of or conflict with assessed rights of
others with respect to any Intellectual Property which, singly or in the
aggregate, if the subject of any unfavorable decision, ruling or finding, might
have a Material Adverse Effect.
(ag) The Company and each Guarantor has such permits, licenses,
franchises, certificates of need and other approvals or authorizations of
governmental or regulatory authorities ("Permits") as are necessary under
applicable law to own their respective properties and to conduct their
respective businesses in the manner described in the Offering Memorandum, except
to the extent that the failure to have such Permits would not have a Material
Adverse Effect; the Company and each Guarantor has fulfilled and performed in
all material respects, all their respective material obligations with respect to
the Permits, and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit, subject in
each case to such qualification as may be set forth in the Offering Memorandum
and except to the extent that any such revocation or termination would not have
a Material Adverse Effect; and, except as described in the Offering Memorandum,
none of the Permits contains any restriction that is materially burdensome to
the Company or any Guarantor.
(ah) Except as set forth in the Offering Memorandum, there has been no
storage, disposal, generation, manufacture, refinement, transportation, handling
or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Company or any Guarantor (or, to the knowledge of the Company
or any Guarantor, any of their predecessors in interest) at, upon or from any of
the property now or previously owned or leased by the Company or any Guarantor
in violation of any applicable law, ordinance, rule, regulation, order,
judgment, decree or permit or which would require remedial action under any
applicable law, ordinance, rule, regulation, order, judgment, decree or permit,
except for any violation or remedial action which would not have, or could not
be reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions, a Material Adverse
9
<PAGE>
Effect; except as set forth in the Offering Memorandum, there has been no
material spill, discharge, leak, emission, injection, escape, dumping or release
of any kind onto such property or into the environment surrounding such property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any Guarantor or with respect to
which the Company or any Guarantor has knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which would not
have or would not be reasonably likely to have, singularly or in the aggregate
with all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a Material Adverse Effect; and the terms "hazardous
wastes," "toxic wastes," "hazardous substances" and "medical wastes" shall have
the meanings specified in any applicable local, state, federal and foreign laws
or regulations with respect to environmental protection.
(ai) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not reasonably
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); each "pension plan" other
than a multiemployer 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 to the knowledge of the Company,
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(aj) The Company and each of its Subsidiaries maintain insurance
covering their properties, operations, personnel and businesses. Such Insurance
insures against such losses and risks as are reasonably adequate in accordance
with customary industry practice to protect the Company and its Subsidiaries and
their businesses. Neither the Company nor any of its Subsidiaries has received
written notice from any insurer or agent of such insurer that substantial
capital improvements or other expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly in force on
the date hereof and will be outstanding and duly in force through the Closing
Date.
(ak) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has paid,
or made adequate reserve or provision for, all 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 have) a material adverse effect on the
consolidated financial position, stockholders' equity, results of operations,
business or prospects of the Company.
(al) Neither the Company nor, to the knowledge of the Company, any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any Guarantor, has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; has made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; has
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or has made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
(am) The Company is not and, upon sale of the Series A Notes to be
issued and sold thereby in accordance herewith and the application of the net
proceeds to the Company of such sale as
10
<PAGE>
described in the Offering Memorandum under the caption "Use of Proceeds," will
not be an "investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(an) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D ("Regulation D") under the Act) 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 its behalf), (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) which is or could be integrated with the offering and sale
of the Notes in a manner that would require the registration of the Series A
Notes under the Act or (ii) engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D, including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising) in connection with the offering of
the Series A Notes. No securities of the same class as the Series A Notes have
been issued and sold by the Company within the six-month period immediately
prior to the date hereof.
(ao) Except as permitted by the Act, the Company has not distributed
and, prior to the later to occur of the Closing Date and completion of the
distribution of the Series A Notes, will not distribute any offering material in
connection with the offering and sale of the Series A Notes other than the
Preliminary Offering Memorandum and Offering Memorandum.
(ap) When the Series A Notes are issued and delivered pursuant to this
Agreement, such Series A Notes will not be of the same class (within the meaning
of Rule 144A under the Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or that are quoted in a
United States automated inter-dealer quotation system.
(aq) Assuming (i) that the Series A Notes are issued, sold and
delivered under the circumstances contemplated by the Offering Memorandum and
this Agreement, (ii) that your representations and warranties in Section 2 are
true, (iii) that the representations of the Accredited Institutions set forth in
the certificates of such Accredited Institutions in the form set forth in Annex
A to the Offering Memorandum are true, (iv) compliance by you with your
covenants set forth in Section 2 and (v) that each of the Eligible Purchasers is
a QIB, an Accredited Institution or a person who is not a "U.S. person" who
acquires the Series A Notes outside the United States in an "offshore
transaction" (within the meaning of Rule 904 of Regulation S), the purchase of
the Series A Notes by you pursuant hereto and the initial resale of the Series A
Notes pursuant hereto pursuant to the Exempt Resales is exempt from the
registration requirements of the Act.
(ar) None of the Company or any of its affiliates or any person acting
on its or their behalf has engaged or will engage in any directed selling
efforts within the meaning of Rule 902(b) of Regulation S with respect to the
Notes, and the Company and its affiliates and all persons acting on its of their
behalf have complied with and will comply with the offering restrictions
requirements of Regulation S in connection with the offering of the Series A
Notes outside of the United States; provided that no representation is made as
to the Initial Purchasers or any person, acting on their behalf.
(as) The sale of the Series A Notes pursuant to Regulation S are
"offshore transactions" and are not part of a plan or scheme to evade the
registration provision of the Act.
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<PAGE>
2. Representations, Warranties and Agreements of the Initial
Purchasers. Each Initial Purchaser represents and warrants with respect to
itself that:
(a) Such Initial Purchaser is either a QIB or an Accredited
Institution, in either case with such knowledge and experience in financial and
business matters as are necessary in order to evaluate the merits and risks of
an investment in the Series A Notes.
(b) Such Initial Purchaser (i) is not acquiring the Series A Notes with
a view to any distribution thereof or with any present intention of offering or
selling any of the Series A Notes in a transaction that would violate the Act or
the securities laws of any State of the United States or any other applicable
jurisdiction; (ii) in connection with the Exempt Resales, will solicit offers to
buy the Notes only from, and will offer to sell the Notes only to, the Eligible
Purchasers in accordance with this Agreement and on the terms contemplated by
the Offering Memorandum; and (iii) will not offer or sell the Notes by, nor has
it offered or sold the Notes by, or otherwise engaged in, any form of general
solicitation or general advertising (within the meaning of Regulation D;
including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) in
connection with the offering of the Series A Notes.
(c) The Notes have not been and will not be registered under the Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Act. The Initial Purchasers represent that they have not offered, sold or
delivered the Notes, and will not offer, sell or deliver the Notes (i) as part
of its distribution at any time or (ii) otherwise until 40 days after the later
of the commencement of the offering and the Closing Date (such period, the
"Restricted Period"), within the United States or to, or for the account or
benefit of U.S. persons, except in accordance with Rule 144A under the Act, or
to Accredited Institutions in transactions that are exempt from the registration
requirements of the Act. Accordingly, each Initial Purchaser represents and
agrees that neither it, its affiliates nor any persons acting on its or their
behalf has engaged or will engage in any directed selling efforts within the
meaning of Rule 902(b) of Regulation S with respect to the Notes, and it, its
affiliates and all persons acting on its behalf have complied and will comply
with the offering restrictions requirements of Regulation S.
(d) Such Initial Purchaser agrees that, at or prior to confirmation of
a sale of Notes (other than a sale pursuant to Rule 144A or to Accredited
Institutions in transactions that are exempt from the registration requirements
of the Act), it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Notes from it
during the Restricted Period a confirmation or notice substantially to the
following effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Act") and may not be offered and sold
within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the
offering or the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Act. Terms used
above have the meanings assigned to them in Regulation S."
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<PAGE>
Such Initial Purchaser further agrees that it has not entered and will
not enter into any contractual arrangement with respect to the distribution or
delivery of the Notes, except with its affiliates or with the prior written
consent of the Company.
(e) Such Initial Purchaser further represents and agrees that (i) it
has not offered or sold and will not offer or sell any Notes to persons in the
United Kingdom prior to the expiry of the period of six months from the issue
date of the Notes, except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Notes
in, from or otherwise involving the United Kingdom, and (iii) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the Notes to a person who is
of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 or is a person to whom the
document may otherwise lawfully be issued or passed on.
(f) Such Initial Purchaser agrees not to cause any advertisement of the
Notes to be published in any newspaper or periodical or posted in any public
place and not to issue any circular relating to the Notes, except such
advertisements as may be permitted by Regulation S.
(g) The sale of the Series A Notes pursuant to Regulation S are
"offshore transactions" and are not part of a plan or scheme to evade the
registration provision of the Act.
(h) Such Initial Purchaser understands that the Company and, for
purposes of the opinions to be delivered to you pursuant to Section 7 hereof,
counsel to the Company, General Counsel to the Company and counsel to the
Initial Purchasers, will rely upon the accuracy and truth of the foregoing
representations and you hereby consent to such reliance.
The terms used in this Section 2 that have meanings assigned to them in
Regulation S are used herein as so defined.
Each Initial Purchaser further agrees that, in connection with the
Exempt Resales, it will solicit offers to buy the Series A Notes only from, and
will offer to sell the Series A Notes only to, the Eligible Purchasers in Exempt
Resales.
3. Purchase of the Notes by the Initial Purchasers. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell $120.0 million in
aggregate principal amount of Series A Notes to the Initial Purchasers, and each
of the Initial Purchasers, severally and not jointly, agrees to purchase the
aggregate principal amount of Series A Notes set forth opposite that Initial
Purchaser's name in Schedule 1 hereto. Each Initial Purchaser will purchase such
aggregate principal amount of Series A Notes at an aggregate purchase price
equal to 97.0% of the principal amount thereof (the "Purchase Price").
The Company shall not be obligated to deliver any of the Series A Notes
to be delivered, except upon payment for all the Series A Notes to be purchased
on such Closing Date as provided herein.
4. Delivery of and Payment.
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<PAGE>
(a) Delivery to the Initial Purchasers of and payment for the Series A
Notes shall be made at 9:00 a.m., New York City time, on the Closing Date at the
offices of Latham & Watkins, 885 Third Avenue, New York, New York 10022, or such
other time or place as you and the Company shall designate.
(b) One or more Series A Notes in definitive form, registered in the
name of Cede & Co., as nominee of the Depository Trust Company ("DTC"), or such
other names as the Initial Purchasers may request upon at least one business
days' notice to the Company, having an aggregate principal amount corresponding
to the aggregate principal amount of Series A Notes sold pursuant to Eligible
Resales (collectively, the "Global Note"), shall be delivered by the Company to
the Initial Purchasers, against payment by the Initial Purchasers of the
purchase price thereof by wire transfer of immediately available funds as the
Company may direct by written notice delivered to you two business days prior to
the Closing Date. The Global Note in definitive form shall be made available to
you for inspection not later than 9:30 a.m. on the business day immediately
preceding the Closing Date.
(c) Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Initial Purchaser hereunder.
5. Further Agreements of the Company and the Guarantors.
The Company and each of the Guarantors agrees:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, of (i) the issuance by any state securities commission of any
stop order suspending the qualification or exemption from qualification of any
Series A Notes for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purpose by the Commission or any state securities
commission or other regulatory authority, and (ii) the happening of any event
that makes any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or which requires the making of any
additions to or changes in the Preliminary Offering Memorandum or the Offering
Memorandum in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company and each
Guarantor shall use its best efforts to prevent the issuance of any stop order
or order suspending the qualification or exemption of the Series A Notes under
any state securities or Blue Sky laws and, if at any time any state securities
commission shall issue any stop order suspending the qualification or exemption
of the Series A Notes under any state securities or Blue Sky laws, the Company
and each Guarantor shall use every reasonable effort to obtain the withdrawal or
lifting of such order at the earliest possible time.
(b) To furnish to you, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as you may reasonably request. The Company and each
Guarantor consents to the use of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments and supplements thereto required
pursuant to this Agreement, by you in connection with the Exempt Resales that
are in compliance with this Agreement.
(c) Not to amend or supplement the Offering Memorandum prior to the
Closing Date or during the period referred to in (d) below unless you shall
previously have been advised of, and shall not have reasonably objected to, such
amendment or supplement within a reasonable time, but in any event not longer
than five days after being furnished a copy of such amendment or supplement. The
Company shall reasonably promptly prepare, upon any reasonable request by you,
any amendment or
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<PAGE>
supplement to the Offering Memorandum that may be necessary or advisable in
connection with Exempt Resales.
(d) If, in connection with any Exempt Resales or market making
transactions after the date of this Agreement and prior to the consummation of
the Exchange Offer, any event shall occur that, in the judgment of the Company
or in the judgment of your counsel, makes any statement of a material fact in
the Offering Memorandum untrue or that requires the making of any additions to
or changes in the Offering Memorandum in order to make the statements in the
Offering Memorandum, in light of the circumstances at the time that the Offering
Memorandum is delivered to prospective Eligible Purchasers, not misleading, or
if it is necessary to amend or supplement the Offering Memorandum to comply with
all applicable laws, the Company shall promptly notify you of such event and
prepare an appropriate amendment or supplement to the Offering Memorandum so
that (i) such statements or omissions will be corrected and (ii) the Offering
Memorandum will comply with applicable law.
(e) To cooperate with you and your counsel in connection with the
qualification of the Series A Notes for offer and sale by you and by dealers
under the state securities or Blue Sky laws of such jurisdictions as you may
request (provided, however, that the Company shall not be obligated to qualify
as a foreign corporation in any jurisdiction in which it is not now so qualified
or to take any action that would subject it to general consent to service of
process in any jurisdiction in which it is not now so subject). The Company
shall continue such qualification in effect so long as required by law for
distribution of the Series A Notes and shall file such consents to service of
process or other documents as may be necessary in order to effect such
qualification.
(f) To the extent it lawfully may do so, not to voluntarily claim, and
to actively resist any attempts to claim, the benefit of any usury laws against
the holders of the Series A Notes.
(g) Prior to the Closing Date, to furnish to you, as soon as they have
been prepared, a copy of any internal consolidated financial statements of the
Company for any period subsequent to the period covered by the financial
statements appearing in the Offering Memorandum.
(h) To use its reasonable best efforts to do and perform all things
required to be done and performed under this Agreement by it prior to or after
the Closing Date and to satisfy all conditions set forth in Section 7 hereof.
(i) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes in a manner that would require
the registration under the Act of the sale to you or the Eligible Purchasers of
Series A Notes.
(j) For so long as any of the Notes remain outstanding and are
Restricted Securities within the meaning of Rule 144(a)(3) under the Act and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, to make available to any registered holder or beneficial owner
of Series A Notes in connection with any sale thereof and any prospective
purchaser of such Series A Notes from such registered holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act.
(k) To comply with its agreements in the Registration Rights Agreement,
and all agreements set forth in the representation letters of the Company to DTC
relating to the approval of the Notes by DTC for "book-entry" transfer.
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<PAGE>
(l) To use its reasonable best efforts to effect the inclusion of the
Notes in the National Association of Securities Dealers, Inc. Automated
Quotation System - Private Offerings, Resales and Trading through Automated
Linkages Market ("PORTAL").
(m) To apply the net proceeds from the sale of the Series A Notes being
sold by the Company as set forth in the Offering Memorandum under the caption
"Use of Proceeds."
(n) To take such steps as shall be necessary to ensure that the Company
shall not become an "investment company" within the meaning of such term under
the Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
6. Expenses. The Company agrees that, whether or not the transactions
contemplated by this Agreement are consummated or this Agreement becomes
effective or is terminated, to pay all costs, expenses, fees and taxes incident
to and in connection with: (i) the preparation, printing and distribution of the
Preliminary Offering Memorandum and the Offering Memorandum (including, without
limitation, financial statements) and all amendments and supplements thereto
(but not, however, legal fees and expenses of your counsel incurred in
connection therewith), (ii) the preparation (including, without limitation, word
processing and duplication costs) and delivery of all Blue Sky Memoranda and all
other agreements, memoranda, correspondence and other documents printed and
delivered in connection herewith and with the Exempt Resales (but not, however,
legal fees and expenses of your counsel incurred in connection with any of the
foregoing other than fees of such counsel plus reasonable disbursements incurred
in connection with the preparation, printing and delivery of such Blue Sky
Memoranda), (iii) the issuance and delivery by the Company of the Notes, (iv)
the issuance and delivery by the Guarantors of the Subsidiary Guarantees, (v)
the qualification of the Notes for offer and sale under the securities or Blue
Sky laws of the several states (including, without limitation, the reasonable
fees and disbursements of your counsel relating to such registration or
qualification), (vi) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and supplements
thereto, as may be reasonably requested for use in connection with the Exempt
Resales, (vii) the preparation of certificates for the Notes and Subsidiary
Guarantees (including, without limitation, printing and engraving thereof),
(viii) the fees, disbursements and expenses of the Company's counsel and
accountants, (ix) all expenses and listing fees in connection with the
application for quotation of the Series A Notes in PORTAL, (x) all fees and
expenses of the Company in connection with approval of the Notes by DTC for
"book-entry" transfer and (xi) the performance by the Company and the Guarantors
of their other obligations under this Agreement; provided that, except as
provided in Section 6(ii) and Section 10, the Initial Purchasers shall pay their
own costs and expenses of their counsel.
7. Conditions of Initial Purchasers' Obligations. The respective
obligations of the Initial Purchasers hereunder are subject to the accuracy,
when made and again on the Closing Date (as if made again on and as of such
date), of the representations and warranties of the Company and the Guarantors
contained herein, to the performance by the Company and the Guarantors of their
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Offering Memorandum shall have been printed and copies
distributed to you not later than 11:00 a.m., New York City time, on August 7,
1997, or at such later date and time as you may approve in writing.
(b) No Initial Purchaser shall 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 Latham & Watkins, counsel for the Initial
16
<PAGE>
Purchasers, is material or omits to state a fact which, in the opinion of such
counsel, is material or is necessary to make the statements, in the light of the
circumstances under which they were made, not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the other Operative
Documents, the Transaction Agreement, the Credit Documents, the Offering
Memorandum, and all other legal matters relating to this Agreement and the
transactions contemplated hereby 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.
(d) Dechert Price & Rhoads shall have furnished to the Initial
Purchasers its written opinion, as counsel to the Company and the Guarantors,
addressed to the Initial Purchasers and dated as of the Closing Date,
substantially in the form attached hereto as Exhibit B. The opinion of such
counsel may be limited to the laws of the state of New York, the General
Corporation Law of the state of Delaware and the federal laws of the United
States.
(e) The Initial Purchasers shall have received from Latham & Watkins,
counsel for the Initial Purchasers, such opinion or opinions, dated such Closing
Date, with respect to the issuance and sale of the Series A Notes, the Offering
Memorandum and other related matters as the Initial Purchasers may reasonably
require, and the Company shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon such
matters.
(f) The Initial Purchasers shall have received letters addressed to the
Initial Purchasers, and dated the date hereof and the Closing Date from KPMG
Peat Marwick, independent certified public accountants, substantially in the
forms heretofore approved by the Initial Purchasers.
(g) The Company and the Guarantors shall have furnished to the Initial
Purchasers a certificate, dated such Closing Date, of David L. Wenner, its Chief
Executive Officer and Robert C. Cantwell, its Chief Financial Officer, stating
that:
(i) The representations, warranties and agreements of the Company
(after giving effect to all materiality qualifiers therein) and the
Guarantors in Section 1 are true and correct as of such date and giving
effect to the consummation of the transactions contemplated by the
Transaction Agreement, the Credit Documents and this Agreement; the
Company and each Guarantor has complied with all its agreements
contained herein; and the conditions set forth in Sections 7(h), 7(i)
and 7(l) have been fulfilled; and
(ii) They have carefully examined the Preliminary Offering
Memorandum and the Offering Memorandum and, in their opinion (i) as of
their respective dates and as of the Closing Date, the Preliminary
Offering Memorandum and the Offering Memorandum did not include any
untrue 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 (ii) since the date of the
Offering Memorandum, no event has occurred which should have been set
forth in a supplement or amendment to the Offering Memorandum.
(h) (i) The Company and each Guarantor shall not have sustained since
the date of the latest audited financial statements included in the Offering
Memorandum any loss or interference with
17
<PAGE>
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Offering
Memorandum or (ii) since such date there shall not have been any change in the
capital stock or long-term debt of the Company or any Guarantor or any change,
or any development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company or any Guarantor, otherwise than as set forth or
contemplated in the Offering Memorandum, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the Initial Purchasers,
so material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Notes being delivered on such
Closing Date on the terms and in the manner contemplated in the Offering
Memorandum.
(i) Prior to or simultaneously with the closing of the transactions
contemplated by the Operative Documents, the Company shall have closed the
transactions contemplated by the Credit Documents.
(j) Simultaneously with the closing of the transactions contemplated by
the Operative Documents, the Company shall redeem the Interim Notes and repay
the outstanding balance of the Existing Credit Facility in accordance with the
Use of Proceeds section of the Offering Memorandum.
(k) Latham & Watkins shall have been furnished with executed copies,
certified by the Secretary of the Company, of the Transaction Agreement, the
Credit Documents and such other documents and opinions, in addition to those set
forth above, as they may reasonably require for the purpose of enabling them to
review or pass upon the matters referred to in this Agreement and in order to
evidence the accuracy, completeness or satisfaction in all material respects of
any of the representations, warranties or conditions herein contained.
(l) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
Act and (ii) no such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities.
(m) 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 or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended 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, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such 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) as to make it, in the judgment of a
majority in interest of the several Initial Purchasers, impracticable or
inadvisable to proceed with the public offering or delivery of the Notes being
delivered on such Closing Date on the terms and in the manner contemplated in
the Offering Memorandum.
18
<PAGE>
(n) The Company shall have furnished to the Initial Purchasers a
certificate, dated as of the Closing Date, of Robert C. Cantwell, its Chief
Financial Officer, stating that the Company has at least $50.0 million of
borrowings available to it under the New Credit Agreement (giving effect to the
covenants contained in the New Credit Agreement).
(m) Dechert Price & Rhoads shall have furnished a letter to the Initial
Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers, the Company and their respective counsel, permitting the Initial
Purchasers to rely on certain provisions of Dechert Price & Rhoads' opinion
rendered pursuant to the New Credit Agreement.
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.
8. Indemnification and Contribution.
(a) The Company and the Guarantors, jointly and severally, shall
indemnify and hold harmless each Initial Purchaser, its officers and employees
and each person, if any, who controls any Initial Purchaser within the meaning
of the Act, 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, officer, employee or controlling person
may become subject, under the Act 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 the
Preliminary Offering Memorandum or the Offering Memorandum or in any amendment
or supplement thereto, (ii) the omission or alleged omission to state in any
Preliminary Offering Memorandum or the Offering Memorandum or in any amendment
or supplement thereto any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by any Initial Purchaser in
connection with, or relating in any manner to, the Notes or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that neither the Company nor the
Guarantors shall be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Initial Purchaser
through its gross negligence or willful misconduct), and shall reimburse each
Initial Purchaser and each such officer, employee or controlling person promptly
upon demand for any legal or other expenses reasonably incurred by that Initial
Purchaser, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that neither the Company nor any of the Guarantors shall 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, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Offering Memorandum or the
Offering Memorandum, or in any such amendment or supplement in reliance upon and
in conformity with written information concerning such Initial Purchaser
furnished to the Company by or on behalf of any Initial Purchaser specifically
for inclusion therein. The foregoing indemnity agreement is in addition to any
liability which the Company or any Guarantor may otherwise have to any Initial
Purchaser or to any officer, employee or controlling person of that Initial
Purchaser.
19
<PAGE>
(b) Each Initial Purchaser, severally and not jointly, shall indemnify
and hold harmless the Company, the Guarantors, their officers and employees,
each of their directors, and each person, if any, who controls the Company or
any Guarantor within the meaning of the Act or the Exchange Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company or any such Guarantor, director, officer
or controlling person may become subject, under the Act 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 in any Preliminary Offering Memorandum or the Offering Memorandum, or
in any amendment or supplement thereto, any 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
written information concerning such Initial Purchaser furnished to the Company
by or on behalf of that Initial Purchaser specifically for inclusion therein,
and shall reimburse the Company, the Guarantors, and any such director, officer
or controlling person for any legal or other expenses reasonably incurred by the
Company, the Guarantors, or any such director, officer or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which any Initial
Purchaser may otherwise have to the indemnified parties.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, 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 8 except to the extent it 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 8. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, 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 8 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
the Initial Purchasers shall have the right to employ counsel to represent
jointly the Initial Purchasers and their respective officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Initial Purchasers against the
Company under this Section 8 if, in the reasonable judgment of the Initial
Purchasers, it is advisable for the Initial Purchasers, officers, employees and
controlling persons to be jointly represented by separate counsel, and in that
event the fees and expenses of such separate counsel shall be paid by the
Company. No indemnifying party shall (i) without the prior written consent of
the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent
20
<PAGE>
shall not be unreasonably withheld), but if settled with the consent of the
indemnifying party 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.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a) in respect of any loss, claim, damage or liability, or any
action in respect thereof, referred to therein, 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
Series A 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 Series A 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 Series A
Notes purchased under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the Series A 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 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 or the Initial
Purchasers, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) 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
shall be deemed to include, for purposes of this Section 8(d), 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 8(d), no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Series A Notes purchased by it was resold to Eligible Purchasers exceeds the
amount of any damages which such Initial Purchaser has 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 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute as provided in this Section 8(d) are
several in proportion to their respective underwriting obligations and not
joint.
(e) The Initial Purchasers confirm and the Company acknowledges that
the last paragraph on the cover page and the stabilization legend on page iii
and the information set forth in the 1st through the 9th and the 13th paragraphs
under the caption "Plan of Distribution" in the Offering Memorandum constitute
the only information concerning such Initial Purchasers furnished in writing to
21
<PAGE>
the Company by or on behalf of the Initial Purchasers specifically for inclusion
in the Offering Memorandum.
9. Termination. The obligations of the Initial Purchasers hereunder may
be terminated by Lehman Brothers Inc. by notice given to the Company prior to
delivery of and payment for the Series A Notes if, prior to that time, any of
the events described in Sections 7(h) or 7(n) shall have occurred or if the
Initial Purchasers shall decline to purchase the Series A Notes for any reason
permitted under this Agreement. If, on the Closing Date, the Initial Purchasers
shall default in the performance of their obligations under this Agreement, this
Agreement shall terminate without liability on the part of the Company or the
Guarantors, except that the Company will continue to be liable for the payment
of expenses to the extent set forth in Section 6 and except that the provisions
of Section 8 shall not terminate and shall remain in full force and effect.
10. Reimbursement of Initial Purchasers' Expenses. If the Company shall
fail to tender the Series A Notes for delivery to the Initial Purchasers by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed, or because any other
condition of the Initial Purchasers' obligations hereunder required to be
fulfilled by the Company is not fulfilled, the Company will reimburse the
Initial Purchasers for all reasonable out-of-pocket expenses (including the fees
and disbursements of its counsel) incurred by the Initial Purchasers in
connection with this Agreement and the proposed purchase of the Series A Notes,
and upon demand the Company shall pay the full amount thereof to Lehman Brothers
Inc.
11. Notices, etc. 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, telex or facsimile transmission to Lehman Brothers Inc., Three
World Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 212-526-6588), with a copy to Latham & Watkins, 885
Third Avenue, New York, New York 10022, Attention: Kirk A. Davenport
(Fax: 212-751-4864) and, in the case of any notice pursuant to Section
8, to the Director of Litigation, Office of the General Counsel, Lehman
Brothers Inc., Three World Financial Center, 10th Floor, New York, NY
10285; and
(b) if to the Company or any Guarantor, shall be delivered or sent
by mail, telex or facsimile transmission to B&G Foods, Inc., 426 Eagle
Rock Avenue, Roseland, New Jersey 07068, Attention: Chief Financial
Officer (Fax: 201-228-7461), with a copy to Dechert Price & Rhoads, 30
Rockefeller Plaza, New York, New York, 10112, Attention: Glyndwr P.
Lobo (Fax: 212-698-3599).
Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. The Company shall be entitled to act and rely
upon any request, consent, notice or agreement given or made on behalf of the
Initial Purchasers by Lehman Brothers Inc.
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 personal representatives and successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except that (i) the representations, warranties, indemnities and agreements of
the Company and the Guarantors contained in this Agreement shall also be deemed
to be for the
22
<PAGE>
benefit of the person or persons, if any, who control any Initial Purchaser
within the meaning of Section 15 of the Act and (ii) the representations,
warranties, indemnities and agreements of the Initial Purchasers contained in
this Agreement shall be deemed to be for the benefit of directors of each of the
Company or the Guarantors, officers of each of the Company and the Guarantors
and any person controlling the Company within the meaning of Section 15 of the
Act. 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. Survival. The respective indemnities, representations, warranties
and agreements of the Company, the Guarantors 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 investigation
made by or on behalf of any of them or any person controlling any of them.
14. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.
16. 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.
17. 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.
[Signature Page(s) Follow]
23
<PAGE>
If the foregoing correctly sets forth the agreement between the Company
and the Initial Purchasers, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
B&G FOODS, INC.
By /s/
--------------------------------
Name:
Title:
BGH HOLDINGS, INC.
By /s/
--------------------------------
Name:
Title:
RWBV ACQUISITION CORP.
By /s/
--------------------------------
Name:
Title:
BRH HOLDINGS, INC.
By /s/
--------------------------------
Name:
Title:
24
<PAGE>
BLOCH & GUGGENHEIMER, INC.
By /s/
--------------------------------
Name:
Title:
ROSELAND DISTRIBUTION COMPANY
By /s/
--------------------------------
Name:
Title:
BURNS & RICKER, INC.
By /s/
--------------------------------
Name:
Title:
ROSELAND MANUFACTURING, INC.
By /s/
--------------------------------
Name:
Title:
RWBV BRANDS COMPANY
By /s/
--------------------------------
Name:
Title:
<PAGE>
Accepted:
LEHMAN BROTHERS INC.
By /s/
--------------------------------
Name:
Title:
LAZARD FRERES & CO. LLC
By /s/
--------------------------------
Name:
Title:
<PAGE>
SCHEDULE 1
Initial Purchaser Principal Amount Notes
- ----------------- ----------------------
LEHMAN BROTHERS INC........................ $ 96,000,000
LAZARD FRERES & CO. LLC.................... $ 24,000,000
=======================
Total................................... $ 120,000,000
<PAGE>
EXHIBIT A
Registration Rights Agreement
-----------------------------
<PAGE>
EXHIBIT B
Form of Opinion of Dechert Price & Rhoads
-----------------------------------------
<PAGE>
EXHIBIT 12.1
B&G FOODS, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
39-WEEK
PERIOD ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Income before income tax expense and extraordinary item.............. $ 459 $ 867 $ 1,614
Add:
Interest expense................................................... 5,635 4,649 3,780
Amortization of deferred financing costs........................... 473 -- --
Portion of rents representative of the interest factor............. 374 578 500
------ ------ ------
Income as adjusted............................................... 6,941 6,094 5,894
Fixed charges:
Interest expense................................................... $ 5,635 $ 4,649 $ 3,780
Amortization of deferred financing costs........................... 473 -- --
Portion of rents representative of the interest factor............. 374 578 500
------ ------ ------
Fixed charges.................................................... 6,482 5,227 4,280
------ ------ ------
Ratio of earnings to fixed charges................................... 1.07 1.17 1.38
------ ------ ------
------ ------ ------
</TABLE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Stockholders
B&G Foods, Inc.:
We consent to the use of our report dated October 31, 1997, relating to the
financial statements of B&G Foods, Inc. and subsidiaries included herein and to
the reference to our firm under the heading "Experts" in the prospectus.
Our report states that as further described in note 1, the Predecessor was
acquired on December 27, 1996 in a business combination accounted for as a
purchase. As a result, the Successor Consolidated financial statements are
presented on a different basis of accounting than the Predecessor Combined
financial statements and, therefore, are not comparable.
KPMG Peat Marwick LLP
Short Hills, New Jersey
November 7, 1997
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Stockholders
B&G Foods, Inc.:
We consent to the use of our report dated September 30, 1997, relating to the
combined financial statements of the Nabisco Brands included herein and to the
reference to our firm under the heading "Experts" in the prospectus.
Our report states that the accompanying financial statements of the Nabisco
Brands were prepared to present the net assets acquired and the product
contribution of the Nabisco Brands pursuant to the purchase agreement between
Nabisco, Inc. and RWBV Acquisition Corp., a wholly-owned, indirect subsidiary of
B&G Foods, Inc. (the "Buyer") as described in note 1 and are not intended to be
a complete presentation of the Nabisco Brands' financial position, results of
operations and cash flows.
KPMG Peat Marwick LLP
Short Hills, New Jersey
November 7, 1997
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
JEM Brands, Inc.:
We consent to the use of our report dated September 17, 1997, relating to the
consolidated financial statements of JEM Brands, Inc. and subsidiary included
herein and to the reference to our firm under the heading "Experts" in the
prospectus.
KPMG Peat Marwick LLP
New Orleans, Louisiana
November 7, 1997
<PAGE>
Exhibit 25
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------------
B&G FOODS, INC.
(Exact name of obligor as specified in its charter)
Delaware 13-3916496
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Table of Additional Registrants
BGH Holdings, Inc. Delaware 36-3867424
Jem Brands, Inc. Delaware 06-1213945
Trappey's Fine Foods, Inc. Delaware 22-2934591
Bloch & Guggenheimer, Inc. Delaware 36-1208070
RWBV Acquisition Corp. Delaware 22-351-8822
RWBV Brands Company Delaware Pending
Roseland Distribution Company Delaware 22-3210182
Roseland Manufacturing, Inc. Delaware 22-3213825
BRH Holdings, Inc. Delaware 36-3867428
Burns & Ricker, Inc. Delaware 22-2780678
426 Eagle Rock Avenue
Roseland, NJ 07068
(Address of principal executive offices) (Zip code)
------------------------
9 5/8% Senior Subordinated Notes due 2007
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 4th day of November, 1997.
THE BANK OF NEW YORK
By: /s/ THOMAS B. ZAKRZEWSKI
---------------------------
Name: THOMAS B. ZAKRZEWSKI
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE>
EXHIBIT 7
---------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 7,769,502
Interest-bearing balances .......... 1,472,524
Securities:
Held-to-maturity securities ........ 1,080,234
Available-for-sale securities ...... 3,046,199
Federal funds sold and Securities pur-
chased under agreements to resell...... 3,193,800
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................35,352,045
LESS: Allowance for loan and
lease losses ..............625,042
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,726,574
Assets held in trading accounts ...... 1,611,096
Premises and fixed assets (including
capitalized leases) ................ 676,729
Other real estate owned .............. 22,460
Investments in unconsolidated
subsidiaries and associated
companies .......................... 209,959
Customers' liability to this bank on
acceptances outstanding ............ 1,357,731
Intangible assets .................... 720,883
Other assets ......................... 1,627,267
-----------
Total assets ......................... $57,514,958
===========
LIABILITIES
Deposits:
In domestic offices ................ $26,875,596
Noninterest-bearing ......11,213,657
Interest-bearing .........15,661,939
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 16,334,270
Noninterest-bearing .........596,369
Interest-bearing .........15,737,901
Federal funds purchased and Securities
sold under agreements to repurchase. 1,583,157
Demand notes issued to the U.S.
Treasury ........................... 303,000
Trading liabilities .................. 1,308,173
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,383,570
With remaining maturity of more than
one year through three years.......... 0
With remaining maturity of more than
three years ......................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,377,244
Subordinated notes and debentures .... 1,018,940
Other liabilities .................... 1,732,792
-----------
Total liabilities .................... 52,937,421
===========
EQUITY CAPITAL
Common stock ........................ 1,135,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,721,258
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 1,948
Cumulative foreign currency transla-
tion adjustments .................. ( 12,272)
-----------
Total equity capital ................ 4,577,537
-----------
Total liabilities and equity
capital ........................... $57,514,958
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
)
Alan R. Griffith )
J. Carter Bacot ) Directors
Thomas A. Renyi )
)
-----------------------
