SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C.
20549
FORM
8-K
CURRENT
REPORT
Pursuant to
Section 13 or 15(d)
of THE SECURITIES EXCHANGE
ACT OF 1934
Date of Report: March
31, 1994
(Date of earliest
event reported)
RALSTON PURINA
COMPANY
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(Exact name of registrant as specified in
its charter)
MISSOURI 1-4582
No. 43-0470580
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(State or Other (Commission
(IRS Employer
Jurisdiction of File Number)
Identification
Incorporation)
Number)
CHECKERBOARD SQUARE, ST. LOUIS, MISSOURI
63164
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(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number,
including area code:
(314) 982-1000
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PAGE 2
INFORMATION TO BE INCLUDED IN THE REPORT
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- ----
Item 2. Acquisition or Disposition of Assets
-----------------------------------------
On March 31, 1994, the Registrant distributed all of the issued
and
outstanding shares of $.01 par value common stock ("Ralcorp
Stock") of its
subsidiary, Ralcorp Holdings, Inc. ("Ralcorp") to shareholders of
its
Ralston-Ralston Purina Group Common Stock ("RPG Stock") on the
basis of one
share of Ralcorp Stock for every three shares of RPG Stock held
as of the close
of business on that date, as more specifically described in the
Agreement and
Plan of Reorganization dated as of that date, between Ralston and
various
subsidiaries and Ralcorp. Immediately prior to such distribution
(the
"Distribution"), Ralston exchanged 65616 shares of RPG Stock and
9892 shares
of Ralston-Continental Baking Group Common Stock ("CBG Stock")
held by certain
key employees of Ralcorp for shares of Ralcorp Stock of equal
value.
On that date, Registrant contributed all of the assets and
liabilities,
including approximately $30 million of long-term debt, associated
with
its domestic cereal business, baby food business, snack cracker
and cookie
business, resort business and coupon redemption business to
Ralcorp or one of
its wholly owned subsidiaries. On March 30, 1994 borrowed $370
Million
pursuant to the Credit Agreement with various lenders and
Nationsbank of North
Carolina, N.A. as agent, and assigned the repayment obligation,
without
recourse to the Registrant, to Ralcorp.
Item 7. Financial Statements and Exhibits
---------------------------------------
(b) Pro Forma financial information
RALSTON PURINA COMPANY
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The historical consolidated financial statements of Ralston
include the results
of operations and financial position of the businesses
constituting Ralcorp.
The pro forma consolidated statement of earnings for the three
months ended
December 31, 1993 is prepared assuming that the Distribution had
occurred as
of October 1, 1993. The pro forma consolidated statement of
earnings for the
year ended September 30, 1993 is prepared assuming that the
Distribution had
occurred as of October 1, 1992. The pro forma consolidated
balance sheet as
of December 31, 1993 is prepared assuming that the Distribution
had occurred
as of that date. Pro forma financial statements have been
prepared by
adjusting the historical statements for the effect of costs,
expenses,
assets and liabilities and the recapitalization which might have
occurred had
the Distribution been effected as of the dates indicated. These
pro forma
financial statements may not necessarily reflect the consolidated
results of
operations or financial position that would have existed had the
Distribution
occurred on the dates indicated.
PAGE 3
<TABLE>
Pro Forma Consolidated Statement of Earnings
(Dollars in millions)
Three Months Ended December 31, 1993
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- ---------------------
<CAPTION>
As Pro
Forma
Reported
Adjustments Pro Forma
- -----------------------------------------------------------------
- ---------------------
<S> <C> <C>
<C>
Net Sales $2,199.3
($263.2)(a) $1,936.1
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- ---------------------
Costs and Expenses
Cost of products sold 1,173.6
(132.8)(a) 1,040.8
Selling, general and administrative 468.5
(34.1)(a) 434.4
Advertising and promotion 268.6
(68.2)(a) 200.4
Interest 56.3
(3.6)(b) 52.7
Other (income)/expense, net 7.6
(.1)(a) 7.5
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- ---------------------
1,974.6
(238.8) 1,735.8
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- ---------------------
Earnings before Income Taxes 224.7
(24.4) 200.3
Income Taxes 91.0
(9.2)(c) 81.8
- -----------------------------------------------------------------
- ---------------------
Net Earnings $133.7
($15.2) $118.5
=================================================================
=====================
</TABLE>
(a) To eliminate results of operations for Ralcorp.
(b) To reflect reduction of interest expense due to debt
repayment by Ralston.
(c) To reflect the tax effect for the above pro forma
adjustments.
<TABLE>
RALSTON PURINA COMPANY
Pro Forma Consolidated Statement of Earnings
(Dollars in millions)
Year Ended September 30, 1993
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- ---------------------
<CAPTION>
As Pro
Forma
Reported
Adjustments Pro Forma
- -----------------------------------------------------------------
- ---------------------
<S> <C> <C>
<C>
Net Sales $7,902.2
($888.8)(a) $7,013.4
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- ---------------------
PAGE 4
Costs and Expenses
Cost of products sold 4,322.0
(466.1)(a) 3,855.9
Selling, general and administrative 1,879.8
(125.9)(a) 1,753.9
Advertising and promotion 875.5
(208.5)(a) 667.0
Interest 238.1
(15.2)(b) 222.9
Other (income)/expense, net 6.4
(.6)(a) 5.8
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- ---------------------
7,321.8
(816.3) 6,505.5
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- ---------------------
Earnings before Income Taxes, Extraordinary Item
and Cumulative Effect of Accounting Changes 580.4
(72.5) 507.9
Income Taxes 239.1
(27.3)(c) 211.8
- -----------------------------------------------------------------
- ---------------------
Earnings before Extraordinary Item and
Cumulative Effect of Accounting Changes $341.3
($45.2) $296.1
=================================================================
=====================
</TABLE>
(a) To eliminate results of operations for Ralcorp.
(b) To reflect reduction of interest expense due to debt
repayment by Ralston.
(c) To reflect the tax effect for the above pro forma
adjustments.
<TABLE>
RALSTON PURINA COMPANY
Pro Forma Consolidated Balance Sheet
December 31, 1993
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- ----------------------------
<CAPTION>
Pro Forma
(Dollars in millions, except per share data) As
Reported Adjustments(a) Pro Forma
- -----------------------------------------------------------------
- ----------------------------
<S> <C>
<C> <C>
ASSETS
Current Assets
Cash
$19.6 ($4.2) $15.4
Marketable securities
57.8 57.8
Receivables, less allowance for doubtful accounts
921.6 (55.8) 865.8
Inventories
782.3 (91.2) 691.1
Other current assets
178.7 (10.6) 168.1
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- ----------------------------
Total Current Assets
1,960.0 (161.8) 1,798.2
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- ----------------------------
Investments and Other Assets
941.4 (55.7) 885.7
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- ----------------------------
PAGE 5
Property at Cost
3,992.4 (646.4) 3,346.0
Accumulated depreciation
1,652.8 (187.8) 1,465.0
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- ----------------------------
Net Property
2,339.6 (458.6) 1,881.0
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- ----------------------------
Total
$5,241.0 ($676.1) $4,564.9
=================================================================
============================
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Current maturities of long-term debt
$148.5 ($ .2) $148.3
Notes payable
490.5 (377.3)(b) 113.2
Accounts payable and accrued liabilities
1,142.3 (88.5) 1,053.8
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- ----------------------------
Total Current Liabilities
1,781.3 (466.0) 1,315.3
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- ----------------------------
Long-Term Debt
1,973.6 (30.3)(b) 1,943.3
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- ----------------------------
Deferred Income Taxes
153.8 (25.8) 128.0
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- ----------------------------
Other Liabilities
591.2 (24.0) 567.2
- -----------------------------------------------------------------
- ----------------------------
Redeemable Preferred Stock
509.8 509.8
- -----------------------------------------------------------------
- ----------------------------
Unearned ESOP Compensation
(297.7) (297.7)
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- ----------------------------
Shareholders Equity
529.0 (130.0) 399.0
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- ----------------------------
Total
$5,241.0 ($676.1) $4,564.9
=================================================================
============================
</TABLE>
(a) To eliminate assets and liabilities of Ralcorp.
(b) To reflect repayment of debt by Ralston following the
Distribution and to
eliminate debt assumed by Ralcorp.
RALSTON PURINA GROUP
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The historical combined financial statements of the RPG Group
include the results of operations and financial position of the
businesses constituting Ralcorp. The pro forma combined
statement of earnings for the three months ended December 31,
1993 is prepared assuming that the Distribution had
occurred as of October 1, 1993. The pro forma combined statement
of earnings for the year ended September 30, 1993 is prepared
assuming that the Distribution had occurred as of October 1,
1992. The pro forma combined balance sheet as of December 31,
1993 is prepared assuming that the Distribution had occurred as
PAGE 6
of that date. Pro forma financial statements have been prepared
by adjusting the historical statements for the effect of costs,
expenses, assets and liabilities and the recapitalization which
might have occurred had the Distribution been effected as of the
dates indicated. These pro forma financial statements may not
necessarily reflect the consolidated results of operations or
financial position that would have existed had the Distribution
occurred on the dates indicated.
<TABLE>
Pro Forma Combined Statement of Earnings
(Dollars in millions except per share data)
Three Months Ended December 31, 1993
- -----------------------------------------------------------------
- -------------------
<CAPTION>
As Pro
Forma
Reported
Adjustments Pro Forma
- -----------------------------------------------------------------
- -------------------
<S> <C> <C>
<C>
Net Sales $1,724.3
($263.8)(a) $1,460.5
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- -------------------
Costs and Expenses
Cost of products sold 944.1
(133.4)(a) 810.7
Selling, general and administrative 252.8
(34.1)(a) 218.7
Advertising and promotion 246.4
(68.2)(a) 178.2
Interest 49.7
(3.6)(b) 46.1
Other (income)/expense, net 6.9
(.1)(a) 6.8
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1,499.9
(239.4) 1,260.5
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- -------------------
Earnings Related to Retained Interest
in the CBG Group (.1)
(.1)
- -----------------------------------------------------------------
- -------------------
Earnings before Income Taxes 224.3
(24.4) 199.9
Income Taxes 90.9
(9.2)(c) 81.7
- -----------------------------------------------------------------
- -------------------
Net Earnings $133.4
($15.2) $118.2
=================================================================
===================
Earnings per Share:
Primary $1.27
$1.12
=================================================================
===================
Fully Diluted $1.18
$1.05
=================================================================
===================
</TABLE>
PAGE 7
(a) To eliminate results of operations for Ralcorp.
(b) To reflect reduction of interest expense due to debt
repayment by Ralston.
(c) To reflect the tax effect of the above pro forma adjustments.
<TABLE>
RALSTON PURINA GROUP
Pro Forma Combined Statement of Earnings
(Dollars in millions except per share data)
Year Ended September 30, 1993
- -----------------------------------------------------------------
- -------------------
<CAPTION>
As
Pro Forma
Reported
Adjustments Pro Forma
- -----------------------------------------------------------------
- -------------------
<S> <C> <C>
<C>
Net Sales $5,915.4
($891.1)(a) $5,024.3
- -----------------------------------------------------------------
- -------------------
Costs and Expenses
Cost of products sold 3,353.0
(468.4)(a) 2,884.6
Selling, general and administrative 1,023.3
(125.9)(a) 897.4
Advertising and promotion 791.9
(208.5)(a) 583.4
Interest 210.7
(15.2)(b) 195.5
Other (income)/expense, net 8.3
(.6)(a) 7.7
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- -------------------
5,387.2
(818.6) 4,568.6
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- -------------------
Earnings Related to Retained Interest
in the CBG Group (26.7)
(26.7)
- -----------------------------------------------------------------
- -------------------
Earnings before Income Taxes, Extraordinary Item
and Cumulative Effect of Accounting Changes 501.5
(72.5) 429.0
Income Taxes 217.9
(27.3)(c) 190.6
- -----------------------------------------------------------------
- -------------------
Earnings before Extraordinary Item and
Cumulative Effect of Accounting Changes $283.6
($45.2) $238.4
=================================================================
===================
Earnings per Share before Extraordinary Item
and Cumulative Effect of Accounting Changes:
Primary $2.56
$2.12
=================================================================
===================
Fully Diluted $2.44
$2.04
=================================================================
===================
</TABLE>
PAGE 8
(a) To eliminate results of operations for Ralcorp.
(b) To reflect reduction of interest expense due to debt
repayment by Ralston.
(c) To reflect the tax effect of the above pro forma adjustments.
<TABLE>
RALSTON PURINA GROUP
Pro Forma Combined Balance Sheet
December 31, 1993
- -----------------------------------------------------------------
- ----------------------------
<CAPTION>
Pro Forma
(Dollars in millions, except per share data) As
Reported Adjustments(a) Pro Forma
- -----------------------------------------------------------------
- ----------------------------
<S> <C>
<C> <C>
ASSETS
Current Assets
Cash
$19.6 ($4.2) $15.4
Marketable securities
54.9 54.9
Receivables, less allowance for doubtful accounts
828.9 (55.8) 773.1
Inventories
720.1 (91.2) 628.9
Other current assets
150.0 (10.6) 139.4
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- ----------------------------
Total Current Assets
1,773.5 (161.8) 1,611.7
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- ----------------------------
Retained Interest in the CBG Group
25.2 25.2
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- ----------------------------
Investments and Other Assets
901.5 (55.7) 845.8
- -----------------------------------------------------------------
- ----------------------------
Property at Cost
2,968.5 (646.4) 2,322.1
Accumulated depreciation
1,215.2 (187.8) 1,027.4
- -----------------------------------------------------------------
- ----------------------------
Net Property
1,753.3 (458.6) 1,294.7
- -----------------------------------------------------------------
- ----------------------------
Total
$4,453.5 ($676.1) $3,777.4
=================================================================
============================
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Current maturities of long-term debt
$120.9 ($ .2) $120.7
Notes payable
475.0 (377.3)(b) 97.7
Accounts payable and accrued liabilities
949.8 (88.5) 861.3
- -----------------------------------------------------------------
- ----------------------------
Total Current Liabilities
1,545.7 (466.0) 1,079.7
- -----------------------------------------------------------------
- ----------------------------
Long-Term Debt
1,636.1 (30.3)(b) 1,605.8
- -----------------------------------------------------------------
- ----------------------------
Deferred Income Taxes
143.5 (25.8) 117.7
- -----------------------------------------------------------------
- ----------------------------
Other Liabilities
389.3 (24.0) 365.3
- -----------------------------------------------------------------
- ----------------------------
Redeemable Preferred Stock
463.9 463.9
- -----------------------------------------------------------------
- ----------------------------
Unearned ESOP Compensation
(223.3) (223.3)
- -----------------------------------------------------------------
- ----------------------------
PAGE 9
RPG Group Equity
498.3 (130.0) 368.3
- -----------------------------------------------------------------
- ----------------------------
Total
$4,453.5 ($676.1) $3,777.4
=================================================================
============================
</TABLE>
(a) To eliminate assets and liabilities of Ralcorp.
(b) To reflect repayment of debt by Ralston following the
Distribution and to
eliminate debt assumed by Ralcorp.
(c) Exhibits
2.1 Agreement and Plan of Reorganization
2.2 Tax Sharing Agreement
2.3 Bridging Agreement
2.4 Technology Agreement
2.5 Trademark Agreement
10.1 Credit Agreement and Assignment
10.2 Form of Stock Redemption and Exchange
Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934,
the registrant has duly caused this report to be signed on its
behalf by the
undersigned hereto duly authorized.
RALSTON PURINA COMPANY
(Registrant)
By: -----------------------
- ---------------
JAMES R. ELSESSER
Vice President and
Chief Financial Officer
Dated: April , 1994
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"),
dated as of March 31, 1994, by and among Ralston Purina Company,
a Missouri corporation ("Ralston"), Ralston Purina International,
Inc., a Delaware corporation and wholly owned subsidiary of
Ralston ("RPII"), VCS Holding Company, a Delaware corporation and
wholly owned subsidiary of RPII ("VCS"), and Ralcorp Holdings,
Inc., a newly formed Missouri corporation which is presently a
wholly owned subsidiary of Ralston ("Ralcorp").
WITNESSETH:
WHEREAS, Ralston is engaged in various businesses, including the
businesses of manufacturing, distributing and selling a line of
branded and private label cereals, including the "Chex" brand
cereal products, in the United States and the Western Hemisphere
(collectively, the "Cereal Business"), baby food under the
"Beech-Nut" brand (the "Baby Food Business") and branded and
private label cookies, crackers and snacks (the "Bremner
Business"), and indirectly, through subsidiaries wholly owned by
RPII, is engaged in the all season resort business operated by
Keystone Resorts Management, Inc. ("KRMI"), the related real
estate business conducted by Summit County Land Company
("Summit") and in the coupon redemption business operated by
American Redemption Systems, Inc. ("ARS"); and
WHEREAS, the Board of Directors of Ralston (the "Ralston Board")
has determined that it is in the best interests of Ralston to
consolidate Ralston's Cereal Business, Baby Food Business,
Bremner Business, ski resort and related real estate business and
coupon redemption business into Ralcorp and to distribute the
$.01 par value common stock of Ralcorp ("Common Stock") to
shareholders of its $.10 par value Ralston-Ralston Purina Group
Common Stock ("RPG Stock"); and
WHEREAS, in order to effect such consolidation the Ralston Board
has determined that (1) RPII will contribute approximately $600
million of existing intercompany debt owing from Ralston to RPII
to the capital of VCS, (2) RPII will thereafter merge with and
into Ralston (the "Merger"), so that Ralston, as the surviving
corporation in the Merger will succeed to all the remaining
assets (including the stock of KRMI, Summit, ARS, and VCS) and
liabilities of RPII and (3) Ralston will thereafter contribute
all of the assets of the Cereal, Baby Food and Bremner Businesses
and all of the capital stock of KRMI, Summit and ARS as a capital
contribution to Ralcorp and certain of its subsidiaries, and
Ralcorp and such subsidiaries will assume certain liabilities
associated with such contributed assets, including approximately
$365 million of newly placed debt; and
WHEREAS, in order to effect such distribution of the ownership of
Ralcorp to the holders of RPG Stock, the Ralston Board has
determined that it is necessary and desirable to (1) repurchase
shares of Ralston stock held by certain key Ralcorp employees by
exchanging shares of Common Stock of approximately equal value
for such shares of Ralston stock and (2) distribute the remaining
outstanding shares of Common Stock (constituting substantially
all of the outstanding shares) on a pro rata basis to the holders
of RPG Stock, such distributions being hereinafter referred to
collectively as the "Distribution"; and
WHEREAS, the Ralston Board has also determined that it will
contribute to VCS as a capital contribution all of the
outstanding stock of several operating subsidiaries and certain
other subsidiaries presently owned by RPII, along with associated
notes receivable from such subsidiaries or their affiliates; and
WHEREAS, the Merger is intended to qualify for non-recognition
treatment under Section 368(a)(1)(A), the transfer of assets and
liabilities to Ralcorp and certain of its subsidiaries is
intended to qualify for non-recognition treatment under Section
368(a)(1)(D) and Section 351 and the Distribution is intended to
qualify for non-recognition treatment under Section 355 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties hereto have determined that it is necessary
and desirable to set forth the principal corporate transactions
required to effect the Distribution and to set forth other
agreements that will govern certain other matters prior to and
following the Distribution;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound
thereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 General. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms
defined):
Action: any action, claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental
or other regulatory or administrative agency or commission or any
arbitration or other tribunal.
Affiliate: with respect to any specified Person, an "affiliate"
as defined in Rule 405 promulgated pursuant to the Securities
Act; provided, however, that for purposes of this Agreement (i)
Affiliates of Ralcorp shall not be deemed to include Ralston or
any of its subsidiaries or Affiliates other than Ralcorp, KRMI,
Summit and ARS or Subsidiaries of Ralcorp, KRMI, Summit and ARS,
and (ii) Affiliates of Ralston shall not be deemed to include
Ralcorp, KRMI, Summit and ARS or Subsidiaries of Ralcorp, KRMI,
Summit and ARS.
Ancillary Agreements: all of the agreements, instruments,
understandings, assignments and other arrangements entered into
in connection with the transactions contemplated hereby,
including, without limitation, the Bridging Agreement, the Tax
Sharing Agreement, the Technology Agreement and the Trademark
Agreement.
ARS: as defined in the recitals to this Agreement.
Asset: any and all assets and properties, tangible or
intangible, including the following: (i) cash, notes and trade
receivable accounts (whether current or non-current and including
all rights with respect thereto); (ii) certificates of deposit,
bankers' acceptances, stock, debentures, evidences of
indebtedness, certificates of interest or participation in
profit-sharing agreements, collateral-trust certificates,
preorganization certificates, investment contracts, voting-trust
certificates; (iii) trade secrets, confidential information,
registered and unregistered trademarks, service marks, service
names, trade styles and trade names and associated goodwill;
statutory, common law and registered copyrights; applications for
any of the foregoing, rights to use any of the foregoing and
other rights in, to and under any of the foregoing; (iv) rights
under leases, contracts, licenses, permits, and sales and
purchase agreements; (v) real estate and buildings and other
improvements thereon and timber and mineral rights of every kind;
(vi) leasehold improvements, fixtures, trade fixtures, machinery,
equipment (including transportation and office equipment), tools,
dies and furniture; (vii) office supplies, production supplies,
spare parts, other miscellaneous supplies and other tangible
property of any kind; (viii) raw materials, work-in-process,
finished goods, consigned goods and other inventories; (ix)
prepayments or prepaid expenses; (x) claims, causes of action,
choses in action, rights of recovery and rights of set-off of any
kind; (xi) the right to receive mail and other communications;
(xii) lists of advertisers, records pertaining to advertisers and
accounts, lists and records pertaining to suppliers and agents,
and books, ledgers, files and business records of every kind;
(xiii) advertising materials and other recorded, printed or
written materials; (xiv) goodwill as a going concern and other
intangible properties; (xv) personnel records and employee
contracts, including any rights thereunder to restrict an
employee from competing in certain respects; and (xvi) licenses
and authorizations issued by any governmental authority.
Baby Food Business: as defined in the recitals to this
Agreement.
Bremner Business: as defined in the recitals to this Agreement.
Bremner Finance: Bremner Finance, Inc., a Delaware corporation.
Bridging Agreement: as defined in Section 5.03 of this
Agreement.
Business Day: any day other than a Saturday, a Sunday or a day
on which banking institutions located in the State of Missouri
are obligated by law or executive order to close.
CBG Options: as defined in Section 7.04 of this Agreement.
CBG Stock: Ralston Purina Company Ralston-Continental Baking
Group Common Stock, par value $.10 per share.
Cereal Business: as defined in the recitals to this Agreement.
Claims: as defined in Section 4.01 of this Agreement.
Common Stock: Ralcorp Holdings, Inc. common stock, par value
$.01 per share.
Code: the Internal Revenue Code of 1986, as amended, or any
successor legislation.
Collective Bargaining Agreement: any collective bargaining or
other labor agreement to which any member of either Group is a
party, including those listed on Schedule 7.09.
Current Plan Year: the plan year or fiscal year, to the extent
applicable with respect to any Plan, during which the
Distribution Date occurs.
Disputed Items: as defined in Section 5.05 of this Agreement.
Distribution: as defined in the recitals to this Agreement.
Distribution Date: the date, to be determined by the Ralston
Board, or the Executive Committee thereof, as of which the
Distribution shall be effected.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, or any successor legislation.
ESOP Stock: Ralston Purina Company Series A ESOP Convertible
Preferred Stock, $1.00 par value.
Exchange Act: the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
Final Date: the fifteenth Business Day after the Distribution
Date.
Form 10: as defined in Section 2.06 of this Agreement.
Former Ralston Businesses: all of the businesses and operations
(i) heretofore but not currently conducted by any member of the
Ralston Group or the Ralcorp Group or by any former Subsidiary of
any such member or (ii) currently or heretofore conducted by any
such former Subsidiary.
Group: the Ralston Group or the Ralcorp Group
Indemnifiable Loss: with respect to any claim by an Indemnitee
for indemnification hereunder, any and all losses, liabilities,
claims, damages, obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and
all Actions, demands, claims and assessments, and any and all
judgments, settlements and compromises related thereto and
reasonable attorney's fees and expenses in connection therewith)
incurred or suffered by such Indemnitee with respect to such
claim except as may arise in connection with the performance of
any of the Ancillary Agreements, which shall, in each such case,
be governed by the terms of such Ancillary Agreement.
Indemnitee: as defined in Section 4.03 of this Agreement.
Indemnitor: as defined in Section 4.03 of this Agreement.
Information: as defined in Section 6.02 of this Agreement.
Information Statement: the information statement to be sent to
holders of RPG Stock in connection with the Distribution, which
shall set forth appropriate disclosures concerning Ralcorp, the
Distribution and other related matters.
IRS: the Internal Revenue Service.
ISP: the Ralston Purina 1988 Incentive Stock Plan.
KRMI: as defined in the recitals to this Agreement.
Liabilities: all claims, debts, liabilities, royalties, license
fees, losses, costs, expenses, deficiencies, litigation
proceedings, taxes, levies, imposts, duties, deficiencies,
assessments, attorneys' fees, charges, allegations, demands,
damages, judgments or obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown and whether or not the
same would properly be reflected on a balance sheet, including
all costs and expenses relating thereto.
Merger: as defined in the recitals to this Agreement.
Merger Agreement: as defined in Section 2.01 of this Agreement.
Net Worth: as defined in Section 5.05 of this Agreement.
Net Worth Statement: as defined in Section 5.05 of this
Agreement.
Notice of Claim: as defined in Section 4.03 of this Agreement.
NYSE: the New York Stock Exchange.
Person: an individual, a partnership, a joint venture, a
corporation, a trust or other entity, an unincorporated
organization or a government or any department or agency thereof.
Plan: any plan, policy, arrangement, contract or agreement
providing benefits (including salary, bonuses, deferred
compensation, incentive compensation, savings, stock purchases,
pensions, profit sharing, welfare benefits or retirement or other
retiree benefits, including retiree medical benefits) for any
group of employees or former employees or individual employee or
former employee, or the beneficiary or beneficiaries of any such
employee or former employee, whether formal or informal or
written or unwritten and whether or not legally binding, and
including any means, whether or not legally required, pursuant to
which any benefit is provided by an employer to any employee or
former employee or the beneficiary or beneficiaries of any such
employee or former employee.
Purina Retirement Plans: as defined in Section 7.01 of this
Agreement.
Qualified Plan: a Plan which is an employee pension benefit plan
(within the meaning of Section 3(2) of ERISA) and which
constitutes or is intended in good faith to constitute a
qualified plan under Section 401(a) of the Code.
Ralcorp: as defined in the recitals to this Agreement.
Ralcorp Assets: subject to the provisions of any other agreement
referred to in this Agreement, (i) all of the Assets used or held
by or on behalf of any member of either Group immediately prior
to the Distribution Date, which Assets are used or held for use
exclusively in the Ralcorp Business rather than the Ralston
Business, and any office equipment and furniture used immediately
prior to the Distribution exclusively by Ralcorp Employees, (ii)
all of the outstanding shares of capital stock of Summit, KRMI,
ARS, Bremner Finance and all other Subsidiaries of Ralcorp
engaged in the Ralcorp Business, and (iii) all of the other
Assets listed on Schedule 1.01(a); notwithstanding the above,
however, Ralcorp Assets shall not include the Assets listed or
described on Schedule 1.01(b).
Ralcorp Business: all of the Cereal Business, the Baby Food
Business and the Bremner Business and the businesses conducted
immediately prior to the Distribution Date by Summit, KRMI and
ARS.
Ralcorp Deferred Compensation Plans: as defined in Section 7.05
of this Agreement.
Ralcorp Employee: any individual who on the Distribution Date is
an officer or employee of any member of either Group and (a) who
is primarily employed in the Ralcorp Business, or (b) who will be
an employee of the Ralcorp Group following the Distribution, or
(c) who is on leave or layoff from active employment but who,
immediately prior to commencement of such leave or layoff, was
primarily employed in the Ralcorp Business, except that a Ralcorp
Employee shall not include any individual who, as of the
Distribution Date, (i) has been determined to be disabled under
the Purina Benefit Association Long Term Disability Plan ("LTD
Plan"), the Ralston Purina Company Group Life Insurance Plan or
the Purina Retirement Plan for Production Employees; or (ii) is
on leave during a waiting period prior to a determination of
disability under the LTD Plan.
Ralcorp Group: Ralcorp and its Subsidiaries, including KRMI,
Summit, ARS and Bremner Finance.
Ralcorp Individual: any individual who is a Ralcorp Employee or
a beneficiary of a Ralcorp Employee.
Ralcorp ISP: as defined in Section 7.04 of this Agreement.
Ralcorp Obligations: as defined in Article X of this Agreement.
Ralcorp Officers: the individuals listed on Schedule 7.04 to
this Agreement.
Ralcorp Retirement Plans: as defined in Section 7.01 of this
Agreement.
Ralcorp Share Purchase Rights Agreement: as defined in Section
2.03 of this Agreement.
Ralcorp Group Territory: the United States and the entire
Western Hemisphere.
Ralston: as defined in the recitals to this Agreement.
Ralston Assets: subject to the provisions of any of the other
agreements referred to in this Agreement, all of the Assets,
other than the Ralcorp Assets, used or held immediately prior to
the Distribution Date by or on behalf of any member of either
Group.
Ralston Board: the Board of Directors of Ralston Purina Company
and their duly elected or appointed successors.
Ralston Business: all of the businesses of Ralston conducted
immediately prior to the Distribution Date by any member of
either Group, other than the Ralcorp Business.
Ralston Deferred Compensation Plans: as defined in Section 7.05
of this Agreement.
Ralston Employee: any individual who at any time is or was an
officer or employee of any member of any Group, other than a
Ralcorp Employee.
Ralston Group Territory: the entire world except for the United
States and the Western Hemisphere.
Ralston Group: Ralston and its Subsidiaries and Affiliates,
other than members of the Ralcorp Group.
Ralston Individual: any individual who (i) is a Ralston
Employee, (ii) at any time prior to the Distribution Date is or
was an officer or employee of any Former Ralston Business or
(iii) is a beneficiary of any individual specified in clause (i)
or (ii).
Record Date: the date to be determined by the Board of Directors
of Ralston, or the Executive Committee thereof, as the record
date for determining shareholders of RPG Stock entitled to
receive the Distribution.
Rights: the rights to be issued by Ralcorp pursuant to the
Ralcorp Share Purchase Rights Agreement.
RPG Options: as defined in Section 7.04 of this Agreement.
RPG Stock: Ralston Purina Company Ralston-Ralston Purina Group
common stock, $.10 par value.
RPII: as defined in the recitals to this Agreement.
SEC: the Securities and Exchange Commission.
Securities Act: the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
Subsidiary: with respect to any specified Person, any
corporation or other legal entity of which such Person or any of
its Subsidiaries controls or owns, directly or indirectly, more
than 50% of the stock or other equity interest entitled to vote
on the election of members to the board of directors or similar
governing body of such corporation or other legal entity.
Summit: as defined in the recitals to this Agreement.
Tax Sharing Agreement: as defined in Section 5.03 of this
Agreement.
Technology Agreement: as defined in Section 5.03 of this
Agreement.
Third Party Claim: any Action or claim by a third party against
or otherwise involving an Indemnitee for which indemnification
may be sought pursuant to Section 4.04 hereof.
Trademark Agreement: as defined in Section 5.03 of this
Agreement.
United States: the fifty states of the United States of America
excluding the territories and possessions of the United States.
VCS: as defined in the recitals to this Agreement.
Welfare Plan: any Plan, including but not limited to the Plans
listed on Schedule 7.03, which is not a Qualified Plan and which
provides medical, health, disability, accident, life insurance,
death, dental or other welfare benefits, including any post-
employment benefits or retiree medical benefits.
1.02 References to Time. All references to times of the day in
this Agreement shall refer to St. Louis, Missouri time.
ARTICLE II
CERTAIN TRANSACTIONS PRIOR TO THE DISTRIBUTION
2.01 Contribution of Debt; Merger; Transfer of Stock. Prior to
the Distribution Date, (i) RPII shall contribute to VCS, as a
capital contribution, existing intercompany debt owing from
Ralston to RPII in the aggregate principal amount of
approximately $600,000,000, and (ii) Ralston and RPII shall enter
into an Agreement and Plan of Merger in substantially the form
attached to this Agreement as Exhibit 2.01(b) ("Merger
Agreement") pursuant to which, subject to the terms and
conditions of the Merger Agreement, RPII shall be merged with and
into Ralston in accordance with, and with the effects set forth
in, the Merger Agreement, the Delaware General Corporation Law
and the General and Business Corporation Law of Missouri.
Following the Merger, Ralston shall contribute the outstanding
shares of its Subsidiaries Eveready Battery Company, Inc.,
Continental Baking Company and Protein Technologies International
Holdings, Inc., all the shares of which are presently owned by
RPII but after the Merger will be owned by Ralston, to VCS, along
with all notes receivable from such Subsidiaries to Ralston.
2.02 Issuance of Stock. Prior to the Distribution Date, the
parties hereto shall take all steps necessary so that immediately
prior to the Distribution Date the number of shares of Common
Stock outstanding and held by Ralston shall equal the number of
shares necessary to effect the Distribution. The Distribution
shall be effected by exchanging with certain Ralcorp Employees
identified on Schedule 3.02, pursuant to Section 3.02 of this
Agreement, shares of Common Stock for shares of approximately
equal value of RPG Stock and CBG Stock owned by such Ralcorp
Employees, and immediately thereafter distributing, on a pro rata
basis to every holder of RPG Stock, one share of Common Stock for
every three shares of RPG Stock held as of the Record Date.
2.03 Share Purchase Rights Agreement; Articles of Incorporation;
Bylaws. Prior to the Distribution Date, Ralcorp shall adopt a
Ralcorp Share Purchase Rights Agreement in substantially the form
filed with the SEC as an exhibit to the Form 10, and the Board of
Directors of Ralcorp shall authorize a distribution of one Right
to every share of outstanding Common Stock, such distribution to
occur prior to the Distribution. Ralston and Ralcorp shall take
all action necessary so that, at the Distribution Date, the
Articles of Incorporation and Bylaws of Ralcorp shall be
substantially in the forms filed with the SEC as exhibits to the
Form 10.
2.04 Transfer of Assets; Assumption of Liabilities.
(a) Prior to the Distribution Date, the parties hereto shall
also take all action necessary to convey, assign and transfer to
Ralcorp or another member of the Ralcorp Group as designated by
Ralcorp, effective as of the Distribution Date, all of the right,
title and interest of Ralston or its Affiliates in the Ralcorp
Assets. Effective as of the Distribution Date, Ralston shall
contribute the Ralcorp Assets utilized primarily in the Cereal
Business to a directly wholly owned subsidiary of Ralcorp and, in
addition, shall contribute to such subsidiary all of the
outstanding capital stock of KRMI, Summit and ARS. Ralston
shall, at that same time, contribute, respectively, the Ralcorp
Assets utilized primarily in the Baby Food Business and the
Ralcorp Assets utilized primarily in the Bremner Business to two
indirectly wholly owned subsidiaries of Ralcorp. The parties
acknowledge that formal actions to fully effect such transfers of
Ralcorp Assets may not be completed by the Distribution Date, but
that the entire beneficial title and interest in and to each
Ralcorp Asset shall pass to Ralcorp or the designated member of
the Ralcorp Group as of the Distribution Date. Ralston shall, at
its sole expense, take such action as is necessary in its
reasonable discretion, whether before or after the Distribution
Date, to complete the transfer of the Ralcorp Assets to Ralcorp
or another member of the Ralcorp Group as designated by Ralcorp,
and Ralcorp shall cooperate fully with Ralston in such regard.
(b) As of the Distribution Date, Ralcorp or another member of
the Ralcorp Group shall assume or retain all Liabilities, of
whatsoever type or nature, arising exclusively out of or
associated exclusively with the ownership of the Ralcorp Assets
or the operation of the Ralcorp Business prior to the
Distribution, whether such Liabilities become known prior to or
after or are asserted prior to or after the Distribution, except
to the extent such Liabilities are assumed or retained by Ralston
pursuant to this Section 2.04(b). To the extent any Liabilities
arise out of or are associated with the ownership of both the
Ralcorp Assets and the Ralston Assets or the operation of both
the Ralcorp Business and the Ralston Business or a Former Ralston
Business prior to the Distribution, and have not been assumed or
retained by Ralston pursuant to this Section 2.04(b), Ralcorp or
another member of the Ralcorp Group shall also assume that
portion of such Liabilities arising exclusively out of or
associated exclusively with the ownership of the Ralcorp Assets
or the operation of the Ralcorp Business prior to the
Distribution. In addition, effective as of the Distribution
Date, Ralcorp or another member of the Ralcorp Group shall assume
(i) Liabilities specifically described in any other provision of
this Agreement or any Ancillary Agreement, and Liabilities
described on Schedule 2.04(a) to this Agreement, including
approximately $365 million of newly placed debt described
thereon. Ralston and members of the Ralston Group shall retain
or assume (i) the Liabilities specifically described in this
Agreement or any Ancillary Agreement, (ii) the Liabilities
specifically described on Schedule 2.04(b) to this Agreement, and
(iii) all other Liabilities not arising exclusively out of or
associated exclusively with the ownership of the Ralcorp Assets
or the operation of the Ralcorp Business prior to the
Distribution, whether such Liabilities become known prior to or
after or are asserted prior to or after the Distribution Date.
(c) The parties agree and acknowledge that the assumption by
Ralcorp or Ralston, as the case may be, of all such Liabilities
described herein is part of a single plan to transfer the Ralcorp
Business and the Ralcorp Assets to Ralcorp. With regard to that
plan, the parties further agree that (i) the entire beneficial
title and interest in and to each and all Ralcorp Assets shall,
regardless of when legal title to any such asset is in fact
transferred to Ralcorp, remain in Ralston until the Distribution
Date at which time all beneficial title and interest in all of
the Ralcorp Assets will pass to Ralcorp; (ii) the economic burden
of the assumption by the members of the Ralcorp Group or the
Ralston Group, as the case may be, of each and all of the
Liabilities described herein shall pass to the Ralcorp Group or
the Ralston Group, as the case may be, as of the Distribution
Date, regardless of when Ralcorp or any other member of the
Ralcorp Group or Ralston or any other member of the Ralston
Group, as the case may be, in fact assumes or becomes legally
obligated to the obligee of any one or more of such Liabilities;
and (iii) all operations of the Ralcorp Business shall be for the
account of Ralston through 11:59 p.m. on the Distribution Date
and shall be for the account of Ralcorp thereafter.
2.05 Conduct of Business Pending the Distribution Date. Prior to
the Distribution Date, the Ralcorp Business shall be operated for
the sole benefit of Ralston.
2.06 Registration and Listing. Prior to the Distribution Date:
(a) Ralston and Ralcorp shall prepare, and Ralcorp shall file
with the SEC, a Registration Statement on Form 10 ("Form 10")
pursuant to Section 12(b) of the Exchange Act with respect to the
Common Stock and associated Rights. Ralston and Ralcorp shall
use reasonable efforts to cause the Form 10 to become effective
under the Exchange Act, and, following such effectiveness,
Ralston shall mail the Information Statement to the holders of
record of RPG Stock as of the close of business on the Record
Date.
(b) The parties hereto shall take all such actions as may be
necessary or appropriate under state securities and Blue Sky laws
in connection with the Distribution.
(c) Ralston and Ralcorp shall prepare, and Ralcorp shall file and
seek to make effective, an application for the listing of the
Common Stock and associated Rights on the NYSE, subject to
official notice of issuance.
ARTICLE III
THE DISTRIBUTION
3.01 Record Date and Distribution Date. Subject to the
satisfaction of the conditions set forth in Section 10.01, the
Ralston Board, or the Executive Committee thereof, in its
discretion, shall establish the Record Date and the Distribution
Date and any appropriate procedures in connection with the
Distribution. The Distribution shall be effective as of 11:59
p.m. on the Distribution Date, and the determination of record
holders of RPG Stock on the Record Date shall also be as of 11:59
p.m. on that date.
3.02 Distribution. Ralston shall offer to exchange, effective as
of the close of business on the Distribution Date, with the
Ralcorp Officers and the key Ralcorp Employees listed on Schedule
3.02 certain unrestricted shares of RPG Stock and CBG Stock owned
by each of them, as described on said Schedule, for a number of
shares of Common Stock equal in market value to the number of
shares of RPG Stock and CBG Stock so indicated, based upon (i)
the average of the closing prices on the NYSE Composite Index for
the RPG Stock and the CBG Stock trading regular way for the ten
trading day period ending on the last day prior to the
Distribution Date, and (ii) the average of the closing prices on
the NYSE Composite Index for the Common Stock for the ten trading
day period commencing on the date on which the Common Stock is
first traded regular way on the NYSE following the Distribution
Date. Ralston shall thereafter distribute the remaining
outstanding shares of Common Stock to holders of record of RPG
Stock on the Record Date on the basis of one-third of a share of
Common Stock for each share of RPG Stock outstanding on the
Record Date, subject to the treatment of fractional shares set
forth in Section 3.03. All shares of Common Stock issued in the
Distribution shall be duly authorized, validly issued, fully paid
and nonassessable.
3.03 Payment in Lieu of Fractional Shares. No fractional shares
of Common Stock shall be issued in the Distribution. In lieu
thereof, Ralston shall remit to each holder of RPG Stock who
would otherwise be entitled to receive such fractional shares, an
amount equal to the average of the high and low sales prices of
the Common Stock during the first three days of trading following
the Distribution Date multiplied by such holder's fractional
interest in such shares (after making appropriate deductions of
the amount required for Federal tax withholding purposes).
ARTICLE IV
INDEMNIFICATION
4.01 Indemnification.
(a) From and after the Distribution Date, Ralston agrees to
indemnify and hold harmless Ralcorp against and in respect of any
and all Liabilities assumed or retained by Ralston pursuant to
Section 2.04(b) of this Agreement or related to, arising from, or
associated with:
(i) any breach or violation of any covenant made in this
Agreement or any Ancillary Agreement by Ralston or RPII or any of
their Subsidiaries;
(ii) any Third Party Claim primarily relating to the actions of
the Ralston Board in authorizing the Distribution; or
(iii) the ownership, use or possession of the Ralston Assets or
the operation of the Ralston Business or Former Ralston
Businesses, whether relating to or arising out of occurrences
prior to or after the Distribution, except to the extent
liability therefor is assumed or retained by Ralcorp or another
member of the Ralcorp Group pursuant to Section 2.04(b) of this
Agreement.
Any indemnification provided for under this Section shall be
deemed to also extend to other members of the Ralcorp Group,
Affiliates, Ralcorp Employees, directors, Plan fiduciaries,
shareholders, agents, consultants, representatives, successors,
transferees and assigns of Ralcorp or members of the Ralcorp
Group.
(b) From and after the Distribution Date, Ralcorp agrees to
indemnify and hold harmless Ralston against and in respect of all
Liabilities assumed or retained by Ralcorp or another member of
the Ralcorp Group pursuant to Section 2.04(b) of this Agreement
or related to, arising from, or associated with:
(i) any breach or violation of any covenant made in this
Agreement or any Ancillary Agreement by Ralcorp or any of its
Subsidiaries; or
(ii) the ownership, use or possession of the Ralcorp Assets or
the operation of the Ralcorp Business, whether relating to or
arising out of occurrences prior to or after the Distribution,
except to the extent liability therefor is assumed or retained by
Ralston or another member of the Ralston Group pursuant to
Section 2.04(b) of this Agreement.
Any indemnification provided for under this Section shall also be
deemed to extend to other members of the Ralston Group,
Affiliates, Ralston Employees, directors, Plan fiduciaries,
shareholders, agents, consultants, representatives, successors,
transferees and assigns of Ralston or members of the Ralston
Group.
4.02 Insurance and Third Party Obligations. Any indemnification
otherwise payable pursuant to Section 4.01 shall be reduced by
the amount of any insurance or other amounts (net of deductibles
and allocated paid loss retro-premiums) that would be payable by
any third party to the Indemnitee or on the Indemnitee's behalf
in the absence of this Agreement. It is expressly agreed that no
insurer or any other third party shall be (i) entitled to a
benefit it would not be entitled to receive in the absence of the
foregoing indemnification provisions, (ii) relieved of the
responsibility to pay any claims for which it is obligated, or
(iii) entitled to any subrogation rights with respect to any
obligation hereunder.
4.03 Actions and Claims Other Than Third Party Claims; Notice and
Payment. Upon obtaining knowledge of any Action, Liabilities or
claim, other than Third Party Claims, which any Person entitled
to indemnification (the "Indemnitee") believes may give rise to
any Indemnifiable Loss, the Indemnitee shall promptly notify the
party liable for such indemnification (the "Indemnitor") in
writing of such Action or claim (such written notice being
hereinafter referred to as a "Notice of Claim"); provided,
however, that failure of an Indemnitee timely to give a Notice of
Claim to the Indemnitor shall not release the Indemnitor from its
indemnity obligations set forth in this Article IV except to the
extent that such failure materially increases the amount of
indemnification which the Indemnitor is obligated to pay
hereunder, in which event the amount of indemnification which the
Indemnitee shall be entitled to receive shall be reduced to an
amount which the Indemnitee would have been entitled to receive
had such Notice of Claim been timely given. A Notice of Claim
shall specify in reasonable detail the nature and estimated
amount of any such Action Liabilities or claim giving rise to a
right of indemnification. The Indemnitor shall have thirty
Business Days after receipt of a Notice of Claim to notify the
Indemnitee (a) whether or not it disputes its liability to the
Indemnitee with respect to such Action Liabilities or claim or
the amount thereof, and setting forth the basis for such
objection. If the Indemnitor fails to respond to the Indemnitee
within such thirty Business Day period, the Indemnitor shall be
deemed to have acknowledged its responsibility for such
Indemnifiable Loss. The Indemnitor shall pay and discharge any
such Indemnifiable Loss which is not contested within sixty days
after its receipt of a Notice of Claim.
4.04 Third Party Claims; Notice, Defense and Payment. Promptly
following the earlier of (i) receipt of notice of the
commencement of a Third Party Claim or (ii) receipt of
information from a third party alleging the existence of a Third
Party Claim, any Indemnitee who believes that it is or may be
entitled to indemnification by any Indemnitor under Section 4.01
with respect to such Third Party Claim shall deliver a Notice of
Claim to the Indemnitor. Failure of an Indemnitee timely to give
a Notice of Claim to the Indemnitor shall not release the
Indemnitor from its indemnity obligations set forth in this
Section 4.04 except to the extent that such failure adversely
affects the ability of the Indemnitor to defend such Action,
Liabilities or claim or materially increases the amount of
indemnification which the Indemnitor is obligated to pay
hereunder, in which event the amount of indemnification which the
Indemnitee shall be entitled to receive shall be reduced to an
amount which the Indemnitee would have been entitled to receive
had such Notice of Claim been timely given. Indemnitee shall not
settle or compromise any Third Party Claim in an amount in excess
of $25,000 prior to giving a Notice of Claim to Indemnitor. In
addition, if an Indemnitee settles or compromises any Third Party
Claims prior to giving a Notice of Claim to an Indemnitor, the
Indemnitor shall be released from its indemnity obligations to
the extent that such settlement or compromise was not made in
good faith and was not commercially reasonable. Within thirty
days after receipt of such Notice of Claim (or sooner if the
nature of such Third Party Claim so requires), the Indemnitor may
(i) by giving written notice thereof to the Indemnitee,
acknowledge liability for, and at its option elect to assume, the
defense of such Third Party Claim at its sole cost and expense or
(ii) object to the claim of indemnification set forth in the
Notice of Claim delivered by the Indemnitee; provided that if the
Indemnitor does not within the same thirty day period give the
Indemnitee written notice either objecting to such claim and
setting forth the grounds therefor or electing to assume the
defense, the Indemnitor shall be deemed to have acknowledged its
responsibility to accept the defense and its ultimate liability,
if any, for such Third Party Claim. Any contest of a Third Party
Claim as to which the Indemnitor has elected to assume the
defense shall be conducted by attorneys employed by the
Indemnitor and reasonably satisfactory to the Indemnitee;
provided that the Indemnitee shall have the right to participate
in such proceedings and to be represented by attorneys of its own
choosing at the Indemnitee's sole cost and expense. If the
Indemnitor assumes the defense of a Third Party Claim, the
Indemnitor may settle or compromise the Third Party Claim without
the prior written consent of Indemnitee; provided that the
Indemnitor may not agree to any such settlement pursuant to which
any such remedy or relief, other than monetary damages for which
the Indemnitor shall be responsible hereunder, shall be applied
to or against the Indemnitee, without the prior written consent
of the Indemnitee, which consent shall not be unreasonably
withheld. If the Indemnitor does not assume the defense of a
Third Party Claim for which it has acknowledged liability for
indemnification under Section 4.01, the Indemnitee may require
the Indemnitor to reimburse it on a current basis for its
reasonable expenses of investigation, reasonable attorney's fees
and reasonable out-of-pocket expenses incurred in defending
against such Third Party Claim and the Indemnitor shall be bound
by the result obtained with respect thereto by the Indemnitee,
provided that the Indemnitor shall not be liable for any
settlement effected without its consent, which consent shall not
be unreasonably withheld. The Indemnitor shall pay to the
Indemnitee in cash the amount for which the Indemnitee is
entitled to be indemnified (if any) within fifteen days after the
final resolution of such Third Party Claim (whether by
settlement, a final nonappealable judgment of a court of
competent jurisdiction or otherwise) or, in the case of any Third
Party Claim as to which the Indemnitor has not acknowledged
liability, within fifteen days after such Indemnitor's objection
has been resolved by settlement, compromise or arbitration
pursuant to the provisions of Article XI of this Agreement.
4.05 Other Legal Matters
(a) Notwithstanding any other provision of this Agreement, as of
the Distribution Date, Ralston and Ralcorp agree that they (and
their Affiliates) shall cooperate in the defense of certain third
party legal actions set forth on Schedule 4.05 attached hereto
(the "Shared Legal Actions"). Ralston and Ralcorp agree that
Ralston's internal legal counsel shall be responsible for
directing the defense of Shared Legal Actions including, but not
limited to, making the following decisions: selection of outside
counsel; litigation strategies; settlement of litigation; and
appeals of adverse judgements. Ralston and Ralcorp agree that
prior to making decisions regarding the defense of Shared Legal
Actions, Ralston's internal legal counsel shall consult with
Ralcorp's internal legal counsel.
(b) Ralston and Ralcorp shall bear their own expenses for
internal costs relating to the defense of Shared Legal Actions.
Any out-of-pocket expenses (including but not limited to the fees
and expenses of outside counsel), amounts paid as monetary
damages or costs arising from adverse judgments, amounts paid in
settlement of disputed claims, and amounts paid for clean-up or
remedial expenses arising from Shared Legal Actions relating to
environmental laws shall be shared as set forth in Schedule 4.05.
The proceeds of any judgment or settlement relating to the Shared
Legal Actions payable to either Ralston or Ralcorp shall also be
shared as set forth on Schedule 4.05.
4.06 Remedies Cumulative; Survival of Indemnities. The remedies
provided in this Article IV shall be cumulative and shall not
preclude assertion by any Indemnitee of any other rights or the
seeking of any and all other remedies against any Indemnitor.
The obligations of each of the Ralston Group and the Ralcorp
Group under this Article IV shall survive the sale or other
transfer by it of any assets or businesses or the assignment by
it of any Liabilities, with respect to any claim of the other for
any Indemnifiable Losses related to such assets, businesses or
Liabilities.
ARTICLE V
CERTAIN ADDITIONAL COVENANTS
5.01 Further Assurances. Each party hereto shall cooperate with
the other parties, and execute and deliver, or use its best
efforts to cause to be executed and delivered, all instruments,
including instruments of conveyance, assignment and transfer, and
to make all filings with, and to obtain all consents, approvals
or authorizations of, any governmental or regulatory authority or
any other Person under any permit, license, agreement, indenture
or other instrument, and take all such other actions as such
party may reasonably be requested to take by any other party
hereto from time to time, consistent with the terms of this
Agreement, in order to effectuate the provisions and purposes of
this Agreement and the transfers of Assets and Liabilities and
the other transactions contemplated hereby or in any of the
Ancillary Agreements. If any such transfer of Assets or
Liabilities is not consummated prior to or on the Distribution
Date, then the party hereto retaining such Asset or Liability
shall thereafter hold such Asset in trust for the use and benefit
of the party entitled thereto (at the expense of the party
entitled thereto), or shall retain such Liability for the account
of the party by whom such Liability is to be assumed pursuant
hereto, as the case may be, and shall take such other action as
may be reasonably requested by the party to whom such Asset is to
be transferred, or by whom such Liability is to be assumed, as
the case may be, in order to place such party, insofar as
reasonably possible, in the same position as if such Asset or
Liability had been transferred as contemplated hereby. If and
when any such Asset or Liability becomes transferable, such
transfer shall be effected forthwith. The parties hereto agree
that, as of the Distribution Date, each party hereto shall be
deemed to have acquired complete and sole beneficial ownership of
all of the Assets, together with all rights, powers and
privileges incident thereto, and shall be deemed to have assumed
in accordance with the terms of this Agreement all of the
Liabilities, and all duties, obligations and responsibilities
incident thereto, that such party is entitled to acquire or
required to assume pursuant to the terms of this Agreement.
5.02 Ralcorp Board. Prior to the Distribution Date, Ralcorp
shall take such actions as are necessary such that its Board of
Directors is comprised of those individuals named as directors in
the Form 10.
5.03 Contractual Arrangements.
(a) Effective as of the Distribution Date, Ralston and Ralcorp
shall enter into the Tax Sharing Agreement, substantially in the
form attached to this Agreement as Exhibit 5.03(a) ("Tax Sharing
Agreement");
(b) Effective as of the Distribution Date, Ralston and Ralcorp
shall enter into the Corporate Services Bridging Agreement,
substantially in the form attached to this Agreement as Exhibit
5.03(b) ("Bridging Agreement");
(c) Effective as of the Distribution Date, Ralston and Ralcorp
shall enter into the Trademark Agreement, substantially in the
form attached to this Agreement as Exhibit 5.03(d) ("Trademark
Agreement").
(d) Effective as of the Distribution Date, Ralston and Ralcorp
shall enter into the Technology Agreement, substantially in the
form attached to this Agreement as Exhibit 5.03(e) ("Technology
Agreement").
5.04 Intercompany Accounts.
(a) Through and including 11:59 p.m. on the Distribution Date,
Ralston shall continue to employ cash management practices with
respect to the Ralcorp Business consistent with those employed
immediately prior to the date of this Agreement.
(b) All bank accounts used exclusively in the Ralcorp Business,
and the balances therein existing as of 11:59 a.m. on the
Distribution Date, shall be transferred on the Distribution Date
to Ralcorp or its Subsidiaries. All bank accounts used jointly
by such Business and any Ralston Business and balances therein
existing as of the Distribution Date shall remain with Ralston.
Following the Distribution Date, each party shall promptly pay to
the other any amounts collected by it through any of its accounts
to the extent any of such amounts collected relate exclusively to
the Business of the other party, and each party shall promptly
pay, upon notice from the other, any deductions or other
shortfalls in payment with respect to the other's accounts
receivable to the extent such deductions or other shortfalls
relate to promotional programs or operating procedures of such
first party.
(c) All intercompany services provided by the Ralston Group to
the Ralcorp Group shall terminate as of the Distribution Date
unless otherwise provided in the Bridging Agreement or any other
Ancillary Agreement. Effective as of the close of business on
the Distribution Date, all intercompany receivables or payables
and loans then existing between any member of one Group and any
member of the other Group, other than any such receivables or
payables arising out of sales of raw materials, inventories or
other tangible goods from one Group to another which are or would
be treated as trade receivables or payables in the ordinary
course of business, shall be written off by means of
cancellation, capital contribution or dividend, as the case may
be.
5.05 Net Worth Guaranty.
(a) The parties agree and acknowledge that the Net Worth of
Ralcorp (as defined in subsection (c) of this Section 5.05) shall
be $130 million as of 11:59 p.m. on the Distribution Date. If
the Net Worth of Ralcorp as of 11:59 p.m. on the Distribution
Date (as determined in subsection (b) hereof) is less than $130
million, then Ralston shall remit to Ralcorp the amount of such
deficit in the manner described in subsection (d) hereof. If the
Net Worth of Ralcorp is more than $130 million, then Ralcorp
shall remit to Ralston the amount of such excess in the manner
described in subsection (d) hereof.
(b) As soon as reasonably practicable following the
Distribution Date, Ralston (with the assistance and cooperation,
without any charge to Ralston, of personnel employed by Ralcorp
or its affiliates) will prepare and deliver to Ralcorp a
statement of assets and liabilities of Ralcorp setting forth the
Net Worth of Ralcorp as of 11:59 p.m. on the Distribution Date
(the "Net Worth Statement"). The Net Worth Statement shall be
prepared in accordance with generally accepted accounting
principles as applied for year-end reporting purposes, applied
consistently in all material respects with Ralston's accounting
policies and practices in effect as of the Distribution Date,
except as otherwise agreed by the parties. During the period of
ten Business Days following the receipt by Ralcorp of the Net
Worth Statement, Ralcorp shall be permitted to review the
supporting workpapers used to prepare such statement and shall
have such access to personnel of Ralston as may be reasonably
necessary to permit it to review in detail the manner in which
the Net Worth Statement was prepared. On or before the
expiration of such ten Business Day period, Ralcorp shall deliver
a letter to Ralston stating whether it concurs with the Net Worth
Statement and its exceptions thereto ("Disputed Items"), if any,
together with the reasons therefor. As promptly as practicable,
but no later than ten Business Days after receipt of such letter
by Ralston, Ralcorp and Ralston shall attempt to resolve such
objections. If during such ten Business Day period the parties
are able to resolve all Disputed Items, the amount shown on the
Net Worth Statement so agreed upon shall be binding upon the
parties to this Agreement. If during such ten Business Day
period any such Disputed Items cannot be resolved, (i) those
items as to which Ralston and Ralcorp have agreed shall, to the
extent of the amounts agreed upon by the parties, be deemed
agreed upon, shall no longer constitute Disputed Items and shall
be deemed conclusive for purposes of preparing the relevant
statement and (ii) the parties shall promptly thereafter but in
no event more than ten Business Days thereafter cause an
accounting firm, other than Price Waterhouse, of recognized
standing reasonably satisfactory to Ralston and Ralcorp promptly
to review this Agreement and the remaining Disputed Items for
purposes of resolving the remaining Disputed Items and
adjustment, if necessary, of the Net Worth Statement. In making
such calculation, such accounting firm shall make a determination
only of Disputed Items not resolved by the parties and in the
case of all other items shall use the amounts which are agreed
upon by the parties. Such accounting firm shall deliver to
Ralston and Ralcorp, as promptly as practicable, a report setting
forth its resolution of the remaining Disputed Items and its
recommended adjustment of the Net Worth Statement. In making its
determination of such resolution, such accounting firm shall act
as an expert and not as an arbitrator, and such report shall be
final and binding upon the parties hereto. The cost of such
review and report shall be borne equally by Ralston and Ralcorp.
(c) The term "Net Worth" of Ralcorp shall mean the
remainder which results when (i) the dollar amount of the
consolidated liabilities of Ralcorp as of 11:59 p.m. on the
Distribution Date is subtracted from (ii) the sum of the
consolidated depreciated book values of the assets of Ralcorp as
of that time and date. The dollar amount of such consolidated
liabilities and the sum of the consolidated depreciated book
values of such assets shall be determined as if the transfer of
assets and assumption of liabilities described in Section 2.04 of
this Agreement had been completed as of 11:59 p.m. on the
Distribution Date.
(d) Any payment required by subsection (a) of this Section
5.05 shall be due and payable no later than five (5) Business
Days after the Net Worth of Ralcorp is finally determined
pursuant to the provisions of subsection (b) hereof. All
payments made pursuant to subsection (a) shall bear interest from
the Distribution Date up to but not including the date of payment
at a rate of interest per annum equal to the three-month London
InterBank Offered Rate (as designated by Nations Bank) on the
Distribution Date plus 100 basis points. Any such payment shall
be made by bank wire transfer in immediately available funds to
an account which shall be designated in writing by the recipient
not less than two days prior to the due date.
ARTICLE VI
ACCESS TO INFORMATION
6.01 Provision of Corporate Records. Prior to or as
promptly as practicable after the Distribution Date, Ralston
shall deliver to Ralcorp all corporate books and records of
Ralcorp and its Subsidiaries as well as copies or, to the extent
not detrimental in the sole opinion of Ralston to the interests
of Ralston, originals, of all books, records and data relating
exclusively to the Ralcorp Assets, the Ralcorp Business, and the
Liabilities assumed or retained by Ralcorp, including, but not
limited to, all books, records and data relating to the purchase
of materials, supplies and services, financial results, sale of
products, records of the Ralcorp Employees, commercial data,
research done by or for Ralston, catalogues, brochures, training
and other manuals, sales literature, advertising and other sales
and promotional materials, maintenance records and drawings, all
active agreements, active litigation files and government
filings. To the extent that originals of such books, records and
data are provided to Ralcorp, Ralcorp shall provide Ralston
copies thereof as reasonably requested in writing by Ralston.
Notwithstanding the above, Ralston shall provide copies of
customer information, invoices and credit information only to the
extent reasonably requested in writing by Ralcorp, and Ralston
shall provide such copies of all books, records and data only to
the extent that such action is not prohibited by the terms of any
agreements pertaining to such information or is not prohibited by
law. From and after the Distribution Date, all books, records
and copies so delivered shall be the property of Ralcorp.
Notwithstanding the above, Ralston shall not be required to make
copies, other than pursuant to Section 6.02 of this Agreement, of
any books, records and data which are more than five years old or
which relate to events occurring more than five years prior to
the Distribution Date, or of any portion of any books, records or
data to the extent such portion relates exclusively to the
Ralston Assets, the Ralston Business or to Liabilities assumed or
retained by Ralston.
6.02 Access to Information. From and after the Distribution
Date, each of Ralston and Ralcorp shall afford to the other and
to the other's agents, employees, accountants, counsel and other
designated representatives, reasonable access and duplicating
rights during normal business hours to all records, books,
contracts, instruments, computer data and other data and
information ("Information") within such party's possession
relating to such other party's businesses, assets or liabilities,
insofar as such access is reasonably required by such other
party. Without limiting the foregoing, such Information may be
requested under this Section 6.02 for audit, accounting, claims,
litigation and tax purposes, as well as for purposes of
fulfilling disclosure and reporting obligations.
6.03 Retention of Records. Except as otherwise required by
law or agreed in writing, or as otherwise provided in the Tax
Sharing Agreement, each of Ralston and Ralcorp shall retain, for
a period of at least seven years following the Distribution Date,
all significant Information in such party's possession or under
its control relating to the business, assets or liabilities of
the other party and, after the expiration of such seven-year
period, prior to destroying or disposing of any of such
Information, (a) the party proposing to dispose of or destroy any
such Information shall provide no less than 30 days' prior
written notice to the other party, specifying the Information
proposed to be destroyed or disposed of, and (b) if, prior to the
scheduled date for such destruction or disposal, the other party
requests in writing that any of the Information proposed to be
destroyed or disposed of be delivered to such other party, the
party proposing to dispose of or destroy such Information
promptly shall arrange for the delivery of the requested
Information to a location specified by, and at the expense of,
the requesting party.
6.04 Confidentiality. From and after the Distribution Date,
each Group shall hold, in strict confidence, all Information
obtained from the other Group prior to the Distribution Date or
furnished to it pursuant to this Agreement or any other agreement
referred to herein which relates to or concerns the business
conducted by such other Group, and such Information shall not be
used by it to the detriment of the other Group, or disclosed by
it or its agents, officers, employees or directors without the
prior written consent of such other Group unless and to the
extent that (a) disclosure is compelled by judicial or
administrative process or, in the opinion of such Group's
counsel, by other requirements of law, or (b) such Group can show
that such Information was (i) available to such Group on a
nonconfidential basis prior to its disclosure by the other Group,
(ii) in the public domain through no fault of such Group, (iii)
lawfully acquired by such Group from other sources after the time
that it was furnished to such Group pursuant to this Agreement or
any other agreement referred to herein, or (iv) independently
developed by such Group. Notwithstanding the foregoing, each
Group shall be deemed to have satisfied its obligations of
confidentiality under this Section 6.04 with respect to any
Information concerning or supplied by the other Group if it
exercises substantially the same care with regard to such
Information as it takes to preserve confidentiality for its own
similar Information.
6.05 Reimbursement. Each member of any Group providing
Information pursuant to Sections 6.02 or 6.03 to any member of
the other Group shall be entitled to receive from the recipient,
upon presentation of an invoice therefor, payment of all out-of-
pocket costs and expenses as may reasonably be incurred in
providing such Information.
ARTICLE VII
EMPLOYEE BENEFITS; LABOR MATTERS
7.01 Purina Retirement Plans.
(a) Ralcorp shall take, or cause to be taken, all action
necessary and appropriate to establish, effective as of the day
after the Distribution Date, and administer a defined benefit
pension plan which is a Qualified Plan ("Ralcorp Retirement
Plan") and to provide benefits thereunder for all Ralcorp
Individuals who, on the Distribution Date,were participants in,
or otherwise entitled to, benefits under the Purina Retirement
Plan for Sales, Administrative and Clerical Employees or the
Purina Retirement Plan for Production Employees (the "Purina
Retirement Plans"). Ralcorp agrees that each such Ralcorp
Individual shall be, to the extent applicable, entitled, for all
purposes under the Ralcorp Retirement Plan, to be credited with
the term of service and any accrued benefit credited to such
Ralcorp Individual as of the Distribution Date under the terms of
any applicable Purina Retirement Plan as if such service had been
rendered to Ralcorp and as if such accrued benefit had originally
been credited to such Ralcorp Individual under the Ralcorp
Retirement Plan. Ralston agrees to provide Ralcorp, as soon as
practicable after the Distribution Date (with the cooperation of
Ralcorp to the extent that relevant information is in the
possession of the Ralcorp Group), with a list of the Ralcorp
Individuals who were, to the best knowledge of Ralston,
participants in or otherwise entitled to benefits under each
Purina Retirement Plan immediately prior to the Distribution
Date, together with a listing, if requested by Ralcorp, of each
such Ralcorp Individual's term of service for eligibility and
vesting purposes under such Plan and a listing of each such
Ralcorp Individual's accrued benefit thereunder. Ralston shall,
as soon as practicable after the Distribution Date, provide
Ralcorp with such additional information (in the possession of
the Ralston Group and not already in the possession of the
Ralcorp Group) as may be reasonably requested by Ralcorp and
necessary in order for the Ralcorp Group to establish and
administer effectively the Ralcorp Retirement Plan.
(b) Ralston agrees, as soon as practicable following the
Distribution Date, to direct the trustees of the Purina
Retirement Trust to transfer to the trustee or other funding
agent of the Ralcorp Retirement Plan, in cash, securities, other
property or a combination thereof, as reasonably determined by
Ralston and agreed to by Ralcorp, an amount equal to (X) less
(Y), as adjusted by (Z) plus $3 million; where (X) equals the
projected benefit obligations (within the meaning of Statement
No. 87 of the Financial Accounting Standards Board) to the
Ralcorp Individuals as of the Distribution Date pursuant to the
benefit provisions of the Purina Retirement Plans in effect as of
September 30, 1993, as determined by Kwasha Lipton based on the
actuarial assumptions used for the Purina Retirement Plans for
the latest plan year ending prior to the Distribution Date; where
(Y) equals aggregate payments made from the Purina Retirement
Trust relating to the Purina Retirement Plans in respect of
Ralcorp Individuals from the Distribution Date through the date
of complete transfer; and where (Z) equals the amount of the net
earnings or losses, as the case may be, from the Distribution
Date through the date of transfer, on the average of the daily
balances of (X) and (Y) and based upon the actual rate of return
earned by the Purina Retirement Plans during such period.
Notwithstanding the foregoing provisions of this Section 7.01(b),
such transfer shall be adjusted, if and to the extent necessary,
to comply with applicable law and regulations, including Section
414(1) of the Code and the regulations promulgated thereunder.
(c) In connection with the transfers described in this
Section 7.01, Ralcorp and Ralston shall cooperate in making any
and all appropriate filings required under the Code or ERISA, and
the regulations thereunder, and any applicable securities laws
and take all such action as may be necessary and appropriate to
cause such transfers to take place as soon as practicable after
the Distribution Date; provided, however, that each such transfer
shall not take place until as soon as practicable after the later
of (i) the expiration of a 30-day period following the date of
filing any required Forms 5310-A (or any successor form thereto)
with the IRS and (ii) the receipt of a favorable IRS
determination letter with respect to the qualification of the
Ralcorp Retirement Plan under Section 401(a) of the Code or, in
the event that the Ralcorp Retirement Plan is substantially
identical to the Purina Retirement Plans, the receipt by Ralston
of an opinion of counsel retained by Ralcorp and reasonably
satisfactory in form and substance to Ralston to the effect that
such counsel believes the Ralcorp Retirement Plan will be found
by the IRS to be qualified under Section 401(a) of the Code and
that the trust established thereunder is exempt from federal
income tax under Section 501(a) of the Code. Ralston and Ralcorp
agree to provide to such counsel such information in the
possession of the Ralston Group and the Ralcorp Group,
respectively, as may be reasonably requested by such counsel in
connection with the issuance of such opinion. Ralston agrees,
during the period ending with the date of complete transfer of
assets and liabilities to the Ralcorp Retirement Plan, to
administer the Purina Retirement Plans in the ordinary course, in
accordance with plan provisions, as they were operated prior to
the Distribution, except as otherwise set forth in this
Agreement.
(d) Except as specifically set forth in this Section 7.01,
from and after the Distribution Date, the Ralston Group shall
cease to have any liability or obligation whatsoever with respect
to Ralcorp Individuals under the Purina Retirement Plans, and
Ralcorp shall assume and shall be solely responsible for all
liabilities and obligations whatsoever of either Group with
respect to Ralcorp Individuals under the Purina Retirement Plans
and shall be solely responsible for all liabilities and
obligations whatsoever under the Ralcorp Retirement Plan;
provided, however, that Ralston shall either be responsible for
or make all required contributions, no later than the date such
contributions are legally required to be made, in respect of
Ralcorp Individuals with respect to each Purina Retirement Plan
for all prior Plan years and for the portion of the Current Plan
Year ending on the Distribution Date (determined as set forth in
Section 7.01(b)), to the extent not previously made. Ralcorp
agrees that, for a period of five years after the Distribution
Date, it will not terminate the Ralcorp Retirement Plan or any
successor plan.
7.02 401(k) Plans.
(a) Ralcorp shall take, or cause to be taken, all
necessary and appropriate actions to establish, effective as of
the day after the Distribution Date, and administer one or more
defined contribution Plans which will be a Qualified Plan and
which will also be subject to Section 401(k) of the Code
("Ralcorp SIP"), and to provide benefits thereunder for all
Ralcorp Employees who, immediately prior to the Distribution
Date, were participants in the Ralston Purina Company Savings
Investment Plan ("Ralston SIP") or the Ralston Purina Company
Employee Savings Plan for Production Employees ("Ralston ESP").
Ralcorp agrees that each such Ralcorp Employee shall be, to the
extent applicable, entitled, for all purposes under the
appropriate Ralcorp SIP, to be credited with the term of service
and any account balance credited to such Ralcorp Employee as of
the Distribution Date under the terms of the Ralston SIP or the
Ralston ESP as if such service had been rendered to Ralcorp and
as if such account balance had originally been credited to such
Ralcorp Employee under the appropriate Ralcorp SIP. Ralston
agrees to provide Ralcorp, as soon as practicable after the
Distribution Date (with the cooperation of Ralcorp to the extent
that relevant information is in the possession of the Ralcorp
Group), with a list of the Ralcorp Employees who were, to the
best knowledge of Ralston, participants in the Ralston SIP or the
Ralston ESP immediately prior to the Distribution Date, together
with a listing, if requested by Ralcorp, of each such Ralcorp
Employee's term of service for eligibility and vesting purposes
under such Plan and a listing of each such Ralcorp Employee's
account balance thereunder. Ralston shall, as soon as
practicable after the Distribution Date, provide Ralcorp with
such additional information (in the possession of the Ralston
Group and not already in the possession of the Ralcorp Group) as
may be reasonably requested by Ralcorp and necessary in order for
the Ralcorp Group to establish and administer effectively any
Ralcorp SIP. The Ralcorp SIP receiving transfers of accounts
from the Ralston SIP shall contain a "Common Stock Fund" as an
investment alternative for participants, and Ralcorp Employees
for whom account balances are to be transferred to the Ralcorp
SIP from the Ralston SIP, as described below, shall be permitted
to elect to invest such balances, or any portion thereof, in the
Common Stock Fund. Such Ralcorp SIP shall also qualify as an
ESOP, as defined in Section 4975(e)(7) of the Code, and shall
provide a 100% matching contribution for the first 6% of
participant elective deferrals, but participants who were first
employed in either the Ralston Group or the Ralcorp Group after
June 30, 1993, shall receive a match equal to 20% of the match
available to employees first hired prior to that date for each
year of service, up to a maximum 100% match by Ralcorp. Both
matched and matching contributions shall be invested in the
Common Stock Fund.
(b) Ralston agrees, as soon as practicable following the
Distribution Date, to direct the trustees of the Ralston Purina
Company Savings Investment Trust, and of the Trust for the
Ralston ESP, to transfer to the trustee or other funding agent of
the appropriate Ralcorp SIP in cash, securities or other property
or a combination thereof, as reasonably determined by Ralston, an
amount equal to the account balances as of the date of transfer
attributable to the participants and beneficiaries in the Ralston
SIP or the Ralston ESP, as the case may be, who are Ralcorp
Employees, plus the portion of any unallocated contributions and
trust earnings attributable to such participants who are Ralcorp
Employees, other than, with respect to the Ralston SIP, shares of
Ralston's Series A ESOP Convertible Preferred Stock ("ESOP
Stock") held in the Ralston SIP's ESOP suspense account. Such
transfer shall be adjusted, if and to the extent necessary, to
comply with Section 414(l) of the Code and the regulations
promulgated thereunder. At the time determined appropriate by
the appropriate fiduciary of the Ralston SIP, such fiduciary
shall cause shares of ESOP Stock allocated to accounts of Ralcorp
Employees under the Ralston SIP to be converted into or redeemed
for shares of RPG Stock and CBG Stock, as provided by the terms
of the ESOP Stock. Shares of RPG Stock and CBG Stock received by
the Ralston SIP upon such redemption or conversion, as well as
shares of such stocks otherwise held in the Plan with respect to
Ralcorp Employee participant accounts in the RPG Stock Fund and
the CBG Stock Fund, will be transferred directly to the trustee
of the Ralcorp SIP for attribution to respective participant
accounts in that Plan. Shares of Common Stock distributed with
respect to shares of RPG Stock held in the Ralston SIP as of the
Distribution, to the extent attributable to accounts of Ralcorp
Employees, shall be transferred to respective participant
accounts in the Common Stock Fund of the Ralcorp SIP.
(c) In connection with the transfers described in Section
7.02(b), Ralston and Ralcorp shall cooperate in making any and
all appropriate filings required under the Code or ERISA, and the
regulations thereunder, and any applicable securities laws and
take all such action as may be necessary and appropriate to cause
such transfers to take place as soon as practicable after the
Distribution Date; provided, however, that each such transfer
shall not take place until as soon as practicable after the
earlier of (A) the receipt of a favorable IRS determination
letter with respect to the qualification of each applicable
Ralcorp SIP under Section 401(a) of the Code or (B) the receipt
by Ralston of an opinion of counsel retained by Ralcorp and
reasonably satisfactory in form and substance to Ralston to the
effect that such counsel believes the Ralcorp SIP will be found
by the IRS to be qualified under Section 401(a) of the Code and
that each trust established thereunder is exempt from federal
income tax under Section 501(a) of the Code. Ralston and Ralcorp
agree to provide to such counsel such information in the
possession of the Ralston Group and the Ralcorp Group,
respectively, as may be reasonably requested by such counsel in
connection with the issuance of such opinion. Ralston agrees,
during the period ending with the date of complete transfer of
assets and liabilities to the Ralcorp SIP, to administer the
Ralston SIP and the Ralston ESP, in accordance with plan
provisions, and, insofar as it is practical, in the ordinary
course as it was operated prior to the Distribution, except as
otherwise set forth in this Agreement.
(d) Except as specifically set forth in this Section 7.02,
from and after the Distribution Date, Ralston shall cease to have
any liability or obligation whatsoever with respect to Ralcorp
Employees under the Ralston SIP and the Ralston ESP (other than
the obligation to complete the transfer of assets and liabilities
to the Ralcorp SIP described in (c) above) and Ralcorp shall
assume and shall be solely responsible for all liabilities and
obligations whatsoever of either Ralston or Ralcorp with respect
to Ralcorp Employees under the Ralston SIP and the Ralston ESP
and shall be solely responsible for all liabilities and
obligations whatsoever under the Ralcorp SIP; provided, however,
that Ralston shall, in respect of Ralcorp Employees participating
in the Ralston SIP and the Ralston ESP prior to the Distribution,
either be responsible for or make all required contributions, no
later than the date such contributions are legally required to be
made, for all prior Plan years and for the portion of the Current
Plan Year ending on the Distribution Date, to the extent not
previously made.
7.03 Welfare Plans
(a) Ralcorp shall take, or cause to be taken, all actions
necessary and appropriate on behalf of itself and the Ralcorp
Group to adopt such Welfare Plans as necessary to provide welfare
benefits, effective as of the Distribution Date, to Ralcorp
Individuals, including the Plans listed on Schedule 7.03. For
this purpose, with respect to any Ralcorp Individual, Ralcorp or
a member of the Ralcorp Group shall, to the extent applicable,
credit such Ralcorp Individual with the term of service credited
to such Ralcorp Employee as of the Distribution Date under the
terms of the applicable welfare plan maintained by Ralston and
consider such Ralcorp Individual to have satisfied any other
eligibility criteria as of the Distribution Date which such
Ralcorp Employee had satisfied under the terms of the applicable
welfare plan maintained by Ralston as if such service had been
rendered to Ralcorp or the member of the Ralcorp Group and as if
such eligibility criteria had been satisfied while employed by
Ralcorp or the member of the Ralcorp Group. Ralcorp will cause
Ralcorp Individuals to receive credit for payments made under the
Purina Comprehensive Health and Well-Med Plan during the Current
Plan Year for purposes of satisfying the applicable deductibles
and maximum out-of-pocket limits of the applicable Ralcorp
Welfare Plans. In connection with the foregoing, Ralston agrees
to provide Ralcorp or its designated representative with such
information (in the possession of the Ralston Group and not
already in the possession of the Ralcorp Group) as may be
reasonably requested by Ralcorp and necessary for the Ralcorp
Group to establish any such Welfare Plan.
(b) Except as otherwise noted in this Section 7.03, Ralcorp
shall assume, or cause one or more members of the Ralcorp Group
to assume, and shall be solely responsible for, or cause its
insurance carriers or agents to be responsible for, all welfare
benefit claims incurred by Ralcorp Individuals under the Ralcorp
Welfare Plans described above in which such Ralcorp Individuals
are eligible to, and elect to, participate on or after 11:59 p.m.
on the Distribution Date. Ralston shall retain liability for
welfare benefit claims incurred by Ralcorp Individuals under the
Purina Comprehensive Health and Well-Med Plan or other Ralston
Welfare Plans before 11:59 p.m. on the Distribution Date. For
purposes of this Section 7.03, medical and dental services are
incurred when the Ralcorp Individual is provided with medical or
dental care; death benefit claims are incurred at the time of
death of the insured notwithstanding any other provision of any
welfare benefit plan to the contrary. As of 11:59 p.m. on the
Distribution Date, Ralcorp Employees will cease participating in
Welfare Plans maintained by any member of the Ralston Group,
except to the extent they elect continued coverage under
Ralston's health benefit plans pursuant to the Consolidated
Omnibus Budget Reconciliation Act.
(c) Ralston and the Ralston Group shall be responsible for
any retiree medical and life insurance benefits payable under any
Welfare Plans of Ralston and the Ralston Group on or after the
Distribution Date with respect to any Ralcorp Employees who have
retired from the Ralcorp Group or the Ralston Group on or before
the Distribution Date and who have met the eligibility
requirements for such benefits at that time. Ralcorp Employees
who retire from the Ralcorp Group after the Distribution Date
shall not be entitled to retiree medical and life insurance
benefits from such Welfare Plans of Ralston and the Ralston
Group. For purposes of this subsection, the distribution of
ownership of the Ralcorp Group to shareholders of RPG Stock shall
not be deemed a termination of employment of Ralcorp Employees.
7.04 Stock Options and Restricted Stock.
(a) Effective immediately after the Distribution Date, the
number of shares of RPG Stock subject to, and the exercise price
of, each non-qualified option to acquire RPG Stock granted
pursuant to the terms of the ISP ("RPG Option") which immediately
prior to the Record Date is outstanding and not exercised shall
be adjusted by Ralston in order to reflect the difference in the
fair market value of the RPG Stock attributable to the
Distribution, in accordance with the requirements of Section 424
of the Code and the regulations promulgated thereunder, based
upon (i) the average of the closing prices on the NYSE Composite
Index for the RPG Stock, trading regular way with due bills for
the Common Stock, for the ten trading day period prior to the
Distribution Date and (ii) the average of the closing prices on
the NYSE Composite Index for the RPG Stock, trading regular way,
for the ten day trading period following the Distribution Date.
(b) Effective as of the Distribution Date, Ralcorp shall
award each Ralcorp Employee holding an outstanding and
unexercised RPG Option or non-qualified option to acquire shares
of CBG Stock granted pursuant to the terms of the ISP ("CBG
Option") immediately following the Distribution an option to
purchase shares of Common Stock, with the number of shares of
Common Stock subject to, and the exercise price of, such option
to be based upon (i) the number of shares of RPG Stock or CBG
Stock, as the case may be, subject to , and the exercise price
of, such RPG Option or CBG Option, (ii) the average of the
closing prices on the NYSE Composite Index for the RPG Stock,
trading regular way with due bills for Common Stock, or the CBG
Stock, as the case may be, for the ten trading day period prior
to the Distribution Date and (iii) the average of the closing
prices on the NYSE Composite Index for the Common Stock for the
ten trading day period commencing on the date on which the Common
Stock is first traded regular way on the NYSE following the
Distribution Date. The exercise price of any such option to
purchase shares of Common Stock shall be rounded to the nearest
whole cent; the number of shares subject to any such option shall
be rounded to the nearest share. All RPG Options and CBG Options
held by Ralcorp Employees immediately following the Distribution
shall, pursuant to the terms thereof, be forfeited six months
following the Distribution if not exercised prior thereto.
(c) Restricted shares of RPG Stock or CBG Stock awarded
pursuant to the ISP and held by Ralcorp Employees (other than the
officers of Ralcorp (the "Ralcorp Officers") listed on Schedule
7.04 attached hereto) immediately prior to the Distribution, and
restricted dividend and interest accounts with respect thereto,
shall, pursuant to the terms of such awards, be forfeited as of
the Distribution. As soon as practicable following the
Distribution, Ralcorp shall award to such Ralcorp Employees
restricted shares of Common Stock which are equal in value to the
restricted shares of RPG Stock and CBG Stock so forfeited, along
with accrued dividends and interest, based upon (i) the average
closing prices on the NYSE Composite Index for the RPG Stock and
the CBG Stock, trading regular way for the ten trading day period
prior to the Distribution Date, and (ii) the average closing
price on the NYSE Composite Index for the Common Stock for the
ten trading day period commencing on the date on which the Common
Stock is first traded regular way on the NYSE following the
Distribution Date. Such restricted shares of Common Stock shall
be subject to the same restrictions on vesting to which the
restricted shares of RPG Stock and CBG Stock so forfeited are
subject. Restricted shares of RPG Stock or CBG Stock awarded
pursuant to the ISP and held by the Ralcorp Officers immediately
prior to the Distribution shall vest and be freed of restrictions
as of the Distribution and shall immediately thereafter be
exchanged for nonrestricted shares of Common Stock pursuant to
Section 3.02 of this Agreement.
7.05 Deferred Compensation Plans. Prior to the Distribution
Date, Ralcorp will establish a Deferred Compensation Plan for Key
Employees, a Supplemental Retirement Plan and an Executive
Savings Investment Plan, which plans shall be non-qualified
unfunded deferred compensation plans ("Ralcorp Deferred
Compensation Plans"). As of the Distribution Date, account
balances of Ralcorp Employees in the Equity and Variable Interest
Options of the Ralston Purina Deferred Compensation Plan for Key
Employees as well as account balances of Ralcorp Employees in the
Ralston Purina Supplemental Retirement Plan and the Ralston
Purina Company Executive Savings Investment Plan ("Ralston
Deferred Compensation Plans") will be converted to account
balances under the Ralcorp Deferred Compensation Plans, and
Ralcorp shall assume sole liability therefor. Accounts in the
Ralston Deferred Compensation Plans reflecting the performance of
RPG Stock, CBG Stock or ESOP Stock, including dividend
equivalents and fractional stock equivalents, will, as
appropriate, be valued based upon the average of the high and low
trading prices on the NYSE Composite Index for the RPG Stock and
the CBG Stock, trading regular way, for the ten trading day
period ending on the last NYSE trading day prior to the
Distribution Date, and such values shall be credited to accounts
in the Ralcorp Deferred Compensation Plans reflecting the
performance of Common Stock, based upon the average of the high
and low trading prices of the Common Stock on the NYSE Composite
Index for the ten trading day period commencing on the first NYSE
trading day following the Distribution Date on which the Common
Stock trades regular way. After the Distribution Date, Ralcorp
shall be responsible for the payment of all liabilities and
obligations for benefits unpaid with respect to all Ralcorp
Employees under the Ralcorp Deferred Compensation Plans, the
Ralston Purina Executive Savings Investment Plan and the Equity
and Variable Interest Options of the Ralston Purina Deferred
Compensation Plan for Key Employees, and Ralston shall cease to
have any liability with respect thereto. The responsibility of
Ralcorp for such payment shall be subject to the receipt by
Ralcorp of an opinion of counsel reasonably satisfactory in form
and substance to Ralston and Ralcorp to the effect that such
assumption of liabilities shall not result in the constructive
receipt for tax purposes by participants of account balances so
transferred to the Ralcorp Deferred Compensation Plans and that
payments made by Ralcorp in satisfaction of such liability shall
be deductible by Ralcorp for federal income tax purposes. With
respect to account balances of Ralcorp Employees in the Fixed
Benefit Option of the Ralston Purina Company Deferred
Compensation Plan for Key Employees, Ralston shall retain
liability for all unpaid benefits, obligations and liabilities
with respect thereto. For purposes of the Ralston Deferred
Compensation Plans, individuals who, in connection with the
Distribution, cease to be employees of Ralston or the Ralston
Group and become Ralcorp Employees shall not be deemed to have
terminated employment for purposes of any deferral elections made
by such individuals, and service with Ralcorp shall be deemed
continuous service with Ralston or the Ralston Group.
Notwithstanding the preceding sentence, Ralcorp Employees shall
be deemed to have involuntarily terminated their employment with
Ralston for purposes of determining their entitlement to
Retirement Income Benefits under the Fixed Benefit Option of the
Ralston Purina Company Deferred Compensation Plan for Key
Employees.
7.06 Life Insurance Programs.
(a) Partnership Life Insurance Plan. Ralcorp Individuals
who, immediately prior to the Distribution Date, were
participants in or otherwise entitled to benefits under the
Ralston Partnership Life Insurance Plan, will, as of the
Distribution Date, be treated as terminated employees for
purposes of such Ralston Partnership Life Insurance Plan, and
will be afforded all rights and benefits to which all terminated
employees are entitled under the terms of such Plan. Ralston
will retain ownership of any individual life insurance contracts
then insuring the life of any Ralcorp Employee in accordance with
the terms of the Partnership Life Insurance Plan.
(b) Split-Dollar Second-To-Die Life Insurance Contracts.
On the Distribution Date, Ralston shall relinquish all rights
under any Split Dollar Second-To-Die Life Insurance policies
currently insuring the lives of any Ralcorp Employee and his or
her spouse, including but not limited to rights to any portion of
the cash value or death benefits under such policies, created in
accordance with the terms of the Split Dollar Agreement and
Collateral Assignment between Ralston and such employee regarding
such policies, and will take all reasonable steps necessary to
assign such rights to Ralcorp. Prior to the Distribution Date,
Ralston shall perform any and all obligations required of it
under the terms of such Split Dollar Agreement and Collateral
Assignment with respect to such policies.
7.07 Vacation Pay. Ralcorp will assume all liability for
unpaid vacation pay accrued by Ralcorp Employees prior to the
Distribution Date. After the Distribution Date, Ralston will
have no liability for vacation pay for Ralcorp Employees.
7.08 Severance Pay.
(a) Ralston and Ralcorp agree that, with respect to
individuals who, in connection with the Distribution, cease to be
employees of the Ralston Group and become employees of the
Ralcorp Group, such cessation shall not be deemed a severance of
employment from either Group for purposes of any Plan that
provides for the payment of severance, salary continuation or
similar benefits and shall, in connection with the Distribution,
if and to the extent appropriate obtain waivers from individuals
against any such assertion.
(b) The Ralston Group shall assume and be solely
responsible for all liabilities and obligations whatsoever in
connection with claims made by or on behalf of Ralston
Individuals and the Ralcorp Group shall assume and be solely
responsible for all liabilities and obligations whatsoever in
connection with claims made by or on behalf of Ralcorp
Individuals in respect of severance pay, salary continuation and
similar obligations relating to the termination or alleged
termination of any such person's employment either before, to the
extent unpaid, or on or after the Distribution Date.
7.09 Collective Bargaining Agreements. As of the
Distribution Date Ralston and the Ralston Group shall cease to
have any liability or obligation whatsoever with respect to
Ralcorp Employees under any of the collective bargaining
agreements listed on Schedule 7.09.
7.10 Other Balance Sheet Adjustments. To the extent not
otherwise provided in this Agreement, Ralston and Ralcorp shall
take such action as is necessary to effect an adjustment to the
books of Ralston and Ralcorp so that, as of the Distribution
Date, the prepaid expense balances and accrued employee
liabilities with respect to any employee liability or obligation
assumed or retained as of the Distribution Date by the Ralston
Group or the Ralcorp Group are appropriately reflected on the
consolidated balance sheets as of the Distribution Date of
Ralston and Ralcorp, respectively.
7.11 Preservation of Rights to Amend or Terminate Plans.
Subject to the provisions of Article VII hereof, no provision of
this Agreement, including the agreement of Ralston or Ralcorp
that it, or any member of the Ralston Group or the Ralcorp Group,
will make a contribution or payment to or under any Plan herein
referred to for any period, shall be construed as a limitation on
the right of Ralston or Ralcorp or any member of the Ralston
Group or the Ralcorp Group to amend such Plan or terminate its
participation therein which Ralston or Ralcorp or any member of
the Ralston Group or the Ralcorp Group would otherwise have under
the terms of such Plan or otherwise, and no provision of this
Agreement shall be construed to create a right in any employee or
former employee or beneficiary of such employee or former
employee under a Plan which such employee or former employee or
beneficiary would not otherwise have under the terms of the Plan
itself. Notwithstanding the above, however, Ralcorp agrees that
it shall not make or cause to be made any amendments to any Plan,
nor shall it terminate any Plan, in a manner which would violate
the covenants set forth in this Agreement, except as may be
required to comply with applicable law, but subject to the
provisions of Article VII hereof.
7.12 Reimbursement; Indemnification. Each of the parties
hereto acknowledges that the Ralston Group, on the one hand, and
the Ralcorp Group, on the other hand, may incur costs and
expenses (including contributions to Plans and the payment of
insurance premiums) arising from or related to any of the Plans
which are, as set forth in this Agreement, the responsibility of
the other party hereto. Notwithstanding anything in this Section
7.12 to the contrary, (1) Ralcorp shall reimburse Ralston and, as
applicable, the trustees of the Purina Retirement Plans, for
costs and expenses or other liabilities they may incur after the
Distribution Date which arise out of (a) action taken by the
Pension Benefit Guaranty Corporation (PBGC) or an agreement
reached between Ralston or the trustees of the Purina Retirement
Plans and the PBGC relating to the funded status of, or payment
of benefits by, the Ralcorp Retirement Plan or any successor plan
or plans, or (b) the termination of the Ralcorp Retirement Plan
or any successor plan prior to the expiration of five years after
the Distribution Date; and (2) costs and expenses or other
recovery arising from any challenge by the IRS pursuant to
Section 414(l) of the Code, in connection with the calculation of
assets and liabilities to be transferred as set forth in Section
7.01, shall not be subject to reimbursement or indemnification
under this Agreement. Ralston and Ralcorp agree to reimburse
each other, as soon as practicable but in any event within 30
days of receipt from the other party of appropriate verification,
for all such costs and expenses.
7.13 Further Transfers. For a period of six months
following the Distribution Date, no member of either Group shall,
directly or indirectly, without the prior written consent of a
corporate officer of the other Group, solicit or attempt to
solicit any employee or officer of such other Group for the
purpose of obtaining his or her services for hire, or otherwise
causing such employee to leave employment with such other Group,
and no member of either Group, without the prior written consent
of a corporate officer of the other Group, will, for such period
of six months, hire such employee or officer; provided, however,
if the employment of any officer or employee of one Group is
terminated by that Group at any time following the Distribution,
a member of the other Group may employ such person without the
consent of the other Group. Subject to the above sentence,
Ralston and Ralcorp recognize that there may be Ralcorp Employees
who will, after the Distribution, become employed by Ralston and
there may be Ralston Employees who become employed, after the
Distribution Date, by Ralcorp. With respect to such employees in
the following categories, the assets and liabilities which are
associated with the plans and programs described in this
Agreement will be transferred and assumed in a manner consistent
with this Agreement: (a) employees transferring within six
months of the Distribution Date directly from one Group to the
other and (b) with respect to employees who are performing
services pursuant to the Bridging Agreement, those who transfer
to the other Group within thirty days of the expiration of the
period during which such individual performed such bridging
services.
7.14 Other Liabilities. As of the Distribution Date,
Ralcorp shall assume and be solely responsible for all
Liabilities whatsoever of the Ralston Group with respect to
claims made by Ralcorp Individuals relating to any Liability not
otherwise expressly provided for in this Agreement, including
earned salaries, wages, severance payments or other compensation,
regardless of whether such Liability was incurred before or after
the Distribution Date.
7.15 Compliance. Notwithstanding anything to the contrary
in this Article VII, to the extent any actions of the parties
contemplated in this Article are determined prior to the
Distribution to violate law or result in unintended tax liability
for Ralston Individuals or Ralcorp Individuals, such action may
be modified to avoid such violation of law or unintended tax
liability.
7.16 Agreement of Parties Notwithstanding anything herein
to the contrary, the agreements contained in this Article VII
shall be binding only as between the parties to this Agreement,
no Ralston Individual or Ralcorp Individual or other person shall
have any right with respect to any such agreement, and no person
other than the parties to this Agreement shall have any rights to
enforce any provision hereof.
ARTICLE VIII
POST-DISTRIBUTION OBLIGATIONS
8.01 Ralcorp Post-Distribution Obligations. Ralcorp shall,
and shall cause each member of the Ralcorp Group to, comply with
each representation and statement made, or to be made, to the
Internal Revenue Service (the "IRS") in connection with any
ruling obtained, or to be obtained, by Ralston, from the IRS with
respect to any transaction contemplated by this Agreement.
Neither Ralcorp nor any member of the Ralcorp Group shall for a
period of two years following the Distribution Date engage in any
of the following transactions, unless, in the sole discretion of
Ralston, either (a) an opinion in form and substance satisfactory
to Ralston is obtained from counsel to Ralcorp, the selection of
which counsel is agreed to by Ralston or (b) a supplemental
ruling is obtained from the IRS, in either case to the effect
that such transactions would not adversely affect the tax
consequences of the contributions, transfers, assumptions, Merger
and Distribution described in Articles II and III of this
Agreement to (1) Ralston or any member of the Ralston Group, (2)
Ralcorp or any member of the Ralcorp Group, or (3) the Ralston
shareholders. The transactions subject to this provision are:
(i) making a material disposition (including transfers from one
member of the Ralcorp Group to another member of the Ralcorp
Group), by means of a sale or exchange of assets or capital
stock, a distribution to shareholders, or otherwise, of any of
its assets (other than the transactions contemplated by this
Agreement) except in the ordinary course of business; (ii)
repurchasing any Ralcorp capital stock, unless such repurchase
satisfies the requirements of Section 4.052 of Revenue Procedure
86-41, as modified by Revenue Procedure 91-63; (iii) issuing any
Ralcorp capital stock that in the aggregate exceeds ten percent
(10%) of the issued and outstanding stock of Ralcorp immediately
following the Distribution; (iv) liquidating or merging with any
other corporation (including a member of the Ralcorp Group); or
(v) ceasing to engage in the active conduct of a trade or
business within the meaning of Section 355(b)(2) of the Code.
Ralcorp hereby represents that neither Ralcorp nor any member of
the Ralcorp Group has any present intention to undertake any of
the transactions set forth in (i), (ii), (iii), (iv) or (v)
above.
8.02 Ralston Post-Distribution Obligations. Ralston shall,
and shall cause each member of the Ralston Group to, comply with
each representation and statement made, or to be made, to the IRS
in connection with any ruling obtained, by Ralston, from the IRS
with respect to any transaction contemplated by this Agreement.
8.03 Indemnification of Shareholders. In the event that
Ralston or Ralcorp breaches or violates any covenant made in this
Article VIII, the breaching party shall indemnify and hold
harmless all shareholders of Ralston as of the Record Date
against and in respect of any and all costs, expenses,
deficiencies, litigation, proceedings, taxes, levies,
assessments, attorneys' fees, damages or judgments of any kind or
nature whatsoever, related to, arising from, or associated with
such breach or violation.
ARTICLE IX
NO REPRESENTATIONS OR WARRANTIES; EXCEPTIONS
Ralcorp understands and agrees that, except as set forth in
Article VIII, no member of the Ralston Group is, in this
Agreement or in any Ancillary Agreement or other agreement or
document, implicitly or explicitly representing or warranting to
Ralcorp in any way as to the Ralcorp Assets, the Ralcorp Business
or the Liabilities of the Ralcorp Group or as to any consents or
approvals required in connection with the consummation of the
transactions contemplated by this Agreement, it being agreed and
understood that the Ralcorp Group shall take all of the Ralcorp
Assets "as is, where is" and that, except as provided in Section
5.01, the Ralcorp Group shall bear the economic and legal risk
that conveyances of the Ralcorp Assets shall prove to be
insufficient or that the title of any member of the Ralcorp Group
to any Ralcorp Assets shall be other than good and marketable and
free from encumbrances.
ARTICLE X
GUARANTEES AND SURETY BONDS OF RALSTON
Ralcorp agrees that as soon as practicable following the
Distribution Date it will substitute surety bonds obtained by it
for each of the surety bonds of any member of the Ralston Group,
if any, relating to any Ralcorp Asset, the Ralcorp Business or
any Liability assumed by Ralcorp hereunder. Ralcorp agrees that
it shall enter indemnification agreements in its name with each
provider of a surety bond obtained with respect to the Ralcorp
Assets, the Ralcorp Business or any Liability assumed by Ralcorp.
Ralcorp shall use its best efforts to obtain the complete release
and discharge of any member of the Ralston Group from all
obligations (including any obligations upon any renewal or
extension) related to the Ralcorp Assets, the Ralcorp Business or
any Liability assumed by Ralcorp on which any member of the
Ralston Group is directly or contingently obligated as a
guarantor or assignor or otherwise contingently liable
(including, without limitation, any letter of credit, guaranties
with respect to workers' compensation liabilities, guarantees of
industrial revenue bonds, and guarantees issued in connection
with the construction and financing of the Princeton, Kentucky
manufacturing facility) (the "Ralcorp Obligations"). In the
event that Ralcorp is unable to obtain any such release, Ralcorp
agrees that (i) it shall not extend the term or otherwise modify
any such Ralcorp Obligation in a manner which would expand
Ralston's financial exposure under such Ralcorp Obligation, (ii)
it shall use its best efforts to substitute itself or another
member of the Ralcorp Group as primary guarantor of such Ralcorp
Obligations, and (iii) Ralcorp or any member of the Ralcorp Group
shall not assign any such Ralcorp Obligation or transfer, sell or
assign any assets securing such Ralcorp Obligation or comprising
all or any substantial portion of a project, the financing of
which gave rise to such Ralcorp Obligation, unless Ralston or the
appropriate member of the Ralston Group, as the case may be, is
released and discharged of all liabilities with respect to such
Ralcorp Obligation. Without limiting any other obligation of
indemnification under this Agreement or any agreement described
herein, Ralcorp shall defend, indemnify and hold harmless each
member of the Ralston Group and their respective Affiliates,
Subsidiaries, directors, officers and employees against any and
all Liabilities whatsoever incurred or suffered by any of them as
a result of any Ralcorp Obligation. The term "best efforts" as
used in this paragraph shall not be deemed to require Ralcorp to
(i) prepay any such Ralcorp Obligation (ii) agree to any increase
in amount of principal payments or interest with respect thereto
or (iii) extend or accelerate the term of any such Ralcorp
Obligation.
ARTICLE XI
ARBITRATION
11.01 Resolution by Negotiation; Arbitration. If any
question shall arise in regard to the interpretation of any
provision of this Agreement or any Ancillary Agreement or as to
the rights or obligations of either Group hereunder or
thereunder, each Group shall designate a senior executive within
its organization who shall, within thirty days after such
question arises, meet with each other to negotiate and attempt to
resolve such question in good faith. Such senior executives may,
if they so desire, consult outside advisors for assistance in
arriving at such a resolution. In the event that a resolution is
not achieved within such thirty day period, then the question
shall be finally resolved by binding arbitration. This agreement
to arbitrate shall continue in full force and effect despite the
expiration, rescission or termination of this Agreement. All
arbitration shall be undertaken pursuant to the Federal
Arbitration Act, and the decision of the arbitrator(s) shall be
enforceable in any court of competent jurisdiction. The parties
knowingly and voluntarily waive their rights to have their
dispute tried and adjudicated by a judge or jury. The
arbitrator(s) shall apply the law of the State of Missouri and
the arbitration shall be held in St. Louis, Missouri.
11.02 Demand for Arbitration. Either Group may demand
arbitration by sending written notice to the other Group. The
arbitration and the selection of the arbitrator(s) shall be
conducted in accordance with such rules as may be agreed upon by
both Groups, or, failing agreement within thirty days after
arbitration is demanded under the Commercial Arbitration Rules of
the American Arbitration Association ("AAA"), as such rules may
be modified by this Agreement. In any dispute which involves
more than $100,000 in damages, three arbitrators shall be used.
Unless the parties agree otherwise, they shall be limited in
their discovery to directly relevant documents. Responses or
objections to a document request shall be served twenty days
after receipt of the request. The arbitrator(s) shall resolve
any discovery dispute.
11.03 Authority of Arbitrator(s). The arbitrator(s)
shall have the authority to award actual money damages (with
interest on unpaid amounts from the date due), but the
arbitrator(s) shall not have the authority to award exemplary or
punitive damages, and each Group expressly waives any claimed
right to such damages. The costs of arbitration, including the
costs and expenses of each Group, shall be paid as directed by
the arbitrator(s). If a group fails to proceed with arbitration,
unsuccessfully challenges the arbitration award, or fails to
comply with the arbitration award, the other Group shall be
entitled to costs, including attorneys' fees, for having to
compel arbitration or enforce the award.
ARTICLE XII
MISCELLANEOUS
12.01 Conditions to the Distribution.
(a) The obligation of Ralston to make the Distribution is
subject to the satisfaction of each of the following conditions:
(i) The transactions contemplated by Article II shall
have been consummated in all material respects;
(ii) Ralston shall have received rulings from the IRS,
in form and substance satisfactory to Ralston's tax counsel and
independent auditors, that the contributions, transfers,
assumptions, Merger and Distribution described in Articles II and
III of this Agreement will not be subject to federal income
taxation at the corporate or shareholder level;
(iii) The Common Stock and associated Rights shall
have been approved for listing on the NYSE, subject to official
notice of issuance;
(iv) The Form 10 shall have been filed with the SEC
and shall have become effective, and no stop order with respect
thereto shall be in effect;
(v) All authorizations, consents, approvals and
clearances of all federal, state, local and foreign governmental
agencies required to permit the valid consummation by the parties
hereto of the transactions contemplated by this Agreement shall
have been obtained; and no such authorization, consent, approval
or clearance shall contain any conditions which would have a
material adverse effect on (A) the Ralston Business or the
Ralcorp Business, (B) the Assets, results of operations or
financial condition of the Ralston Group or the Ralcorp Group, in
each case taken as a whole, or (C) the ability of Ralston or
Ralcorp to perform its obligations under this Agreement; and all
statutory requirements for such valid consummation shall have
been fulfilled;
(vi) Ralston shall have provided the NYSE with the
prior written notice of the Record Date required by Rule 10b-17
of the Exchange Act and the rules and regulations of the NYSE;
(vii) No preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent
jurisdiction or by a government, regulatory or administrative
agency or commission, and no statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority, shall be in effect preventing the payment of the
Distribution;
(viii) The Distribution shall be payable in accordance
with applicable law;
(ix) All necessary consents, waivers or amendments to
each bank credit agreement, debt security or other financing
facility to which any member of the Ralston Group or the Ralcorp
Group is a party or by which any such member is bound shall have
been obtained, or each such agreement, security or facility shall
have been refinanced, in each case on terms satisfactory to
Ralston and Ralcorp and to the extent necessary to permit the
Distribution to be consummated without any material breach of the
terms of such agreement, security or facility; and
(x) One or more members of the Ralcorp Group shall
have been substituted, as of the Distribution Date in respect of
all Ralston Group debt obligations assumed by Ralcorp or another
member of the Ralcorp Group pursuant to this Agreement.
(b) Any determination made by the Ralston Board in good
faith concerning the satisfaction or waiver of any or all of the
conditions set forth in Section 12.01(a) shall be conclusive.
12.02 Covenant Not To Compete. Except as may be
otherwise agreed by the parties hereto, for a period of five
years commencing on the Distribution Date, no member of the
Ralston Group shall engage, directly or indirectly, in the
production, distribution or sale of cereals or cereal based
salted snack products in the Ralcorp Group Territory, and no
member of the Ralcorp Group shall engage, directly or indirectly,
in the production, distribution or sale of cereals or cereal
based salted snack products in the Ralston Group Territory. For
purposes of this Section, a party shall be deemed to be engaged
indirectly in the production of such products in the territory if
it purchases such products, pursuant to a co-packing or other
similar pertinent arrangement, from a third party who
manufacturers the product in such territory. Without intending
to limit the remedies available to any aggrieved party hereunder,
the parties to this Agreement agree that damages at law would be
an insufficient remedy in the event of breach by the other party
and that the aggrieved party shall be entitled to injunctive
relief or other equitable remedies in the event of such breach.
12.03 Survival of Agreements. All covenants and
agreements of the parties hereto contained in this Agreement
shall survive the Distribution Date.
12.04 Entire Agreement. This Agreement, the Exhibits
and Schedules hereto and the Ancillary Agreements shall
constitute the entire agreement between the parties hereto with
respect to the subject matter hereof superseding all previous
negotiations, commitments and writings with respect to such
subject matter. To the extent that the provisions of this
Agreement are inconsistent with the provisions of any Ancillary
Agreement, the provisions of such Ancillary Agreement shall
prevail.
12.05 Expenses. Except as otherwise provided in this Agreement
and the other agreements referred to herein, each party shall pay
all of its costs and expenses (including attorneys' and
accountants' fees, legal costs and expenses) incurred in
connection with this Agreement and the consummation of the
transactions contemplated hereby.
12.06 Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the
State of Missouri, without regard to its conflicts of law
principles, as to all matters, including matters of validity,
construction, effect, performance and remedies.
12.07 Notices. All notices, requests, claims, demands and other
communications hereunder (collectively, "Notices") shall be in
writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by cable, telegram,
telex, facsimile or other standard form of telecommunications, or
by registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
If to a member of the Ralston Group:
Ralston Purina Company
Checkerboard Square
St. Louis, Missouri 63164
Attention: General Counsel
If to a member of the Ralcorp Group:
Ralcorp Holdings, Inc.
901 Chouteau Ave.
St. Louis, Missouri 63102
Attention: General Counsel
or to such other address as either Group may have furnished to
the other Group by a notice in writing in accordance with this
Section 12.05.
12.08 Amendment and Modification. This Agreement may be amended,
modified or supplemented, and rights hereunder may be waived,
only by a written agreement signed by Ralston and Ralcorp. No
waiver of any term, provision or condition of or failure to
exercise or delay in exercising any rights or remedies under this
Agreement, in one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of such term,
provision, condition, right or remedy or as a waiver of any other
term, provision or condition of, or right or remedy under, this
Agreement.
12.09 Successors and Assigns; No Third-Party Beneficiaries. This
Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of each Group and their respective
successors and permitted assigns, but neither this Agreement nor
any of the rights, interests and obligations hereunder shall be
assigned by either Group without the prior written consent of the
other Group (which consent shall not be unreasonably withheld).
Except for the provisions of Sections 4.02 and 4.03 relating to
Indemnities, which are also for the benefit of the Indemnitees,
this Agreement is solely for the benefit of each Group and is not
intended to confer upon any other Person any rights or remedies
hereunder.
12.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
12.11 Interpretation.
(a) The Article and Section headings contained in this Agreement
are solely for the purpose of reference, are not part of the
agreement of the parties hereto and shall not in any way affect
the meaning or interpretation of this Agreement.
(b) The parties hereto intend that, for federal income tax
purposes, the contributions, transfers, assumptions, Distribution
and Merger contemplated hereby shall qualify for non-recognition
treatment under Sections 351, 354, 355, 357(a), 368(a)(1)(A) and
368(a)(1)(D) of the Code.
12.12 Legal Enforceability. Any provision of this Agreement or
any of the Ancillary Agreements which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. Each party acknowledges
that money damages would be an inadequate remedy for any breach
of the provisions of this Agreement or any of the Ancillary
Agreements and agrees that the obligations of the parties
hereunder and thereunder shall be specifically enforceable.
12.13 References; Construction. References to any "Article",
"Exhibit", "Schedule" or "Section", without more, are to
Articles, Exhibits, Schedules and Sections to or of this
Agreement. Unless otherwise expressly stated, clauses beginning
with the term "including" set forth examples only and in no way
limit the generality of the matters thus exemplified.
12.14 Termination. Notwithstanding any provision hereof, this
Agreement may be terminated and the Distribution abandoned at any
time prior to the Distribution Date by and in the sole discretion
of the Ralston Board without the approval of any other party
hereto or of Ralston's shareholders. In the event of such
termination, no party hereto shall have any Liability to any
Person by reason of this Agreement.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
RALCORP HOLDINGS, INC. RALSTON PURINA COMPANY
By:___________________ By:________________________
RALSTON PURINA INTERNATIONAL, INC.
By:______________________________
VCS HOLDING COMPANY, INC.
By:___________________________
TAX SHARING AGREEMENT
BETWEEN
RALSTON PURINA COMPANY
AND
RALCORP HOLDINGS, INC.
THIS AGREEMENT (the "Agreement") dated as of March 31, 1994, is
made by and between RALSTON PURINA COMPANY ("Ralston"), and
RALCORP HOLDINGS, INC. ("Ralcorp").
WHEREAS, Ralston is the common parent of an affiliated group of
corporations (such subsidiaries hereinafter referred to
collectively as the "Ralston Subsidiaries" and individually as a
"Ralston Subsidiary", and such affiliated group shall be
referred to as the "Ralston Group") within the meaning of Section
1504(a) of the U. S. Internal Revenue Code of 1986, as amended
(the "Code"), which includes Ralcorp;
WHEREAS, Ralcorp will become the common parent of an affiliated
group of domestic corporations (such subsidiaries hereinafter
referred to collectively as the "Ralcorp Subsidiaries" and
individually as a "Ralcorp Subsidiary", and such affiliated
group shall be referred to as the "Ralcorp Group");
WHEREAS, Ralston proposes that it will distribute to its
shareholders all of its stock in Ralcorp under the Agreement and
Plan of Reorganization between Ralston and Ralcorp dated March
31, 1994 (the "Distribution Agreement") on March 31, 1994, (the
"Distribution Date") subject to receipt of a favorable ruling
from the Internal Revenue Service ("IRS") that the distribution
qualifies as a tax-free distribution of stock of a controlled
corporation under Section 355 of the Code;
WHEREAS, the Ralcorp Group will be independent of the Ralston
Group after the public stock distribution; and
WHEREAS, Ralston and its Subsidiaries have previously elected to
file consolidated federal income tax returns ("Consolidated
Return") and filed various state and local tax returns and wish
to make provisions therefor and to agree with respect to certain
other tax matters;
NOW, THEREFORE, in consideration of the premises and of the
agreements herein set forth, Ralston, (on its own behalf and on
behalf of its subsidiaries) and Ralcorp (on its own behalf and on
behalf of its subsidiaries), hereby agree as follows:
ARTICLE I. GENERAL PROVISIONS
Sec. 1. Responsibilities
Except as otherwise provided herein, Ralston is and will be
responsible for all federal, state, local, transfer and foreign
taxes which are attributable to its businesses and the businesses
of the Ralcorp Group for any period ending on or before the
Distribution Date (the "Periods"), including any such liabilities
resulting from the audit or other adjustment to previously filed
tax returns. Ralcorp will be responsible for all federal, state,
local, transfer and foreign taxes attributable to the businesses
of the Ralcorp Group after the Distribution Date.
Sec. 2. Tax Adjustments and Net Worth Determination
Ralston and Ralcorp recognize that since the Distribution Date
will occur on some date during the fiscal year ending September
30, 1994, and some tax returns will cover a period which includes
the Distribution Date, there will be certain income and expense
items of the Ralcorp Group businesses which may require
adjustments be made for tax accounting and return preparation
between the portion of the fiscal year beginning October 1, 1993,
and ending with the Distribution Date and the portion of the
fiscal year beginning the day after the Distribution Date and
ending September 30, 1994. These required tax adjustments may
impact the amount of taxes due on certain returns and the
applicable payment dates to various government authorities for
any type of tax covered by this agreement. Recognizing the
extended return preparation periods, the time needed to determine
such final tax adjustments and the potential impact on the Net
Worth Guaranty defined in Section 5.05 of the Distribution
Agreement between Ralston and Ralcorp, the parties agree that
such tax adjustments shall be made and given effect separate and
apart from the Net Worth determination as provided therein.
Notice and documentation of such adjustments shall be provided
the other party within 30 days of determination. Any required
payment resulting from such tax adjustments from one party to the
other shall be made within thirty (30) days of the receipt of
written request therefor.
Sec. 3. Mutual Cooperation
Ralston and Ralcorp will, and will cause each of their
Subsidiaries to, cooperate with each other in filing any federal,
state or local tax return or consent contemplated by this
Agreement and to take such action as the other party may
reasonably request, including but not limited to the following:
(a) provide data for the preparation of tax returns, including
schedules, and make elections that may be required by the other
party; (b) provide required documents and data and cooperate in
audits or investigations of tax returns and execute appropriate
powers of attorney in favor of the other party and/or its agents;
(c) file protests or otherwise contest proposed or asserted tax
deficiencies, including filing petitions for redetermination or
prosecuting actions for refund in court, and pursuing the appeal
of such actions; (d) take any of the actions of the type
described in Regulation Section 1.1502-77(a) of the Code
(describing the scope of the agency of the common parent of a
group of affiliated corporations); and (e) file requests for the
extension of time within which to file tax returns.
ARTICLE II. FEDERAL INCOME TAXES
Sec. 1. Federal Returns
(a) Ralcorp will join, and will cause the Ralcorp Group to join,
in the Consolidated Return to be filed by Ralston for the fiscal
year 1994 to the extent the Ralcorp Group is eligible to join in
such return under the provisions of the Code and the regulations
thereunder. Ralcorp will not, nor will it cause or permit any of
the Ralcorp Subsidiaries to, elect to file separate Federal
returns for such period;
(b) Ralcorp hereby designates, and Ralcorp agrees to cause each
of the Ralcorp Subsidiaries to designate, Ralston irrevocably as
its agent for the purpose of taking any and all action necessary
or incidental to the filing of Consolidated Returns, including
the filing of Internal Revenue Service Form 1122 (consent to be
included in the consolidated return), and Ralcorp agrees to
deliver, and to cause each of the Ralcorp Subsidiaries to
deliver, to Ralston executed copies of said Form 1122, if
required. Ralcorp further agrees to furnish, and to cause each
of the Ralcorp Subsidiaries to furnish, Ralston with any and all
information requested by Ralston in order to carry out the
provisions of this Agreement without any charge to Ralston.
Ralston agrees to furnish to Ralcorp any and all information
requested by Ralcorp in order to carry out the provisions of this
Agreement without any charge to Ralcorp.
(c) Ralcorp shall be responsible for filing all federal income
tax returns required of the Ralcorp Group after the Distribution
Date, subject to bridging obligations that may exist apart from
this Agreement, if any.
Sec. 2. Federal Tax Liabilities
(a) Except as otherwise provided in this Agreement, Ralston shall
be liable for, and shall hold the Ralcorp Group harmless against,
any and all federal income taxes and any interest, penalties and
additions thereto due from Ralston, the Ralcorp Group or any
subsidiary of Ralston attributable to the Periods, and Ralston
shall be entitled to all refunds for such taxes for such Periods.
(b) Except as otherwise provided in this Agreement, Ralcorp and
the Ralcorp Subsidiaries shall be liable for, and shall hold
Ralston and any other Ralston Subsidiary harmless against, any
and all federal income taxes and any interest, penalties and
additions thereto due from the Ralcorp Group attributable to
periods commencing after the Distribution Date.
(c) If, as a result of operations for periods commencing after
the Distribution Date, Ralcorp or its subsidiaries shall have,
for Federal income tax purposes, any losses or credits which may
be carried back to the Periods, Ralcorp shall be entitled to any
refunds as a result of such carrybacks and any tax refunds (plus
interest) received by Ralston or the Ralston Subsidiaries as a
result of such carrybacks shall be remitted to Ralcorp. Ralston
agrees to cooperate with Ralcorp to obtain such refunds and
Ralcorp agrees to reimburse Ralston for expenses related thereto.
(d) If there are timing differences included in the consolidated
return of the Ralston Group for the fiscal year ended September
30, 1993 or the fiscal year including the Distribution Date, that
relate to Ralcorp but are not included in the deferred income tax
balance in the Net Worth Guaranty calculation, and such timing
differences should reverse in the Ralcorp Group federal income
tax returns for periods after the Distribution Date, then notice
and documentation of such adjustments shall be provided the other
party within thirty (30) days of determination, and
(i) If such corresponding adjustment in the federal income tax
returns of Ralcorp or any of its subsidiaries results in an
increase of federal income tax liability for such subsequent
periods, Ralston shall pay Ralcorp the amount of such liability
when due or within thirty (30) days of the receipt of written
request therefore, whichever is later.
(ii) If such corresponding adjustment in the federal income tax
returns of Ralcorp or any of its subsidiaries would result in an
actual diminution of federal income tax liability for such
period, Ralcorp shall pay Ralston the amount of such actual
savings within thirty (30) days of written notice as provided
herein.
Sec. 3. Federal Tax Adjustments
(a) The computation of the amount of Federal income tax liability
of Ralcorp and each of the Ralcorp Subsidiaries for any period in
which Ralcorp or such Ralcorp Subsidiaries joined in a
Consolidated Return of Ralston shall be adjusted consistent with
any adjustments made by the IRS to the taxable income, loss or
tax credits of Ralcorp or any Ralcorp Subsidiary. For purposes
of this Agreement, the term "tax credits" shall include, but
shall not be limited to, any business tax credit available under
the Code.
(b) If the IRS shall make an adjustment to the Consolidated
Return of the Ralston Group for the Periods, and such adjustment,
consistently applied would require Ralcorp or the Ralcorp
Subsidiaries to make a corresponding adjustment to their federal
income tax returns for periods after the Distribution Date, then,
(i) if such corresponding adjustment in the federal income tax
returns of Ralcorp or any of its subsidiaries results in an
increase of federal income tax liability for such period, Ralston
shall pay Ralcorp the amount of such liability, when due,
including any applicable interest, penalties or additions to tax.
Any payment by Ralston to Ralcorp of a refund or additional tax
credit shall be made within ninety (90) days after such
adjustment.
(ii) if such corresponding adjustment in the federal income tax
returns of Ralcorp or any of its subsidiaries would result in an
actual diminution of federal income tax liability for such
period, whether or not an actual amended return is filed, Ralcorp
shall pay Ralston the amount of such actual savings plus interest
either (a) when such refund and related interest are received and
required to be remitted within the period provided in this
Agreement, or (b) within ninety (90) days of written notice by
Ralston to Ralcorp that corresponding adjustments should be made,
if an amended return is not filed.
(c) Any interest payment shall be calculated from the same date
and at the rate used by the Internal Revenue Service in computing
the interest payable by it or to it. Unless otherwise provided,
all payments required to be made under this Agreement from one
party to another shall be made promptly after the event which
gives rise to the requirement for payment occurs. Any payments
made pursuant to this Agreement are to be adjusted in the event
that future events or new information would, had they occurred or
been known at the time of a payment, have altered the amount of
such payment, so that at the time of such future events or
knowledge of such information, appropriate adjustments shall be
made retroactively to include the consequences of such event or
information in the original computation.
Sec. 4. Contest of Federal Adjustments
Any income tax deficiencies or refund claims which arise with
respect to the Consolidated Return liability of the Ralston Group
and which are attributable to the businesses being conducted by
Ralcorp or any Ralcorp Subsidiary shall, at the option of
Ralcorp, be defended or prosecuted by Ralcorp at its own cost and
expense and with counsel and accountants of its own selection and
Ralston may participate in any such proceeding at its own cost
and expense (in either event such cost or expense not to include
the amount of any payment of any tax claim, interest or
penalties, or of any compromise settlement or other disposition
thereof). Ralcorp shall, if it exercises such option, have
control of any such proceedings, but Ralcorp shall not compromise
or settle any deficiency of tax which is attributable to Ralcorp
or any Ralcorp Subsidiary without the prior written consent of
Ralston, which consent shall not be unreasonably withheld.
Ralston and Ralcorp also agree to execute and file such Treasury
Department waivers, consents, or other forms, Tax Court or other
petitions, refund claims, complaints, powers of attorney and
other documents needed from time to time in order to defend,
prosecute or resolve the Federal income tax deficiencies or
refund claims which are the subject of this Article II, Section
4.
ARTICLE III. STATE AND LOCAL INCOME TAXES
Sec. 1. State and Local Returns
(a) Ralcorp and the Ralcorp Subsidiaries have filed separately,
or have been included in combined or consolidated income tax
returns and tax returns in respect of franchise taxes based upon
net income ("income based franchise taxes"), with Ralston and
various Ralston Subsidiaries in the various states of the United
States and in certain other local jurisdictions in which they
carry on their trade or businesses.
(b) Ralston will file, and Ralcorp and the Ralcorp Subsidiaries
consent to the filing of, all combined or consolidated state and
local income or income-based franchise tax returns which include
the businesses of Ralcorp and the Ralcorp Subsidiaries for the
Periods.
(c) Ralcorp will be responsible for filing combined or
consolidated state or local income or income-based franchise tax
returns for Ralcorp and the Ralcorp Subsidiaries in any state or
local jurisdiction in which such a return is required for taxable
periods ending after the Distribution Date, subject to bridging
obligations that may exist apart from this Agreement, if any.
(d) Ralcorp will be responsible for filing the separate state or
local income or income-based franchise tax returns for Ralcorp
and the Ralcorp Subsidiaries in each other state or local
jurisdiction in which such a return is required for periods
beginning October 1, 1993, and ending September 30, 1994, or
thereafter, subject to bridging obligations that may exist apart
from this Agreement, if any.
Sec. 2. State and Local Tax Liability
(a) Except as otherwise provided herein, Ralston shall be
responsible for paying any amount of state and local income or
income-based franchise tax attributable to the Periods. Ralcorp
or the Ralcorp Subsidiaries shall be responsible for paying any
amount of such tax attributable to periods commencing after the
Distribution Date.
(b) If there are timing differences included in the state and
local income or income-based franchise tax returns ("State and
Local Returns") of the Ralston Group for the Periods, that relate
to operation of the Ralcorp businesses but are not included in
the deferred income tax balance in the Net Worth Guaranty
calculation, and such timing differences should reverse in
Ralcorp Group state and local income tax or income-based
franchise tax returns for periods ending after the Distribution
Date, then notice and documentation of such adjustments shall be
provided the other party within thirty (30) days of
determination, and
(i) If such corresponding adjustment in the State and Local
Returns of Ralcorp or any Ralcorp Subsidiary results in an
increase of state and local income or income-based franchise tax
liability for such subsequent periods, Ralston shall pay Ralcorp
the amount of such liability when due or within thirty (30) days
of the receipt of written request therefore, whichever is later.
(ii) If such corresponding adjustment in the State and Local
Returns of Ralcorp or any Ralcorp Subsidiary would result in an
actual diminution of state and local income or income-based
franchise tax liability for such period, Ralcorp shall pay
Ralston the amount of such actual savings within thirty (30) days
of written notice as provided herein.
Sec. 3. State Tax Adjustments
If a state or local taxing authority makes an adjustment for an
item reported on a state or local income or income-based
franchise tax return of Ralcorp or the Ralcorp Subsidiaries
attributable to the Periods (including adjustments to tax basis
determination or tax accounting methods with respect to its
property and accounts included in and carried forward from
Ralston or the Ralston Subsidiaries prior to the Distribution
Date), any resulting increase or decrease in the liability of
Ralcorp and the Ralcorp Subsidiaries shall be accounted for
between Ralston and Ralcorp in accordance with the principles and
provisions of Article II, Section 3(b) of this Agreement.
Sec. 4. State Tax Refunds
(a) Where a State or local income or franchise tax adjustment for
an item reported on a State or local income or franchise tax
return resulting in a refund is made for one or more of the
Periods, that refund will be for the account of Ralston, Ralcorp
or a Ralcorp Subsidiary as the case may be, in accordance with
the principles and provisions of this Agreement on payments under
Article III, Sections 2 and 3.
(b) If, as a result of operations during periods commencing after
the Distribution Date, Ralcorp or the Ralcorp Subsidiaries shall
have, for state or local income tax purposes, any losses or
credits which may be carried back to periods ending on or before
the Distribution Date, Ralcorp shall be entitled to any refunds
resulting from such carrybacks and any tax refunds (plus
interest) received by Ralston or the Ralston Subsidiaries
resulting from such carrybacks shall be remitted to Ralcorp.
Ralston agrees to cooperate with Ralcorp to obtain such refunds
and Ralcorp agrees to reimburse Ralston for expenses related
thereto.
ARTICLE IV. OTHER TAXES
Sec. 1. Non-Income Taxes
(a) Tax liabilities and returns (other than those relating to
federal, state and local income and income-based franchise taxes,
the treatment of which has been set forth above) for all foreign
taxes and all other taxes not measured by income including but
not limited to ad valorem, transfer, capital stock, excise,
sales, use, payroll, real and personal property, special
assessment, franchise (not based on net income), vehicle
registration, employment, earnings, duty and import taxes (plus
applicable interest, penalties and additions) ("Other Taxes")
attributable to the Periods shall be for the account of Ralston.
All such Other Taxes for periods after the Distribution Date are
for the account of Ralcorp.
Sec. 2. Transfer Taxes
Ralston shall pay (a) any and all stock transfer or stamp taxes
or similar charges required (or which may, in the future, be
required) by federal, state or local authorities upon, or by
virtue of, the distribution of the stock under the Distribution
Agreement dated March 31, 1994 (Ralcorp Shares); and (b) any and
all real or personal property transfer or gains taxes or similar
charges (other than taxes or charges based on, or measured by
income) required (or which may, in the future, be required) by
federal, state or local authorities solely upon or by virtue of,
the transfer of property to the Ralcorp Group or the distribution
of the Ralcorp Shares (but not including any liability for any
property tax reassessment arising from the change in ownership of
the Ralcorp Shares pursuant to the Distribution Agreement).
ARTICLE V. STATE AND LOCAL CONTESTS OF ADJUSTMENTS
Sec. 1. Contests of Adjustments
Any state or local income or franchise tax or Other Tax
liabilities which would result in a payment under Articles III or
IV may, at the option of Ralcorp or Ralston, as the case may be,
be defended (or prosecuted as a refund action) by Ralcorp or
Ralston at its own cost and expense and with counsel and
accountants of its own selection. Ralcorp and Ralston agree to
cooperate fully in such defense (or prosecution) and provide
promptly such executed documents as the other party may require
from time to time in order to defend (or prosecute) the tax
deficiencies or refund claims which are the subject of Articles
III or IV. Neither party shall compromise or settle any
deficiency of tax which would result in a payment under Articles
III or IV without the prior written consent of the other, which
consent shall not be unreasonably withheld.
Sec. 2. Payments
Ralston agrees to pay to Ralcorp and Ralcorp agrees to pay to
Ralston as the case may be, any amounts determined to be for the
account of Ralcorp or Ralston as finally determined under
Articles III or IV. Such payment shall be made within thirty
(30) days after the final adjustment giving rise to such payment.
Any interest payment shall be calculated from the same date and
at the same rate used by the applicable State, local or foreign
tax authority in computing the interest payable by it or to it.
ARTICLE VI. ARBITRATION
For the purposes of this Agreement, all computations or
recomputations of federal, state, local or foreign income and
franchise tax liability, and all computations or recomputations
of any amount or any payment (including, but not limited to,
computations of the amount of the tax liability, any loss or
credit or deduction, statutory tax rate for a year, interest
payments, and adjustments) and all determinations of payments or
repayments, or determination of any other nature required to be
made pursuant to this Agreement, shall be based on the
assumptions and conclusions of the party making the computations.
If either Ralston or Ralcorp objects thereto in writing,
addressed to the other party, the provisions of Article XI
Arbitration of the Distribution Agreement between the parties
shall be applicable to resolve any issues under this Tax Sharing
Agreement.
ARTICLE VII. RALCORP POST-DISTRIBUTION TRANSACTIONS
Ralcorp shall, and shall cause each member of the Ralcorp
Group to, comply with each representation and statement made, or
to be made, to the IRS in connection with any ruling obtained, or
to be obtained, by Ralston from the IRS with respect to any
transaction contemplated by the Distribution Agreement. Neither
Ralcorp nor any member of the Ralcorp Group shall for a period of
three years following the Distribution Date engage in any of the
following transactions, unless, in the sole discretion of
Ralston, either (a) an opinion in form and substance satisfactory
to Ralston is obtained from counsel to Ralcorp, the selection of
which counsel is agreed to by Ralston or (b) a supplemental
ruling is obtained from the IRS, in either case to the effect
that such transactions would not adversely affect the tax
consequences of the contributions, transfers, assumptions, Merger
and Distribution described in Articles II and III of the
Distribution Agreement to (1) Ralston or any member of the
Ralston Group, (2) Ralcorp or any member of the Ralcorp Group, or
(3) the Ralston shareholders. The transactions subject to this
provision are: (i) making a material disposition (including
transfers from one member of the Ralcorp Group to another member
of the Ralcorp Group), by means of a sale or exchange of assets
or capital stock, a distribution to shareholders, or otherwise,
of any of its assets (other than the transactions contemplated by
this Agreement) except in the ordinary course of business; (ii)
repurchasing any Ralcorp capital stock, unless such repurchase
satisfies the requirements of Section 4.052 of Revenue Procedure
86-41, as modified by Revenue Procedure 91-63; (iii) issuing any
Ralcorp capital stock that in the aggregate exceeds ten percent
(10%) of the issued and outstanding stock of Ralcorp immediately
following the Distribution; (iv) liquidating or merging with any
other corporation (including a member of the Ralcorp Group); or
(v) ceasing to engage in the active conduct of a trade or
business within the meaning of Section 355(b)(2) of the Code.
Ralcorp hereby represents that neither Ralcorp nor any member of
the Ralcorp Group has any present intention to undertake any of
the transactions set forth in (i), (ii), (iii), (iv) or (v)
above.
ARTICLE VIII. RALSTON POST-DISTRIBUTION OBLIGATIONS
Ralston shall, and shall cause each member of the Ralston Group
to, comply with each representation and statement made, or to be
made, to any taxing authority in connection with any ruling
obtained, by Ralston, from any taxing authority with respect to
any transaction contemplated by the Distribution Agreement.
ARTICLE IX. MISCELLANEOUS PROVISIONS
Sec. 1. This Agreement shall be governed and construed in
accordance with the laws of the State of Missouri and shall be
binding on the successors and assigns of the parties hereto.
Sec. 2. Unless specified otherwise, this Agreement contains the
entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior written
agreements, memoranda, negotiations and oral understandings, if
any, and may not be amended, supplemented or discharged except by
performance or by an instrument in writing signed by all of the
parties hereto.
Sec. 3. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
RALSTON PURINA COMPANY
BY ___________________________________
J. M. NEVILLE
Vice President, General Counsel and
Secretary
RALCORP HOLDINGS, INC.
BY ___________________________________
R. A. PEARCE
Co-Chief Executive Officer and
President
BRIDGING SERVICES AGREEMENT
This Bridging Services Agreement (the "Agreement") is made as of
this ____ day of March, 1994, (the "Effective Date") by and
between Ralston Purina Company, a Missouri Corporation
("Ralston"), and Ralcorp Holdings, Inc., a Missouri Corporation
("Ralcorp").
WHEREAS, Ralston has consolidated its cereal business, baby food
business, its Bremner business, ski resort and related real
estate business and coupon redemption business (together, the
"Ralcorp Businesses") into Ralcorp and intends to distribute the
outstanding common stock of Ralcorp on a pro-rata basis to the
holders of the Ralston-Ralston Purina Group Common Stock (the
"Distribution");
WHEREAS, Ralston desires to provide to Ralcorp, and Ralcorp
desires to receive from Ralston, certain services, as more fully
described on Schedules 1(a) through 1[ ] attached hereto,
(collectively, the "Ralcorp Services") in connection with the
Ralcorp Businesses on an interim basis following the
Distribution; and
WHEREAS, Ralcorp desires to provide Ralston, and Ralston desires
to receive from Ralcorp, certain services, as more fully
described on Schedules 2(a) through 2[ ] attached hereto,
(collectively, the "Ralston Services"), in connection with
Ralston's businesses (other than the Ralcorp Businesses) on an
interim basis following the Distribution; and
WHEREAS, Ralston and Ralcorp desire to enter into this Agreement
to confirm the terms and conditions pursuant to which Ralston
will provide, for a limited time from and after the Effective
Date, to the Ralcorp Services or the Ralston Services, as the
case may be.
NOW THEREFORE, in consideration of the mutual convenants
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Services. Subject to the terms of this Agreement, from and
after the Effective Date, the party providing particular Ralston
or Ralcorp Services, as the case may be, (the "Provider") shall
make such Services available to the party receiving such
Services (the "Recipient") in accordance with the practices in
effect as of the Effective Date or as specifically set forth in
the Schedules. In consideration for the Services, the Recipient
shall pay to the Provider the fee or other charge set forth
opposite each such service on the applicable Schedule and each
Service provided will be separately invoiced to Recipient in
accordance with the billing provisions set forth in the Schedule
with respect to such Service. The Recipient shall give the
Provider written notice of its intent to terminate any one or
more of the Services at least 30 days prior to the termination of
the service unless any Schedules hereto provide for a different
notice period in which case such different notice period shall
apply to the applicable Services. This Agreement shall continue
in full force and effect with respect to any Services not
terminated by any such notices.
2. Liability; Indemnification. The Provider shall have no
liability to the Recipient with respect to its furnishing any of
the Services hereunder except for its willful misconduct. By
agreeing to provide the Services as an accommodation to the
Recipient, the Provider is making no representations or
warranties as to the quality, suitability or adequacy of the
Services for any purpose or use. In providing the Services, the
Provider shall not be obligated to (i) hire any additional
employees; (ii) maintain the employment of any specific employee;
(iii) purchase, lease or license any additional equipment or
software; or (iv) pay any costs related to the transfer or
conversion of the Recipient's data to the Recipient or any
alternate supplier of administrative services. The sole remedy
of the Recipient in the event data owned by it is lost or damaged
in any way during processing by the Provider is the refund to it
of any charges paid for the processing of the damaged data. The
Provider agrees to exercise reasonable diligence to correct
errors or deficiencies in the Services but the Recipient shall
have no other remedy against the Provider regardless of any loss
suffered by the Recipient or any other person or entity. The
Provider shall not be liable to any third party in any way for
any obligation or commitment pursuant to this Agreement or for
any act or omission and the Recipient shall be solely liable and
responsible for any and all claims, liabilities, obligations,
losses, costs, expenses, litigation, proceedings, taxes, levies,
imposts, duties, deficiencies, assessments, charges, allegations,
demands, damages or judgments of any kind or nature whatsoever
("Liabilities") related to, arising from, asserted against or
associated with the Provider furnishing or failing to furnish to
the Recipient any of the Services described herein. Upon the
termination of any of the Services, the Recipient shall be
obligated to return to the Provider, as soon as practicable, any
equipment or other property of the Provider relating to the
services which is owned or leased by it and is or was in the
Recipient's possession or control. Effective as of the date of
this Agreement, the Recipient shall indemnify and hold the
Provider and its affiliates and their respective directors,
shareholders, officers, employees, agents, consultants,
representatives, successors, transferees and assigns harmless
from and against any and all Liabilities (including, without
limitation, reasonable fees and expenses of counsel) of whatever
kind and nature related to, arising from, asserted against or
associated with the Provider's furnishing or failing to furnish
the Services provided for in this Agreement, other than
Liabilities arising out of the fraudulent acts or gross
misconduct of the Provider or its affiliates or their respective
directors, shareholders, officers, employees, agents,
consultants, representatives, successors, transferees or assigns.
Nothing herein, however, shall be deemed to effect the right of
the Recipient to seek damages or other rights of redress against
the Provider for breach of the provisions of this Agreement.
3. Claims. Recipient's receipt of any Service performed
hereunder shall be an unqualified acceptance of, and a waiver by
it of any and all claims with respect to such Service unless it
gives the Provider notice of claim within 30 days after such
receipt; no claim by the Recipient against the Provider of any
kind, whether as to service performed or for delayed performance
or non-performance and whether or not based on negligence, shall
be greater in amount than the fee for the Service in respect of
which such claim is made; and in no event will the Provider be
liable to the Recipient for any incidental or consequential
damages, whether or not caused by or resulting from negligence or
breach of obligations hereunder.
4. Additional Services. If a party to this Agreement wants the
other to provide any service other than the Services provided for
in the Schedules, such party shall notify the other in writing,
and within 30 days following the giving of such notice such other
party shall decide, in its sole discretion, whether to provide
such service. If such other party agrees to be a Provider with
respect to such additional service, the Recipient shall be
invoiced for such services in accordance with billing practices
reasonably determined by the Provider. The provision by Provider
of any such additional Services shall be subject to all other
provisions of this Agreement, as if those Services had originally
been part of the Schedules to this Agreement.
5. Confidentiality. Any and all information which is not
generally known to the public which is exchanged between the
parties in connection with this Agreement, whether of a technical
or business nature, shall be considered to be confidential. The
parties agree that confidential information shall not be
disclosed to any third party or parties without the written
consent of the other party. Each party shall take reasonable
measures to protect against nondisclosure of confidential
information by its officers and employees. Confidential
information shall not include any information (i) which is or
becomes part of the public domain, (ii) which is obtained from
third parties who are not bound by confidentiality obligations or
(iii) which is required to be disclosed by law, regulation, legal
process or the rules of any state or federal regulatory agency or
the New York Stock Exchange. The provisions of this section
shall survive the termination of this Agreement.
6. Assignment. Notwithstanding anything to the contrary in this
Agreement, this Agreement shall not be assignable by either party
hereto, to any other person, firm or entity without the prior
written consent of the other party; provided, however, that the
Agreement in its entirety, or any portion of the rights and
obligations established hereunder, may be assigned by either
party hereto to one of its directly or indirectly wholly-owned
subsidiaries without the written consent of the other party.
Except as expressly provided herein, nothing herein shall create
or be deemed to create any third party beneficiary rights in any
person or entity not a party to this Agreement.
7. Waiver, Amendment or Modification. No waiver, amendment or
modification of this Agreement shall be valid unless in writing
and duly executed by the party to be charged therewith.
8. Entire Agreement. This Agreement and the Schedules hereto
constitutes the entire agreement of the parties concerning the
subject matter hereof and supersedes all previous agreements
between the parties, whether written or oral, with respect to
such subject matter.
9. Governing Law. Despite any different result required by any
conflicts of law provisions, this Agreement shall be governed by
the laws of the State of Missouri.
10. Notices. All notices, requests, demands, waivers and other
communications (hereafter "notices") required or permitted to be
given pursuant to this Agreement shall be in writing and shall be
deemed to have been duly given (i) at the time of delivery, if
delivered by hand, (ii) on the date of transmission, if sent by
facsimile, telegram or other standard form of telecommunications
or (iii) three business days after mailing, if mailed registered
or certified first-class mail, postage prepaid, return receipt
requested. Notices shall be delivered or sent, as the case may
be, to the following addresses or to such other addresses as the
parties may hereafter designate by like notice similarly
provided:
If to Ralcorp: Ralcorp Holdings, Inc.
901 Chouteau
St. Louis, MO 63102
Attn: General Counsel
If to Ralston: Ralston Purina Company
Checkerboard Square
St. Louis, Missouri 63164
Attn: General Counsel
11. Force Majeure. Anything else in this Agreement
notwithstanding, the Provider shall be excused from providing
Services hereunder while, and to the extent that, its performance
is prevented by fire, drought, explosion, flood, invasion,
rebellion, earthquake, civil commotion, strike or labor
disturbance, governmental or military authority, act of God,
mechanical failure or any other event or casualty beyond the
reasonable control of the Provider, whether similar or dissimilar
to those enumerated in this paragraph (hereafter a "Casualty").
In the event of a Casualty, the Recipient shall be responsible
for making its own alternative arrangements with respect to the
interrupted Services.
12. Independent Contractor. The relationship of Provider and
Recipient which is created hereunder is that of an independent
contractor. This Agreement is not intended to create and shall
not be construed as creating between Ralcorp and Ralston the
relationship of affiliate, principal and agent, joint venture,
partnership, or any other similar relationship, the existence of
which is hereby expressly denied.
13. Billing and Payment. The Provider shall bill the Recipient
on a monthly basis for the amounts due to the Provider for
services provided pursuant to the terms of this Agreement. All
such bills shall contain reasonable detail and shall be due 30
days after receipt. The failure of the Recipient to pay any bill
within 30 days of receipt shall result in the Recipient owing the
Provider an additional handling charge equal to 1% per month of
the amount due from the date due to the payment date.
14. Term. It is intended that the Services be provided by each
party hereto as a temporary accommodation to the other. Each
party shall arrange for the relevant Services to be provided by
its own employees or by third-party providers as soon as is
practicable even if such arrangements result in greater cost to
it than it would incur if the Services were provided by the
other. In no event, however, shall either be obliged to provide
any Services after September 30, 1995. Notwithstanding the
foregoing, if any Schedules hereto provide for the provision of
Services for a longer period, such longer period shall govern the
provision of such Services.
15. Waiver. The failure of either party at any time or times to
enforce or require performance of any provision hereof shall in
no way operate as a waiver or affect the right of such party at a
later time to enforce the same. No waiver by either party of any
condition or the breach of any provision contained in this
Agreement.
16. Severability. If any provision of this Agreement shall
hereafter be held to be invalid or unenforceable for any reason,
that provision shall be reformed to the maximum extent permitted
to preserve the parties' original intent, failing which it shall
be severed from this Agreement with the balance of the Agreement
continuing in full force and effect. Such occurrence shall not
have the effect of rendering the provision in question invalid in
any other jurisdiction or in any other case or circumstances or
of rendering invalid any other provisions contained herein to the
extent that such other provisions are not themselves actually in
conflict with any applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed on the day and year first above written.
RALSTON PURINA COMPANY RALCORP HOLDINGS, INC.
By:____________________________ By:____________________________
Title:__________________________ Title:__________________________
Witness:_______________________ Witness:________________________
Name:_________________________ Name:_________________________
This Technology Agreement (hereinafter "Agreement") effective as
of ____________, 1994 by and between Ralston Purina Company, a
Missouri corporation, Ralston Purina International, Inc., a
Delaware corporation and wholly owned subsidiary of Ralston
Purina Company, VCS Holding Company Inc. a Delaware corporation
and wholly owned subsidiary of Ralston Purina International, Inc.
(Hereinafter collectively referred to as "Ralston") and Ralcorp
Holdings, Inc., a newly formed Missouri Corporation which is
presently a wholly owned subsidiary of Ralston (hereinafter
referred to as "Ralcorp").
WITNESSETH THAT:
WHEREAS, Ralston and Ralcorp have simultaneously with this
Agreement entered into a separate agreement and plan of
reorganization, (hereinafter "Reorganization Plan").
WHEREAS, this Agreement is entered into in conjunction with the
above Agreement to facilitate future cooperation between Ralston
and Ralcorp, as hereinafter set forth as well as to achieve the
goals of the "Reorganization Plan."
WHEREAS, Ralston is the owner of technical information and know
how, including trade secrets and patent applications for the
operation of the businesses included in the reorganization plan.
WHEREAS, Ralston wishes to assign and/or license certain
technical information and know how to Ralcorp as hereinafter set
forth.
WHEREAS, Ralston wishes to receive technical assistance from
Ralcorp for the continued operation of its sublicensees, outside
of the defined Territory which assistance Ralcorp is willing to
provide.
NOW, THEREFORE, in consideration of the foregoing, and pursuant
to the following terms and conditions, it is hereby agreed as
follows:
ARTICLE I - DEFINITIONS
1. The term "Territory" shall mean the Western Hemisphere
including the United States of America, North and South America,
the Caribbean and Latin America, but excluding territories and
possessions of the United States which are not in the Western
Hemisphere.
2. The term "Cereal Business" shall mean the manufacture,
distribution, and sale of ready to eat and hot cereals, and snack
products including but not limited to the "Chex" brand cereal
products and snack products.
3. The term "Baby Food Business" shall mean the manufacture,
distribution, and sale of foods and products for infants and
toddlers including but not limited to baby food products sold
under the "Beech Nut" brand.
4. The term "Bremner Business" shall mean the manufacture,
distribution and sale of cookies and crackers including, but not
limited to "Ry Krisp" cracker products.
5. The term "Ski Resort Business" shall mean the operation of
Keystone Resorts Management Inc. and related real estate
business.
6. The term "Technical Information and Know How" shall mean any
and all information owned or licensed from third parties by
Ralston, including trade secrets, know how, manufacturing,
research and other technical information that is used exclusively
and reduced to practice for exclusive use by any of the above
businesses as of the date of this Agreement.
7. The term "Coupon Redemption Business" shall mean the coupon
and promotion redemption business operated by American Redemption
Systems, Inc.
8. The term "Shared Technical Information and Know How" shall
mean any and all information owned or licensed from third parties
by Ralston, including trade secrets, know how, manufacturing,
research and other technical information that is used or reduced
to practice for use as of the date of this Agreement by both
Ralston and the above businesses other than the cereal business
which are part of the Reorganization Plan.
9. The term "Shared Technical Information and Know How related to
the Cereal Business" shall mean any and all information owned or
licensed from third parties by Ralston including trade secrets,
know-how, manufacturing, research and other technical information
that is used or reduced to practice for use by the Cereal
Business and used by both Ralston and the Cereal Business as of
the date of this agreement.
10. The term "Patent Rights" shall mean the patents or patent
applications listed in Exhibit A hereto, and shall include all
continuations, reissues or renewals of those patents or patent
applications.
11. The term "Baby Food Business Excluded Territories" shall mean
the country of Venezuela.
ARTICLE II - RIGHTS GRANTED BY RALSTON
1. (a) Ralston, by separate assignment, hereby transfers and
assigns to Ralcorp the entire interest and title to the patents
and/or patent applications listed in Exhibit A.
(b) Ralston, represents as of the date of this agreement that it
has paid any required annuity or maintenance fee to the U.S.
Patent and Trademark Office in order to maintain the Patent
Rights. After the date of this Agreement, Ralston shall not be
responsible for any annuity, maintenance fees, or any other costs
related to the Patent Rights.
2. Ralston hereby assigns and transfers to Ralcorp the entire
right, title and interest on a worldwide basis in the Technical
Information and Know How for Bremner Business, Ski Resort
Business and Coupon Redemption Business as defined in this
Agreement.
3. Ralston hereby grants to Ralcorp, subject to the terms,
covenants, conditions, and limitations set forth in this
Agreement:
(a) 1. an non revocable, exclusive royalty free license to
utilize the Technical Information and Know How for the Cereal
Business and the Shared Technical Information and Know How
related to the Cereal Business, as both are defined in this
Agreement; for a period of five (5) years from the date of this
agreement in the Territory, and thereafter a non revocable,
worldwide, royalty free, non-exclusive license to utilize the
Technical Information and Know How for the Cereal Business and
Shared Technical Information and Know How related to the Cereal
Business except for the country of Spain and except for the
Technical Information exclusively licensed to Telma in the
country of Israel as per the Agreement dated May 1, 1991 and
attached hereto as Exhibit C and except for the Technical
Information exclusively licensed to Weetabix in the United
Kingdom of Great Britain and Republic of Ireland as per the
Agreement dated January 5, 1994 and attached hereto as Exhibit D.
2. The exclusive grant in 3(a)1 above, shall be subject to a
retained right by Ralston to have cereal products copacked or
manufactured for Ralston, using the Technical Information and
Know How for the Cereal Business or the Shared Technical
Information and Know How for the Cereal Business, in the
Territory for export outside of the Territory. This retained
right shall be subject to the following limitations:
(i) Prior to any sublicense being given by Ralston to any
third party for the copacking of a specified product, Ralston
agrees to first notify Ralcorp in writing of its intent to have a
product copacked using a portion of the Technical Information and
Know How or Shared Technical Information and Know How relating to
the Cereal Business. Ralcorp shall promptly notify Ralston in
writing whether it shall produce the specified product and the
terms and conditions upon which it is willing to do so. If
Ralcorp elects not to copack the product for Ralston upon terms
and conditions reasonably acceptable to Ralston, Ralston shall
then be free to sublicense a copacker.
(ii) In the event of such a sublicense, Ralston agrees not to
disclose to the sublicensed copacker any of the Technical
Information and Know How specifically listed in Exhibit G,
attached hereto. Ralston also agrees to require any sublicensee
under terms which are no less restrictive than are contained in
Article IV(1) and (2), to not otherwise use or disclose any
portion of the Technical Information and Know How or the Shared
Technical Information and Know How related to the Cereal Business
that might be disclosed by Ralston for purposes of copacking.
(b) an non revocable, exclusive worldwide royalty free license to
utilize the Technical Information and Know How for the Baby Food
Business except in the "Baby Food Business Excluded Territories."
(c) the exclusions to the license grants set forth in 3(a) and
(b) above shall not apply in the event agreements presently in
force and attached hereto as Exhibits C, D, E and F, shall expire
or be terminated.
(d) a non revocable, non-exclusive royalty free license to
utilize the Shared Technical Information and Know How for all of
the Businesses as defined in this agreement other than the Cereal
Business, in the Territory.
(e) a non revocable, non-exclusive royalty free license to use,
manufacture, have made, and sell the invention claimed in U.S.
Patent 5,188,860 entitled "Process for the Production of a Fiber
Containing Cereal Product."
(f) The rights granted to Ralcorp under the terms of this Article
shall specifically include the right of Ralcorp to sublicense the
Technical Information and Know How, the Shared Technical
Information and Know How related to the Cereal Business and the
Shared Technical Information and Know How on an exclusive basis
in the Territory for a five (5) year period or on a non-exclusive
worldwide basis after the five (5) year period subject to the
exclusions and limits described in Article II, Paragraphs 3(a)
and (b), provided that the terms of any such sublicensing
agreement shall contain the following conditions:
i. the sublicensee will not disclose any of said Technical
Information and Know How or said Shared Technical Information and
Know How to any third party either during or following the term
of the sublicense without the written consent of Ralston;
ii. the sublicensee will require by written agreement each of
its employees, agents, officers and/or directors to maintain said
Technical Information and Know How or said Shared Technical
Information and Know How in confidence and to not disclose the
same; and
iii. upon termination of the sublicense, the sublicensee will
cease use of said Technical Information and Know How or said the
Shared Technical Information and Know How and to the extent
possible, return the same to the custody of Ralcorp.
The above conditions shall not apply, however, to any of said the
Technical Information and Know How or said Shared Technical
Information and Know How which:
(a) is in or becomes part of the public domain without a breach
by the sublicensee;
(b) is lawfully received by the sublicensee from a third party
who is under no obligation of confidentiality to Ralston; or
(c) is in the possession of the sublicensee prior to the date of
any such sublicensing agreement as evidenced by written records.
ARTICLE III - TECHNICAL ASSISTANCE TO BE PROVIDED BY RALCORP
1. For a period of five (5) years after the date of this
Agreement, Ralcorp agrees to provide technical assistance as may
be reasonably requested by Ralston relative to operation of the
Cereal Business by Ralston outside of the Territory when:
(a) such assistance can be provided within the current resources
and capabilities of Ralcorp;
(b) such assistance will not conflict with the commercial
interests of Ralcorp;
(c) such assistance is of a technical, problem-solving nature;
and
(d) Ralston agrees to appropriately compensate Ralcorp for such
assistance.
2. After five (5) years from the date of this Agreement Ralcorp's
obligation under this article to provide further technical
assistance requested by Ralston shall terminate. Ralcorp agrees
to complete and report to Ralston the results of all research
projects that were authorized in writing by Ralston and accepted
in writing by Ralcorp during the five (5) year period following
the date of this Agreement.
3. (a) The services provided by Ralcorp to Ralston and its
sublicensees under the terms of this Article shall be at the sole
expense of Ralston, for which Ralston will pay to Ralcorp a fee
that is determined in accordance with the procedure set forth in
Exhibit B attached hereto.
(b) Ralcorp shall invoice Ralston for services performed.
Payments shall be due net thirty (30) days from date of invoice.
Separate invoices shall be rendered for each service provided.
(c) Ralcorp shall have no liability to Ralston with respect to
the furnishing of Technical Assistance to Ralston under this
Article except for willful misconduct and gross negligence by
Ralcorp. Ralcorp is making no representations or warranties as
to the quality, suitability or adequacy of the Technical
Assistance provided by Ralcorp. Ralston agrees to defend,
indemnify and hold harmless Ralcorp against any and all claims,
actions or suits for the technical assistance provided by Ralcorp
which arise due to an action or omission by Ralston or its
sublicensees. Ralcorp shall not be restricted from using any
information developed as a result of providing technical
assistance to Ralston under terms of this article, except for the
exclusions contained in Article II Paragraphs 3(a) and (b), or
except for any exclusion as may be subsequently agreed to in
writing between the parties.
(d) If within thirty (30) days following receipt of any invoice,
Ralston notifies Ralcorp that it questions or disputes all or any
part of such invoice, Ralcorp shall provide to Ralston within
thirty (30) days of such notice a certificate, signed by the
appropriate department head of the performing party, explaining
the matter or matters in question in reasonable detail to permit
Ralston to verify the accuracy of any charges involved. In the
event that within thirty (30) days after receipt of such a
verification certificate, Ralston notifies Ralcorp in writing
that it does not accept such invoiced fee, Ralston must include
in such notice the elements of the invoice challenged by Ralston,
the reasons for the challenge, and Ralston's proposed disposition
for the matter. If the parties cannot resolve the matter in a
mutually satisfactory manner within thirty (30) days from the
date of such notice, then the matter shall promptly be submitted
for resolution to a recognized firm of independent public
accountants, mutually acceptable to both parties. Such
independent public accountants will review Ralcorp books and
records and make such other investigation as it shall deem
necessary to verify such invoice. The costs of retaining such
accountants shall be borne by Ralston unless a decision by the
independent accountant is that the Ralcorp invoice was
substantially incorrect, in which case it shall be paid by
Ralcorp.
(e) For the period of five (5) years provided in this article
both parties hereby agree not to hire or otherwise retain the
services of any individual connected with the Research and
Development function of the Cereal Business of Ralcorp as defined
in this Agreement or with the Research and Development function
of any ready to eat cereal business operated by Ralston or for
which Ralston provides technical assistance. The restriction
against hiring shall not apply in the event it is waived in
writing by either party with regard to a particular individual
who may request such a waiver, which waiver shall not be
unreasonably withheld by either party. The restriction against
hiring an individual described above shall not apply and no
waiver is required in the event that such individual has ceased
to be an employee of either party and a period of six (6) months
have elapsed from said individuals termination date.
ARTICLE IV - OBLIGATIONS OF THE PARTIES
1. Ralston and Ralcorp both agree to treat as confidential the
Technical Information and Know How, Shared Technical Information
and Know How, Shared Technical Information and Know How related
to the Cereal Business and any information disclosed to either
party under the terms of the present Agreement; and shall not at
any time disclose or permit to be disclosed any portion thereof
to any other person, firm, or entity except as specifically
provided herein.
2. The obligation of nondisclosure, contained in Paragraph 1
above, shall not apply in the event that any of the above:
(a) was known to the public or generally available to the public
prior to the date it was received from the disclosing party;
(b) became known to the public or generally available to the
public subsequent to the date it was received from the disclosing
party without any fault of the receiving party; or
(c) is, subsequent to the date of this Agreement, disclosed to
the receiving party from a third party who is under no obligation
of confidentiality to the disclosing party.
ARTICLE V - ASSIGNABILITY
This Agreement and the rights granted herein shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
ARTICLE VI - FORCE MAJEURE
The obligations of each party hereunder shall be suspended to the
extent that the performance of its obligations is delayed or
prevented, in whole or in part, by acts of God, inclement
weather, floods, major accidents, strikes, lockouts, labor
disputes, labor shortages, riots, demonstrations, sabotage,
lowas, rules and regulations of governmental bodies or agencies;
governmental action or inaction; orders or restraints of
governmental or other competent authorities; inability to obtain
or unavoidable delay in obtaining necessary materials,
facilities, and equipment in the open market; interruption or
unavoidable delay in communication or transportation; or any
other cause, whether similar or dissimilar to those specifically
enumerated, which shall be beyond such party's reasonable
control. If the obligations of a party are suspended pursuant to
the preceding sentence, such party shall give written notice to
that effect to the other party within ten (10) days after such
suspension shall have commenced together with a statement setting
forth reasonably full particulars concerning the cause of such
suspension as quickly as possible. The requirement that the
cause of such suspension be remedied with all possible diligence
shall not require the settlement of strikes, lockouts or other
labor difficulties affecting such party.
ARTICLE VII - NOTICE
1. All notices, requests, demands and other communication under
this Agreement or in connection therewith shall be given to or
made upon the respective parties hereto as follows:
RALSTON RALCORP
Ralston Purina Company Ralcorp Holding Inc.
Checkerboard Square
St. Louis, MO 63164
Attn: General Counsel Attn: General Counsel
or to such other address, and to the attention of such other
officers or persons as each of the parties hereto may specify by
notice in writing to the other.
2. All notices, requests, demands, and other communication given
or made in accordance with the provisions of this Agreement shall
be in writing and by certified or registered mail, and if
received shall be deemed to have been given when deposited in the
United States mail, postage prepaid.
ARTICLE VIII - MISCELLANEOUS PROVISIONS
1. Should any provision of this Agreement be declared
unenforceable for any reason or found contrary to any law or
statute, said provision will automatically cease to be a part of
this Agreement without affecting any other provision or
obligation thereof.
2. The waiver of any breach or non enforcement of any provision
of this Agreement shall not be a waiver of future compliance or a
waiver to the provisions hereof.
3. This Agreement shall be construed and enforced in accordance
with the laws of the State of Missouri.
4. The headings used in this Agreement are for reference only and
shall not be relied upon or used in the interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representative effective on the
day and year set forth in this Agreement.
RALCORP HOLDINGS INC.
By: _______________________________ Date: _____________________
RALSTON PURINA COMPANY
By: _______________________________ Date: _____________________
THIS TRADEMARK AGREEMENT dated as of the ______ day of
______________ l994, is by and between RALSTON PURINA COMPANY, a
corporation organized under the laws of the state of Missouri,
having its principal office in St. Louis, Missouri and RALCORP
HOLDINGS, INC., a corporation organized under the laws of the
state of Missouri having its principal office in St. Louis,
Missouri.
W I T N E S S E T H:
WHEREAS, the parties have entered into an AGREEMENT AND PLAN OF
REORGANIZATION of even date herewith; and
WHEREAS, pursuant to said AGREEMENT AND PLAN OF REORGANIZATION,
the parties have agreed to transfer certain trademark assets to
RALCORP HOLDINGS, INC., or one or more of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the
parties agree as follows:
l. Definitions
a. Trademarks and Trade Names
Hereunder, "Trademark" shall include trademark(s), service
mark(s), trade dress, and copyright(s); however, "trademark"
shall mean only a word, symbol or device registrable as a
trademark under the trademark laws.
b. Hereunder, "trade name" shall mean corporate name and/or other
business name including, but not limited to, names of
partnerships and joint ventures.
c. Newco
Hereunder, "Newco" shall mean Ralcorp Holdings, Inc., Ralston
Foods, Inc., Keystone Resorts Management, Inc., Bremner, Inc.,
Bremner Finance, Inc., Beech-Nut Nutrition Corporation, Ralston
Food Sales, Inc., American Redemption Systems, Inc. and any and
all subsidiaries of Ralcorp Holdings, Inc. "Newco" shall not,
however, include Ralston Purina Company (hereinafter RPCo.) and
any of its affiliates whose shares will not be owned, whether
directly or indirectly, by Ralcorp Holdings, Inc. following
Closing.
d. Newco Territory
Hereunder, "Newco Territory" shall mean The United States of
America, Mexico, Central America, the Caribbean and South
America. "Newco Territory" shall not, however, include any
French overseas departments.
e. Oldco
Hereunder, "Oldco" shall mean RPCo. and any and all of its
affiliates whose shares it will directly or indirectly own
following Closing.
f. Oldco Territory
Hereunder, "Oldco Territory" shall mean any and all jurisdictions
and geographical areas outside the Newco Territory.
g. The United States of America
"The United States of America" shall include only the 50 states
and the District of Columbia.
h. Closing Date
Hereunder, "Closing" shall have the same meaning as Distribution
Date in the Agreement and Plan of Reorganization.
2. Trademarks
a. Assignments
i. At Closing, RPCo. will assign to Ralston Foods, Inc., RPCo.'s
rights in the Newco Territory in Trademarks, other than
trademarks consisting of or containing the word RALSTON, which
are exclusively associated with RPCo.'s breakfast-cereal or
breakfast-cereal-based snack businesses. At Closing, RPCo. will
assign to Ralston Foods, Inc., RPCo.'s rights in the Newco
Territory, to the trademark RALSTON to the extent it relates to
RPCo.'s breakfast-cereal, breakfast-cereal-based snack, and
cookie and cracker businesses. Registrations and applications to
register trademarks to be so assigned are listed in Schedule
2(a)(i).
ii. At Closing, RPCo. will assign to Beech-Nut Nutrition
Corporation, without geographical limitation, RPCo.'s rights in
Trademarks which are exclusively associated with RPCo.'s Beech-
Nut baby-food business. Registrations and applications to
register trademarks to be so assigned are listed in Schedule
2(a)(ii).
iii. At Closing, RPCo. will assign to Keystone Resorts
Management, Inc., without geographical limitation, RPCo.'s rights
in Trademarks which are exclusively associated with its Keystone
and Arapahoe Basin resorts. Registrations and applications to
register trademarks to be so assigned are listed in Schedule
2(a)(iii).
iv. At Closing, RPCo. will assign to Bremner, Inc., a Nevada
corporation, without geographical limitation, RPCo.'s rights in
Trademarks which heretofore have been exclusively associated with
RPCo.'s Ry-Krisp business. Registrations and applications to
register trademarks to be so assigned are listed in Schedule
2(a)(iv).
v. At Closing, RPCo. will assign to Ralcorp Holdings, Inc.,
RPCo.'s Canadian rights in Trademarks which are exclusively
associated with RPCo.'s breakfast-cereal and breakfast-cereal-
based snack businesses other than Trademarks consisting of or
containing the word RALSTON. Registrations and applications to
register trademarks to be so assigned are listed in Schedule
2(a)(v).
vi. Anything in this Agreement to the contrary notwithstanding,
neither RPCo. nor any of its affiliates will assign to any Newco
entity any Trademark consisting of or containing the words
PURINA, CHECKERBOARD, DAMIER, RPCo.'s 9-Square Checkerboard house
mark, HOSTESS, WONDER, the HOSTESS Heart Design, the WONDER
Balloons Design or any other Trademark now owned by Continental
Baking Company, Protein Technologies International Holdings,
Inc., Ralston Purina International Development Corporation, or
any other Oldco affiliate of RPCo. Moreover, the parties
undertake not to use or register the trademarks listed on
Schedule 2(a)(vi) for the durations and in the territories
indicated therefor.
vii. All assignments contemplated by this Agreement will be on a
quitclaim basis. Newco will assume all limitations, undertakings
and liabilities related to Trademarks associated with all the
Newco businesses, including, but not limited to, limitations,
undertakings and liabilities associated with the Trademarks
acquired by any and all Newco entities hereunder. Moreover,
Newco will assume all limitations in contracts relating to
trademarks entered into by any Oldco entity and binding upon
Oldco successors and/or assigns.
viii. U.S. and Canadian assignments in recordable form will be
delivered to the designated Newco entity at Closing. To the
extent registrations and/or applications to be assigned hereunder
exist in more than one country, multi-country assignments will be
delivered one each to the designated Newco entity at Closing.
Except as indicated in Schedule 2(a)(viii), at Newco's request
and expense, separate country-specific assignments will be
delivered to Newco at a reasonable time following each such
request. All taxes, transfer fees and other costs required to
record Newco's title to Trademarks assigned pursuant to this
Agreement shall be borne by Newco.
ix. If for any reason a trademark required to be assigned to
Newco outside the United States of America hereunder to a Newco
entity in the breakfast-cereal, breakfast-cereal-based snack,
cookie and cracker fields cannot be assigned without also
assigning rights used in or associated with Oldco-related
businesses, the parties will work together in good faith to
accomplish the goal that such trademark will reside in Newco for
breakfast-cereal, breakfast-cereal-based snack, cookie and
cracker purposes and in RPCo., its affiliate or designee for
other purposes.
x. Except as otherwise specifically provided, with respect to
trademarks assigned pursuant to this Agreement:
(a) RPCo. agrees that in the Newco Territory it will not use,
other than as a Newco distributor, or apply to register, any
trademarks assigned to any Newco entity hereunder which are at
Closing applied for, registered or used by any Newco entity, for
a period of five (5) years following Closing, and thereafter to
the extent any such trademark is applied for, registered or used
by any Newco entity and not abandoned in a given jurisdiction in
the Newco Territory at the time RPCo. seeks to register or use
such trademark therein.
(b) Except for trademarks assigned to Newco in the Oldco
Territory pursuant to this Agreement, Newco agrees that in the
Oldco Territory it will not use, other than as an Oldco supplier,
or apply to register, any trademarks assigned to any Newco entity
hereunder which are at Closing applied for, registered or used by
any Newco entity for a period of five (5) years following Closing
and thereafter to the extent any such trademark is used by,
applied for or registered to any Oldco entity and not abandoned
in a given jurisdiction in the Oldco Territory at the time Newco
seeks to register or use such trademark therein. "Used" for
purposes of this and the next-preceding paragraph, shall mean
bona-fide commercialization, and not mere token use. Moreover,
in determining lack of use for purposes of this and the next-
preceding paragraph, the definition of abandonment in the
jurisdiction in question shall apply. In the absence of such
definition, either in the relevant statute or case law, the
definition of abandonment shall be the definition applied under
U.S. federal trademark law.
3. Additional Undertakings with Respect to "RALSTON"
a. By RPCo.
i. Subject to RPCo.'s rights which may be established as
contemplated by subparagraph 2(a)(x)(a) hereinabove, RPCo.
undertakes not to object to Ralston Foods' use of the word
RALSTON as a trademark and/or in its trade name in the Newco
Territory outside the United States of America in association
with breakfast cereal, breakfast-cereal-based snacks, cookies and
crackers.
ii. Except as otherwise provided for in this Agreement, and
subject to RPCo.'s rights which may be established as
contemplated by subparagraph 2(a)(x)(a) hereinabove, RPCo. agrees
not to use the trademark RALSTON or the trade name "Ralston
Purina Company" in association with breakfast cereal, breakfast-
cereal-based snacks, cookies and crackers in the Newco Territory.
iii. RPCo. agrees in perpetuity not to object to Ralston Foods'
use of RALSTON as a trademark and/or in its trade name in the
United States of America in association with any human foods.
iv. Except as otherwise provided for in this Agreement, RPCo.
agrees in perpetuity not to use the trademark RALSTON or the
trade name "Ralston Purina Company" in association with human
foods in the United States of America.
v. Anything in this Agreement to the contrary notwithstanding,
each party agrees not to object to the other's use of RALSTON in
connection with non-animal-related, non-food products used to
advertise and promote products for which the other may use the
RALSTON trademark.
b. By Newco
i. Newco undertakes, without limitation as to territory or
duration, not to object to RPCo.'s and RPCo.'s present and future
non-Newco affiliates' use of RALSTON as a trademark and in
its/their trade name(s) in association with products other than
human foods.
ii. Newco undertakes, without limitation as to territory or
duration, not to object to the inclusion of RALSTON in RPCo.'s
trade name in any good-faith reference to any human-food business
operated as an affiliate whose name does not itself include
RALSTON. Such affiliates now include Continental Baking Company
and Protein Technologies International, Inc.; however, such
undertaking also extends to affiliates RPCo. may hereafter
establish or acquire.
iii. Newco agrees in perpetuity not to use or register and not to
object to Oldco's trademark or trade-name use in Canada of
RALSTON in connection with any product or service.
iv. Without limitation as to territory or duration, Newco agrees
not to object to use by RPCo. and its affiliates of the word
"Ralston" in its/their trade names to the extent such companies
deal in Newco products as an authorized distributor.
v. Anything in this Agreement to the contrary notwithstanding,
and without limitation as to territory, Newco agrees in
perpetuity not to use or register the word RALSTON as a
trademark, trade name or part thereof, in connection with any
product, service or activity relating to animals and not to use
or register in perpetuity RALSTON as a trademark, trade name or
part thereof in connection with any product or service in the
Oldco Territory.
vi. Newco agrees not to object to the inclusion of RALSTON in
Ralston Analytical Laboratories, Ralston Office Services, Ralston
Purina Trust Fund, Ralston Purina Child Development Center, and
other names relating to RPCo. "corporate" activities without
regard to the fact that such activities may relate in some way to
RPCo.'s existing (e.g. Continental Baking Company) or future
human-food businesses.
vii. Anything in this Agreement to the contrary notwithstanding,
Newco agrees not to use the word RALSTON in the trade name of any
publicly traded company without limitation as to duration or
territory.
c. General
Newco shall have the right to use and to apply to register
RALSTON as a trademark in any jurisdiction in the Newco Territory
outside the United States of America for any human food and any
non-animal-related product or service except to the extent barred
by the law of such jurisdiction as a result of trademark rights
retained by Oldco pursuant to this Agreement but not abandoned,
or established by Oldco as the result of prior use or
registration in such jurisdiction following Closing and not
thereafter abandoned. In like manner, Oldco shall have the right
to use and to apply to register RALSTON as a trademark in any
jurisdiction in the Newco Territory outside the United States of
America for any product or service other than breakfast cereal,
breakfast-cereal-based snacks, cookies and crackers except to the
extent barred by the law of such jurisdiction as a result of
trademark rights assigned to Newco pursuant to this Agreement and
not abandoned, or established by Newco as the result of prior use
or registration in such jurisdiction following Closing and not
thereafter abandoned. The rights conferred by this subparagraph
3(c) are not subject to the five-(5-) year limitations in
subparagraph 2(a)(x).
4. To the extent assignable without third-party consent, and, if
not, to the extent such consents are obtained, at Closing, Newco-
related license agreements and contracts related to the rights in
Trademarks to be assigned hereunder between RPCo. and
unaffiliated third parties will be assigned from RPCo. to the
Newco entity to which they relate. Newco agrees to assume
RPCo.'s obligations under such agreements. RPCo. will not,
however, assign or cause to be assigned to any Newco entity, any
license to which Continental Baking Company, Protein Technologies
International, Inc. or other Oldco affiliate of RPCo. is a party
or has an interest.
5. Miscellaneous
a. RPCo. Exports
Except to the extent it may violate another agreement between the
parties hereto, Newco undertakes not to object to Oldco's use of
trademarks assigned to Newco on products produced by or for
Oldco, an Oldco affiliate, licensee, strategic ally or customer
in the Newco Territory for export to destinations outside the
Newco Territory.
b. Newco Phase-Out of Retained Marks
Newco agrees to phase out its use of the "Ralston Purina Company"
trade name, all Checkerboard Designs, except the design forming
part of the historic TOM MIX designs attached hereto as Schedule
5(b), and the words "Checkerboard Square," from its labels,
packaging, advertising, signs and other materials within twelve
(l2) months following Closing.
c. Heritage
Oldco, Newco and their affiliates will be allowed to refer to
their pre-spin-off heritage in good faith in truthful articles,
histories and the like and in packaging and in advertising to the
extent such packaging and advertising does not express or imply a
continuing relationship between Oldco, Newco and/or their
affiliates.
d. RALSTON & Heart Design
RPCo. will take steps within twelve (l2) months following Closing
to withdraw or, where appropriate, to allow to lapse, its RALSTON
& Heart Design applications which include bread and/or cake among
their recited goods and to cancel any such registrations in the
Newco Territory.
e. Isolated Soy Protein
For purposes of this Agreement, isolated soy protein and other
products now sold by Protein Technologies International Holdings,
Inc. and its affiliates shall not be considered human foods.
f. Yukery Agreement
Anything in this Agreement to the contrary notwithstanding, Newco
will acquire no rights pursuant to this Agreement inconsistent
with Oldco's obligations to Yukery Venezolana de Alimentos, C.A.
(hereinafter Yukery); however, if and when Oldco is discharged
from, or otherwise relieved of, such obligations, Oldco will
assign to Newco all rights which would otherwise inure to Newco
but for Oldco's obligations to Yukery under the aforementioned
February 20, l992 agreement.
g. Except to the extent it may violate another agreement between
the parties, Oldco shall have the right to source from any
country, products under any trademarks, whether or not assigned
to Newco hereunder, for sale anywhere, to the extent Newco is
unable or unwilling to supply the same at a competitive price.
h. Good Faith
The parties agree not to do indirectly, through related companies
or otherwise, what they could not do directly under this
Agreement.
6. Scope and Modification
This Trademark Agreement sets forth the entire agreement between
the parties and supersedes all prior agreements and understanding
between the parties relating to the subject matter hereof. None
of the terms of this Trademark Agreement may be waived or
modified except as expressly agreed to, in writing, by both
parties.
7. Successors and Assigns
Except as provided in Schedule 2(a)(vi), this Trademark Agreement
and all the provisions hereof shall be binding upon and inure to
the benefit of the parties and each of their respective
successors and assigns.
8. Interpretation
The section headings contained in this Trademark Agreement are
solely for the purpose of reference, are not part of the
agreement of the parties hereto, and shall not in any way affect
the meaning or interpretation of this Trademark Agreement.
9. Counterparts
This Trademark Agreement may be executed in two or more
counterparts, each of which may be deemed an original, but all of
which together shall constitute one and the same instrument.
l0. Governing Law
This Trademark Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Missouri.
ll. Additional Documents
The parties agree to execute or cause to be executed such
additional documents as may be reasonably required to give effect
to their undertakings in this Trademark Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Trademark Agreement as of the date first above written.
RALSTON PURINA COMPANY RALCORP HOLDINGS, INC.
By_________________________ By________________________
Name: Name:
Title: Title:
[EXECUTION COPY]
CREDIT AGREEMENT
Dated as of March 30, 1994
among
RALSTON PURINA COMPANY,
THE LENDERS PARTY HERETO
and
NATIONSBANK OF NORTH CAROLINA, N.A.,
as Agent
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS 1
SECTION 1.01. Defined Terms 1
SECTION 1.02. Accounting Terms 19
SECTION 1.03. Terms Generally 20
ARTICLE II. THE LOANS 20
SECTION 2.01. Revolving Loans 20
SECTION 2.02. Term Loan 23
SECTION 2.03. Competitive Loan Subfacility 24
SECTION 2.04. Swingline Loan Subfacility 26
SECTION 2.05. Termination and Reduction of
Commitments 29
SECTION 2.06. Fees 29
ARTICLE III. ADDITIONAL PROVISIONS REGARDING LOANS 30
SECTION 3.01. Default Rate 30
SECTION 3.02. Prepayments 30
SECTION 3.03. Extension and Conversion 32
SECTION 3.04. Alternate Rate of Interest 32
SECTION 3.05. Reserve Requirements; Change in
Circumstances 33
SECTION 3.06. Change in Legality 34
SECTION 3.07. Indemnity 35
SECTION 3.08. Mandatory Assignment; Commitment
Termination 35
ARTICLE IV. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS;
U.S. TAXES; EVIDENCE OF LOANS 36
SECTION 4.01. Payments and Computations 36
SECTION 4.02. Pro Rata Treatment 37
SECTION 4.03. Sharing of Payments 37
SECTION 4.04. U.S. Taxes 38
SECTION 4.05. Evidence of Loans 39
ARTICLE V. CONDITIONS PRECEDENT 40
SECTION 5.01. Conditions to Initial Loans to Ralston
Purina 40
SECTION 5.02. Conditions to Assignment to Ralcorp,
Release of Ralston Purina and
Initial Loans to Ralcorp 41
SECTION 5.03. Each Loan 43
ARTICLE VI. REPRESENTATIONS AND WARRANTIES 44
SECTION 6.01. Corporate Organization and Validity 44
SECTION 6.02. Pending Litigation 45
SECTION 6.03. Title to Properties 45
SECTION 6.04. Patents and Trademarks 45
SECTION 6.05. Governmental Consent 46
SECTION 6.06. Taxes 46
SECTION 6.07. Financial Statements 46
SECTION 6.08. Full Disclosure 47
SECTION 6.09. Reorganization Documents 47
SECTION 6.10. Funded Indebtedness 48
SECTION 6.11. Affiliates and Subsidiaries 48
SECTION 6.12. Governmental Regulations, Etc. 48
SECTION 6.13. Environmental Matters 49
SECTION 6.14. Solvency 49
SECTION 6.15. ERISA 49
ARTICLE VII. AFFIRMATIVE COVENANTS 50
SECTION 7.01. Information Covenants 50
SECTION 7.02. Preservation of Existence and
Franchises 53
SECTION 7.03. Books, Records and Inspections 53
SECTION 7.04. Compliance with Law 54
SECTION 7.05. Payment of Taxes and Other Claims 54
SECTION 7.06. Insurance 54
SECTION 7.07. Maintenance of Property 54
SECTION 7.08. Performance of Obligations 54
SECTION 7.09. ERISA 55
SECTION 7.10. Use of Proceeds 55
SECTION 7.11. Financial Covenants 55
SECTION 7.12. Material Subsidiaries 56
SECTION 7.13. Domestic Revenues 57
ARTICLE VIII. NEGATIVE COVENANTS 57
SECTION 8.01. Funded Indebtedness 57
SECTION 8.02. Liens 58
SECTION 8.03. Nature of Business 58
SECTION 8.04. Consolidation, Merger, Sale or Purchase
of Assets, etc. 58
SECTION 8.05. Transactions with Affiliates 59
SECTION 8.06. Dividends 60
SECTION 8.07. Advances, Investments, Loans, etc. 61
SECTION 8.08. No Dividend Restrictions 61
SECTION 8.09. Fiscal Year 61
ARTICLE IX. EVENTS OF DEFAULT 61
SECTION 9.01. Events of Default 61
SECTION 9.02. Acceleration; Remedies 64
ARTICLE X. AGENT 64
SECTION 10.01. Appointment and Authorization 64
SECTION 10.02. General Immunity 64
SECTION 10.03. Consultation with Professionals 65
SECTION 10.04. Documents; Reliance on Borrowing Base
Statements 65
SECTION 10.05. Rights as a Lender 65
SECTION 10.06. Responsibility of Agent 65
SECTION 10.07. Action by Agent 65
SECTION 10.08. Notices of Event of Default, Etc.. 66
SECTION 10.09. Indemnification of Agent 66
SECTION 10.10. No Representations 67
SECTION 10.11. Resignation 67
ARTICLE XI. MISCELLANEOUS 68
SECTION 11.01. Notices 68
SECTION 11.02. Survival of Agreement 69
SECTION 11.03. Binding Effect 69
SECTION 11.04. Benefit of Agreement 69
SECTION 11.05. Right of Set-Off 72
SECTION 11.06. No Waiver; Remedies Cumulative 73
SECTION 11.07. Payment of Expenses, etc. 73
SECTION 11.08. Amendments, Waivers and Consents 74
SECTION 11.09. Counterparts 74
SECTION 11.10. Headings 74
SECTION 11.11. Survival 74
SECTION 11.12. Governing Law; Submission to
Jurisdiction; Venue 75
SECTION 11.13. Severability 75
SECTION 11.14. Entirety 75
SCHEDULES
Schedule 1 Lenders and Commitment Percentages
Schedule 2 Form 10
Schedule 3 Form of Guarantor Joinder Agreement
Schedule 4 Form of Guaranty Agreement
Schedule 5 Form of Notice of Borrowing
Schedule 6 Form of Notice of
Extension/Conversion
Schedule 7 Permitted Investments
Schedule 8 Form of Ralcorp Assignment and
Assumption Agreement
Schedule 9 Form of Competitive Bid Requests
Schedule 10 Form of Legal Opinion of Timothy L.
Grosch, Esq., Associate
Counsel of
Ralston Purina [Closing Date]
Schedule 11 Form of Legal Opinion of Moore &
Van Allen
Schedule 12 Form of Legal Opinion of Timothy L.
Grosch, Esq., Associate
Counsel of
Ralston Purina [Effective Date
of Assignment]
Schedule 13 Form of Legal Opinion of R. W.
Lockwood, Esq., General
Counsel of Ralcorp
Schedule 14 Pending Litigation
Schedule 15 Ralcorp Affiliates
Schedule 16 Ralcorp Subsidiaries
Schedule 17 Environmental Disclosure
Schedule 18 Form of Officer's Compliance
Certificate
Schedule 19 Form of Lender Assignment Agreement
Schedule 20 Projected Usage of Loan Proceeds
THIS CREDIT AGREEMENT (as amended from time to time, the
"Agreement"), dated as of March 30, 1994, is made by and among
RALSTON PURINA COMPANY, a Missouri corporation ("Ralston
Purina"); the lenders listed in Schedule 1 (the "Lenders"); and
NATIONSBANK OF NORTH CAROLINA, N.A., a national banking
association, as agent for the Lenders (in such capacity, the
"Agent").
WHEREAS, Ralston Purina is entering into this Agreement for the
purpose of financing the reorganization of Ralston Purina and
certain of its subsidiaries (as more particularly described in
the Reorganization Agreement and the Form 10 (each as hereinafter
defined), the "Reorganization") and the distribution, on a pro
rata basis, of the common stock of its wholly-owned subsidiary
Ralcorp Holdings, Inc., a Missouri corporation, to the holders of
Ralston-Ralston Purina Group $.10 par value Common Stock of
Ralston Purina (as more particularly described in the Form 10
(hereinafter defined), the "Distribution"); and
WHEREAS, after the Reorganization and the Distribution, Ralcorp
Holdings, Inc. will be a holding company and its operating
subsidiaries will need funds for their working capital and
general corporate purposes, and the Lenders have agreed to
provide financing for such purposes pursuant to the terms of this
Agreement.
NOW, THEREFORE, Ralston Purina, the Lenders and the Agent hereby
agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement,
the following terms shall have the meanings specified below:
"Adjusted Eurodollar Rate" shall mean for the Interest
Period for each Eurodollar Loan comprising part of the same
borrowing (including conversions, extensions and renewals), a per
annum interest rate equal to the per annum rate obtained by
dividing (a) the rate of interest determined by the Agent on the
basis of the offered rates for deposits in dollars for a period
of time corresponding to such Interest Period (and commencing on
the first day of such Interest Period), which appear on the
Reuters Screen LIBO Page as of 11:00 a.m. (London time) two (2)
Business Days before the first day of such Interest Period
(provided that if at least two such offered rates appear on the
Reuters Screen LIBO Page, the rate in respect of such Interest
Period will be the arithmetic mean of such offered rates) by (b)
a percentage equal to 100% minus the Adjusted Eurodollar Rate
Reserve Percentage for such Interest Period. As used herein, (i)
"Reuters Screen LIBO Page" means the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service for the purpose
of displaying London interbank offered rates of major banks) and
(ii) "Adjusted Eurodollar Rate Reserve Percentage", for the
Interest Period for each Eurodollar Loan comprising part of the
same borrowing (including conversions, extensions and renewals),
shall mean the percentage applicable two Business Days before the
first day of such Interest Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for a member
bank of the Federal Reserve System in New York City with respect
to liabilities or assets consisting of or including eurocurrency
liabilities, as such term is defined in Regulation D (or with
respect to any other category of liabilities which includes
deposits by reference to which the interest rate on Eurodollar
Loans is determined) having a term equal to the Interest Period
for the Eurodollar Loan for which such Adjusted Eurodollar Rate
Reserve Percentage is being determined.
"Affiliate" shall mean, with respect to any Person, any
other Person (i) directly or indirectly controlling or controlled
by or under direct or indirect common control with such Person or
(ii) directly or indirectly owning or holding five percent (5%)
or more of the equity interest in such Person. For purposes of
this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" shall have the meaning assigned to such term in
the heading hereof.
"Agent Fee Letter" shall mean the fee letter dated
January 11, 1994 among Ralston Purina and NationsBanc Capital
Markets, Inc.
"Agent's Fees" shall have the meaning assigned to such
term in Section 2.06(c).
"Agreement" shall have the meaning assigned to such term
in the heading hereof.
"Applicable Margin" shall mean, (i) at any time prior to
the Effective Date of Assignment, 3/8%, (ii) for the period
commencing with the Effective Date of Assignment through and
including the date immediately preceding the first Calculation
Date to occur after the Effective Date of Assignment, 1%, and
(iii) from the first Calculation Date to occur after the
Effective Date of Assignment and thereafter, the applicable
margin corresponding to the ratios described below in effect as
of the most recent Calculation Date:
Pricing
Level Consolidated Debt
Coverage Ratio
Applicable
Margin
III Greater than 3.0 to 1.01%
II Equal to or less than 3.0 to 1.0 but
greater than 2.5 to 1.0
3/4%
IEqual to or less than 2.5 to 1.05/8%
Determination of the appropriate Applicable Margin based on the
Consolidated Debt Coverage Ratio shall be made as of each
Calculation Date. The Consolidated Debt Coverage Ratio in effect
as of a Calculation Date shall establish the Applicable Margin
that shall be effective as of the date designated by the Agent as
the Applicable Margin Change Date. The Agent shall determine the
Applicable Margin as of each Calculation Date occurring after the
Effective Date of Assignment and shall promptly notify the
Borrower and the Lenders of the Applicable Margin so determined
and of the Applicable Margin Change Date. Such determinations by
the Agent of the Applicable Margin shall be conclusive absent
manifest error.
"Applicable Margin Change Date" shall mean, with respect
to
any Calculation Date occurring after the Effective Date of
Assignment, a date designated by the Agent that is not more than
five (5) Business Days after receipt by the Agent of the Required
Financial Information for such Calculation Date.
"Bankruptcy Event" shall mean, with respect to any
Person,
the occurrence of any of the following with respect to such
Person: (i) a court or governmental agency having jurisdiction in
the premises shall enter a decree or order for relief in respect
of such Person in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such
Person or for any substantial part of its Property or ordering
the winding up or liquidation of its affairs; or (ii) there shall
be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or any case, proceeding or other action for
the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for
any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other
case, proceeding or other action shall remain undismissed,
undischarged or unbonded for a period of sixty (60) consecutive
days; or (iii) such Person shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for
relief in an involuntary case under any such law, or consent to
the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official)
of such Person or for any substantial part of its Property or
make any general assignment for the benefit of creditors; or (iv)
such Person shall be unable to, or shall admit in writing its
inability to, pay its debts generally as they become due.
"Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the nearest whole multiple of
1/16 of 1%) equal to the greater of (a) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1% or (b) the
Prime Rate in effect on such day. For purposes hereof, (i)
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by NationsBank as its prime rate in
effect at its principal office in Charlotte, North Carolina; each
change in the Prime Rate shall be effective on the date such
change is publicly announced as effective and (ii) "Federal Funds
Effective Rate" shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of
the Federal Reserve System, or, if such rate is not so released
for any day which is a Business Day, the arithmetic average
(rounded upwards to the next 1/100th of 1%), as determined by the
Agent, of the quotations for the day of such transactions
received by the Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent
shall have determined (which determination shall be conclusive
absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or
failure of the Agent to obtain sufficient quotations in
accordance with the terms hereof, the Base Rate shall be
determined without regard to clause (a) of the first sentence of
this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Base Rate Loan" shall mean any Loan bearing interest at
a
rate determined by reference to the Base Rate in accordance with
the provisions of Article II.
"Borrower" shall mean (i) prior to the Effective Date of
Assignment, Ralston Purina and (ii) on and after the Effective
Date of Assignment, Ralcorp.
"Bridging Agreement" shall mean that certain Bridging
Agreement between Ralston Purina and Ralcorp in the form of
Exhibit 2.3 to the Form 10.
"Business Day" shall mean any day (other than a day which
is
a Saturday, Sunday or legal holiday in the State of North
Carolina or the State of Missouri) on which banks are open for
business in Charlotte, North Carolina and the State of Missouri;
provided, however, that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any
day on which banks are not open for dealings in dollar deposits
in the London interbank market.
"Calculation Date" shall mean each December 31,
March 31,
June 30 and September 30.
"Capital Lease" shall mean any lease of Property which,
in
accordance with GAAP, should be capitalized on the lessee's
balance sheet or for which the amount of the assets and
liabilities thereunder, if so capitalized, should be disclosed,
in accordance with GAAP, in a note to such balance sheet.
"Capital Transaction" shall mean any of (i) an issuance
by
Ralcorp or any of its Subsidiaries of (A) new shares of its
capital stock, (B) any shares of its capital stock pursuant to
the exercise of options or warrants or (C) any shares of its
capital stock pursuant to the conversion of any debt securities
to equity or (ii) the incurrence by Ralcorp or any of its
Subsidiaries of any Funded Indebtedness.
"Cash Equivalents" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is
pledged in support thereof) having maturities of not more than
twelve months from the date of acquisition, (ii) dollar
denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits or Eurodollar
certificates of deposit of (A) any domestic commercial bank with
a bank rating of at least C (or the equivalent thereof) by
Thomson Bank Watch or (B) any bank whose short-term commercial
paper rating from S&P is at least A-1 (or the equivalent thereof)
or from Moody's is at least P-1 (or the equivalent thereof) (any
such bank being an "Approved Bank"), in each case with maturities
of not more than twelve months from the date of acquisition,
(iii) commercial paper and variable or fixed rate notes issued by
any Approved Bank (or by the parent company thereof) or any
commercial paper and variable or fixed rate notes issued by, or
guaranteed by any domestic corporation rated A-2 (or the
equivalent thereof) or better by S&P or P-2 (or the equivalent
thereof) or better by Moody's and maturing within twelve months
of the date of acquisition, (iv) interests in money market or
mutual funds which invest solely in assets or securities of the
type described in subparagraph (i), (ii) and/or (iii) hereof and
(v) money market preferred investments having a long-term rating
of A or better by S&P or A-2 or better by Moody's or a short-term
rating of A-1 or better by S&P or P-1 or better by Moody's.
"Change of Control" shall mean the occurrence of any of
the
following events: (i) any Person or two or more Persons acting
in concert shall have acquired beneficial ownership, directly or
indirectly, of, or shall have acquired by contract or otherwise,
or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, control
over, Voting Stock of the Borrower (or other securities
convertible into such Voting Stock) representing 35% or more of
the combined voting power of all Voting Stock of the Borrower, or
(ii) during any period of up to 24 consecutive months, commencing
after the Closing Date, individuals who at the beginning of such
24 month period were directors of the Borrower (together with any
new director whose election by the Borrower's Board of Directors
or whose nomination for election by the Borrower's shareholders
was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning
of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the directors of the Borrower then in office. As
used herein, "beneficial ownership" shall have the meaning
provided in Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934.
"Closing Date" shall mean the date hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
the
same may be amended from time to time.
"Commitment" shall mean, (i) with respect to each Lender,
the commitment of such Lender (A) to make Revolving Loans in an
aggregate principal amount at any time outstanding of up to such
Lender's Commitment Percentage multiplied by the Revolving
Committed Amount (as such Revolving Committed Amount may be
reduced from time to time pursuant to Section 2.05), (B) to make
available to the Borrower a portion of the Term Loan equal to
such Lender's Commitment Percentage of the Term Loan and (C) to
purchase participation interests in the Swingline Loans in
accordance with the provisions of Section 2.04(b)(iii), and (ii)
with respect to the Swingline Lender, the commitment of the
Swingline Lender to make Swingline Loans in an aggregate
principal amount at any time outstanding of up to the Swingline
Committed Amount.
"Commitment Percentage" shall mean, for each Lender, the
percentage identified as its Commitment Percentage opposite such
Lender's name on Schedule 1, as such percentage may be modified
in connection with any assignment made in accordance with the
terms of Section 11.04.
"Competitive Bid" shall mean an offer by a Lender to make
a
Competitive Loan pursuant to the terms of Section 2.03.
"Competitive Bid Rate" shall mean, as to any Competitive
Bid
made by a Lender in accordance with the provisions of Section
2.03, the fixed rate of interest offered by the Lender making
such Competitive Bid.
"Competitive Bid Request" shall mean a request by the
Borrower for Competitive Bids in accordance with the provisions
of Section 2.03.
"Competitive Bid Request Fee" shall have the meaning
assigned to such term in Section 2.06(d).
"Competitive Loan" shall mean a loan made by a
Lender in its
discretion pursuant to the provisions of Section 2.03.
"Competitive Loan Lender" shall mean, at any time, a
Lender
which has any Competitive Loans outstanding.
"Consolidated Debt Coverage Ratio" shall mean, at any
time,
the ratio of (i) Consolidated Funded Indebtedness at such time to
(ii) Consolidated EBITDA for the four fiscal-quarter period then
ended.
"Consolidated EBIT" shall mean, for any period, the sum
of
(i) Consolidated Net Income for such period, plus (ii) an amount
which, in the determination of Consolidated Net Income for such
period, has been deducted for (A) Consolidated Interest Expense
for such period and (B) total Federal, state, local and foreign
income, value added and similar taxes of the Borrower and its
consolidated Subsidiaries for such period.
"Consolidated EBITDA" shall mean, for any period, the sum
of
(i) Consolidated EBIT for such period, plus (ii) an amount which,
in the determination of Consolidated Net Income for such period,
has been deducted for consolidated depreciation and amortization
expense of the Borrower and its consolidated Subsidiaries for
such period.
"Consolidated Funded Indebtedness" shall mean, at any
time,
the outstanding principal amount of all Funded Indebtedness,
without duplication, of the Borrower and its consolidated
Subsidiaries at such time.
"Consolidated Interest Coverage Ratio" shall mean, for
any
period, the ratio of (i) Consolidated EBIT to (ii) Consolidated
Interest Expense.
"Consolidated Interest Expense" shall mean, for any
period,
all interest expense of the Borrower and its consolidated
Subsidiaries for such period, as determined in accordance with
GAAP.
"Consolidated Net Income" shall mean, for any period, net
income after taxes for such period for the Borrower and its
consolidated Subsidiaries, as determined in accordance with GAAP.
"Consolidated Total Assets" shall mean, at any time, all
items which, in accordance with GAAP, would be classified as
assets on a consolidated balance sheet of the Borrower as of such
time.
"Controlled Group" shall mean (i) the controlled group of
corporations as defined in Section 414(b) of the Code and the
applicable regulations thereunder, or (ii) the group of trades or
businesses under common control as defined in Section 414(c) of
the Code and the applicable regulations thereunder, of which any
Credit Party is a member.
"Credit Documents" shall mean (i) this
Agreement, (ii) on
and after Effective Date of Assignment, (A) the Ralcorp
Assignment and Assumption Agreement and (B) the Guaranty
Agreement (including any Guarantor Joinder Agreement) and (iii)
all other related agreements and documents issued or delivered
under this Agreement or, on and after the Effective Date of
Assignment, under the Guaranty Agreement (including any Guarantor
Joinder Agreement) or pursuant hereto or thereto.
"Credit Party" shall mean (i) prior to the Effective Date
of
Assignment, the Borrower and (ii) on and after the Effective Date
of Assignment, any of the Borrower and the Guarantors.
"Default" shall mean any event or condition which upon
notice, lapse of time or both would constitute an Event of
Default.
"Distribution" shall have the meaning assigned to such
term
in the first recital paragraph hereof.
"Dividend" shall mean, with respect to any corporation,
any
cash or non-cash dividend by such corporation to its
stockholders, any return of capital by such corporation to its
stockholders, any other distribution, payment or delivery of
property or cash by such corporation to its stockholders as such,
any direct or indirect redemption, retirement, purchase or other
acquisition of any shares of any class of the capital stock of
such corporation now or hereafter outstanding (or any warrants
for or options or stock appreciation rights in respect of any
such shares), or the setting aside of any funds by such
corporation for any of the foregoing purposes.
"Dollars", "dollars" or "$" shall mean lawful money of
the
United States of America.
"Domestic Credit Party" shall mean (i) prior to the
Effective Date of Assignment, the Borrower and (ii) on and after
the Effective Date of Assignment, any one of the Borrower and
each of the Guarantors which is a Domestic Subsidiary of the
Borrower.
"Domestic Subsidiary" shall mean, with respect to any
Person, any Subsidiary of such Person which is incorporated or
organized under the laws of any State of the United States or the
District of Columbia.
"Effective Date of Assignment" shall have the meaning
assigned to such term in Section 11.04(b).
"Eligible Assignee" shall mean (i) any Lender or any
Affiliate or Subsidiary of a Lender, and (ii) any other
commercial bank, financial institution or "accredited investor"
(as defined in Regulation D of the Securities and Exchange
Commission) reasonably acceptable to the Agent and the Borrower.
"ERISA" shall mean the Employee Retirement
Income Security
Act of 1974, as amended from time to time.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with any Credit Party is a
member of the same Controlled Group.
"Eurodollar Loan" shall mean any Revolving Loan or any
portion of the Term Loan bearing interest at a rate determined by
reference to the Adjusted Eurodollar Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to
such
term in Section 9.01.
"Federal Funds Effective Rate" shall have the meaning
assigned to such term within the definition of "Base Rate".
"Fees" shall mean all fees payable pursuant to Section
2.06.
"Fixed Rate Loan" shall mean a Competitive Loan bearing
interest at a fixed percentage rate per annum as provided in
accordance with the provisions of Section 2.03.
"Foreign Credit Party" shall mean any Credit Party which
is
not a Domestic Credit Party.
"Foreign Subsidiary" shall mean, with respect to any
Person,
any Subsidiary of such Person which is not a Domestic Subsidiary.
"Form 10" shall mean the registration statement on Form
10
filed with and declared effective by the Securities and Exchange
Commission in respect of the Distribution in the form attached as
Schedule 2.
"Funded Indebtedness" shall mean, with respect to any
Person, without duplication, (i) all indebtedness, excluding
intercompany items, of such Person for borrowed money, (ii) all
obligations, including without limitation intercompany items, of
such Person for the deferred purchase price of assets or services
which in accordance with GAAP would be shown to be a liability of
such Person (or on the liability side of a balance sheet of such
Person), (iii) indebtedness of such Person created or arising
under any conditional sale or title retention agreement, (iv) the
principal portion of all obligations of such Person under Capital
Leases, (v) the maximum available amount of all letters of credit
or acceptances issued or created for the account of such Person,
(vi) all Guaranty Obligations of such Person with respect to
Funded Indebtedness of another entity, (vii) all Funded
Indebtedness of another entity secured by a Lien on any Property
of such Person, whether or not such Funded Indebtedness has been
assumed by such Person and (viii) all Funded Indebtedness of any
partnership or joint venture (except for any such Funded
Indebtedness with respect to which recourse by the holder thereof
is limited to the assets of such partnership or joint venture)
where such Person is a general partner, net of any assets of such
partnership or joint venture.
"GAAP" shall mean generally accepted accounting
principles
and provisions as used in the United States of America and as in
effect as of the Closing Date, applied on a consistent basis
subject to the terms of Section 1.02.
"Governmental Authority" shall mean any Federal, state,
local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guarantor" shall mean each of the Subsidiaries of
Ralcorp
which is a party to the Guaranty Agreement, including each
Subsidiary of Ralcorp which becomes a party to the Guaranty
Agreement pursuant to a Guarantor Joinder Agreement.
"Guarantor Joinder Agreement" shall mean a Guarantor
Joinder
Agreement substantially in the form of Schedule 3.
"Guaranty Agreement" shall mean the Guaranty Agreement in
the form attached as Schedule 4.
"Guaranty Obligations" shall mean, with respect to any
Person, without duplication, any obligations of such Person
(other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) guaranteeing or
intended to guarantee any Funded Indebtedness of any other Person
in any manner, whether direct or indirect, and including without
limitation any obligation, whether or not contingent, (i) to
purchase any such Funded Indebtedness or any Property
constituting security therefor, (ii) to advance or provide funds
or other support for the payment or purchase of any such Funded
Indebtedness or to maintain working capital, solvency or other
balance sheet condition of such other Person (including without
limitation keep well agreements, maintenance agreements, comfort
letters or similar agreements or arrangements) for the benefit of
any holder of Funded Indebtedness of such other Person, (iii) to
lease or purchase Property, securities or services primarily for
the purpose of assuring the holder of such Funded Indebtedness,
or (iv) to otherwise assure or hold harmless the holder of such
Funded Indebtedness against loss in respect thereof. The amount
of Guaranty Obligations hereunder shall be deemed to be an amount
equal to the stated or determinable amount of the Funded
Indebtedness in respect of which such Guaranty Obligation is made
or, if not stated or determinable, the maximum reasonably
anticipated amount in respect thereof (assuming such other Person
is required to perform thereunder) as determined in good faith.
"Hazardous Substances" shall have the meaning assigned to
such term in Section 6.13.
"Information Statement" shall mean the Information
Statement
referred to in the Form 10.
"Interest Payment Date" shall mean (i) as to
any Base Rate
Loan, the last day of each March, June, September and December,
the date of repayment of the principal of such Loan and the
Maturity Date, (ii) as to any Eurodollar Loan, the last day of
each Interest Period for such Loan and the Maturity Date, and in
addition where the applicable Interest Period is more than 3
months, then also on the date 3 months from the beginning of the
Interest Period, and each 3 months thereafter, (iii) as to any
Fixed Rate Loan, the last day of the Interest Period for such
Loan, the Effective Date of Assignment, the Maturity Date, and in
addition where the applicable Interest Period is more than 90
days, then also on the date 90 days from the beginning of the
Interest Period and each 90 days thereafter and (iv) as to any
Quoted Rate Swingline Loan, the last day of the Interest Period
for such Loan and the Maturity Date. If an Interest Payment Date
falls on a date which is not a Business Day, such Interest
Payment Date shall be deemed to be the next succeeding Business
Day, except that in the case of Eurodollar Loans where the next
succeeding Business Day falls in the next succeeding calendar
month, then on the next preceding Business Day.
"Interest Period" shall mean (i) as to any Eurodollar
Loan,
a period of one, two, three or six months' duration, as the
Borrower may elect, commencing in each case on the date of the
borrowing (including conversions, extensions and renewals), (ii)
as to any Fixed Rate Loan, a period commencing in each case on
the date of the borrowing and ending on the date specified in the
applicable Competitive Bid whereby the offer to make such Fixed
Rate Loan was extended (such ending date in any event to be not
less than 15 nor more than 180 days from the date of borrowing)
and (iii) as to any Quoted Rate Swingline Loan, a period
commencing in each case on the date of the borrowing and ending
on the date agreed to by the Borrower and the Swingline Lender in
accordance with the provisions of Section 2.04(b)(i) (such ending
date in any event to be not more than 7 Business Days from the
date of borrowing); provided, however, (A) if any Interest Period
would end on a day which is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the
next succeeding calendar month, then on the next preceding
Business Day), (B) no Interest Period shall extend beyond the
Maturity Date, (C) no Interest Period for a Eurodollar Loan that
is part of the Term Loan shall extend beyond the next Term Loan
Installment Payment Date, unless the portion of the Term Loan
that is made up of Base Rate Loans together with the portion of
the Term Loan consisting of Eurodollar Loans with Interest
Periods which expire on or prior to such Term Loan Installment
Payment Date is at least equal to the amount of the next Required
Term Loan Principal Payment and (D) in the case of Eurodollar
Loans, where an Interest Period begins on a day for which there
is no numerically corresponding day in the calendar month in
which the Interest Period is to end, such Interest Period shall,
subject to clause (A) above, end on the last Business Day of such
calendar month.
"Investment", in any Person, shall mean any
loan or
advance
to such Person, any purchase or other acquisition of any capital
stock, warrants, rights, options, obligations or other securities
of such Person, any capital contribution to such Person or any
other investment in such Person, including, without limitation,
any Guaranty Obligation incurred for the benefit of such Person.
"Lenders" shall have the meaning assigned to such term in
the heading hereof. The term "Lenders" shall also include within
the meaning thereof any Person which becomes a Lender in
accordance with the terms of Section 11.04(c).
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance,
lien (statutory or otherwise), preference, priority or charge of
any kind (including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the Uniform
Commercial Code as adopted and in effect in the relevant
jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
"Loan" or "Loans" shall mean the Revolving Loans, the
Term
Loan (or a portion of the Term Loan or any Revolving Loan bearing
interest at the Base Rate or the Adjusted Eurodollar Rate and
referred to as a Base Rate Loan or a Eurodollar Loan), the
Competitive Loans and/or the Swingline Loans, individually or
collectively, as appropriate.
"Long Term Debt" shall mean, with respect to any Person,
all
indebtedness of such Person which, in accordance with GAAP, would
be classified as long term debt on a balance sheet of such
Person, but in any event including all indebtedness of such
Person having a final maturity date of more than one year after
the date of creation thereof, notwithstanding that payments in
respect thereof are required to be made by such Person within one
year of the date of determination. Any indebtedness which is
extended or renewed shall be deemed to have been created at the
date of such extension or renewal.
"Mandatory Borrowing" shall have the meaning assigned to
such term in Section 2.04(b)(iii).
"Material Adverse Effect" shall mean a material adverse
effect on (i) the consolidated operations or consolidated
financial condition of the Borrower, (ii) the ability of the
Credit Parties taken as a whole to perform any material
obligation under the Credit Documents or (iii) the material
rights and remedies of the Lenders under the Credit Documents.
"Material Plan" shall have the meaning assigned to such
term
in Section 9.01(h).
"Material Subsidiary" shall mean (i) Ralston Foods, Inc.,
Bremner, Inc., Beech-Nut Nutrition Corporation and Keystone
Resorts Management, Inc. and (ii) any other direct or indirect
Subsidiary of Ralcorp which on or after the Effective Date of
Assignment has total assets equal to or greater than 10% of
Consolidated Total Assets.
"Maturity Date" shall mean March 31, 1999.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean at any time an employee
pension benefit plan within the meaning of Section 3(37) of ERISA
to which any Credit Party or ERISA Affiliate is then making or
accruing an obligation to make contributions or with respect to
which any Credit Party or ERISA Affiliate has any liability.
"NationsBank" shall mean NationsBank of North Carolina,
N.A., a national banking association.
"Net Proceeds" shall mean proceeds in the form of cash or
Cash Equivalents received by Ralcorp or any of its Subsidiaries
from time to time in connection with any Capital Transaction
(other than pursuant to the exercise of stock-based awards
granted by Ralcorp to any of its directors, officers or
employees), net of the actual costs incurred by Ralcorp or any of
its Subsidiaries in connection with and attributable to such
Capital Transaction.
"Net Worth" shall have the meaning assigned to such term
in
the Reorganization Agreement.
"Notice of Borrowing" shall mean a written notice of
borrowing in substantially the form of Schedule 5, as required by
Section 2.01(b) or Section 2.02(b).
"Notice of Extension/Conversion" shall mean a written
notice
of continuance or conversion of one or more Loans in
substantially the form of Schedule 6, as required by Section
3.03.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation,
a body corporate established within the Department of Labor
pursuant to ERISA, or any successor thereto.
"Permitted Investments" shall mean Investments which are
either (i) cash and Cash Equivalents, (ii) accounts receivable
created, acquired or made in the ordinary course of business and
payable or dischargeable in accordance with customary trade
terms, (iii) subject to the terms of Section 7.12, acquisitions
permitted by Section 8.04(c), (iv) subject to the terms of
Section 7.12, (A) Investments in Domestic Subsidiaries of the
Borrower and (B) Investments in Foreign Subsidiaries of the
Borrower (in addition to Investments permitted by clause (iii)
above), provided that, after giving effect to such Investment,
the aggregate amount of all such Investments made pursuant to
this clause (iv)(B) since the Closing Date (if Ralston Purina is
the Borrower) or the Effective Date of Assignment (if Ralston
Purina is no longer the Borrower), together with the aggregate
amount of transfers to Foreign Subsidiaries of the Borrower made
pursuant to Section 8.05(c), does not exceed 5% of Consolidated
Total Assets as of the most recent fiscal year end preceding the
date of such Investment with respect to which the Agent shall
have received the Required Financial Information, (v)
transactions permitted by Section 8.05, (vi) loans to directors,
officers, employees, agents, customers or suppliers that do not
exceed an aggregate principal amount of $5,000,000 at any one
time outstanding, (vii) equity securities listed on the New York
Stock Exchange ("NYSE"), provided that (A) the long-term credit
rating of the corporation issuing such securities shall be A- (or
the equivalent thereof) or better from S&P or A3 (or the
equivalent thereof) or better from Moody's and (B) the aggregate
purchase price paid for all such equity securities held at any
time shall not exceed $5,000,000 or (viii) Investments set forth
in Schedule 7 (but without additional acquisitions thereof except
as otherwise permitted hereby).
"Permitted Liens" shall mean (a) (i) Liens in favor of
the
Agent on behalf of the Lenders, (ii) Liens for taxes not yet due
or Liens for taxes being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance
with GAAP have been established (and as to which the Property
subject to any such Lien is not yet subject to foreclosure, sale
or loss on account thereof); (iii) Liens in respect of Property
imposed by law arising in the ordinary course of business such as
materialmen's, mechanics', warehousemen's and other like Liens
provided that such Liens secure only amounts not yet due and
payable or, if due and payable, are being contested in good faith
by appropriate proceedings for which adequate reserves determined
in accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof); (iv) pledges or
deposits made to secure payment of worker's compensation
insurance, unemployment insurance, pensions or social security
programs; (v) Liens arising from good faith deposits in
connection with or to secure performance of tenders, bids,
leases, government contracts, performance and return-of-money
bonds and other similar obligations incurred in the ordinary
course of business (other than obligations in respect of the
payment of borrowed money); (vi) Liens arising from good faith
deposits in connection with or to secure performance of statutory
obligations and surety and appeal bonds; (vii) easements, rights-
of-way, restrictions (including zoning restrictions), minor
defects or irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use of
the encumbered Property for its intended purposes; (viii) Liens
arising from Uniform Commercial Code financing statements
regarding Capital Leases and purchase money Liens securing
purchase money indebtedness, in each case to the extent permitted
under Section 8.01(e); (ix) Liens on Property of any Person at
the time such Person becomes a Subsidiary of the Borrower or any
of its Subsidiaries; (x) Liens identified in the financial notes
in the Form 10; (xi) Liens on Property of any Subsidiary of the
Borrower and exclusively securing indebtedness of such Subsidiary
to any Credit Party; (xii) subject to the terms of Section 8.01
and Section 8.04, Liens on any Property created, assumed or
otherwise brought into existence in contemplation of the sale or
other disposition of such Property, whether directly or
indirectly by way of share disposition or otherwise, provided
that after 120 days from the creation of such Lien such Property
shall not be owned by the Borrower or any of its Subsidiaries and
any indebtedness secured by such Lien shall be without recourse
to the Borrower or any of its Subsidiaries; and (xiii)
extensions, renewals or replacements, in whole or in part, of any
Lien referred to in the foregoing clauses (i) to (xii),
inclusive, provided that the principal amount of indebtedness
secured thereby shall not exceed the principal amount of
indebtedness so secured at the time of such extension, renewal or
replacement, and that such extension, renewal or replacement
shall be limited to all or any part of the same Property that
secured the Lien extended, renewed or replaced (plus improvements
on such Property); and (b) Liens securing an aggregate amount of
indebtedness outstanding at any time that is no greater than the
lesser of (i) $30,000,000 and (ii) 5% of the Consolidated Total
Assets less (A) all liabilities and liability items except long-
term debt, deferred income taxes and shareholders' equity and (B)
all good will, trade names, trademarks, patents, unauthorized
debt discount and expenses, and other similar intangibles, all as
computed pursuant to GAAP.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other
enterprise or any Governmental Authority.
"Plan" shall mean any "single-employer plan" (as defined
in
Section 4001(a)(15) of ERISA and subject to Title IV of ERISA),
which is maintained, or at any time during the five calendar
years preceding the date of this Agreement was maintained, for
employees of any Credit Party or an ERISA Affiliate.
"Prime Rate" shall have the meaning assigned to such term
within the definition of "Base Rate".
"Pro Forma Basis" shall mean, with respect to any
transaction, that such transaction shall be deemed to have
occurred as of the first day of the four fiscal-quarter period
ending as of the most recent Calculation Date preceding the date
of such transaction with respect to which the Agent has received
the Required Financial Information. As used herein,
"transaction" shall mean (i) any incurrence, assumption or
retirement of Funded Indebtedness as referred to in Section
8.01(f), (ii) any corporate merger or consolidation as referred
to in Section 8.04(a), (iii) any sale or other disposition of
assets as referred to in Section 8.04(b) or (iv) any acquisition
of capital stock or securities or any purchase, lease or other
acquisition of Property as referred to in Section 8.04(c). With
respect to any transaction of the type described in clause (i)
above regarding Funded Indebtedness which has a floating or
formula rate, the implied rate of interest for such Funded
Indebtedness for the applicable period for purposes of this
definition shall be determined by utilizing the rate which is or
would be in effect with respect to such Funded Indebtedness as at
the relevant date of determination.
"Property" shall mean any interest in any kind of
property
or asset, whether real, personal or mixed, or tangible or
intangible.
"Quoted Rate" shall mean, with respect to any Quoted Rate
Swingline Loan, the fixed percentage rate per annum offered by
the Swingline Lender and accepted by the Borrower with respect to
such Swingline Loan as provided in accordance with the provisions
of Section 2.04.
"Quoted Rate Swingline Loan" shall mean a Swingline Loan
bearing interest at a Quoted Rate.
"Ralcorp" shall mean (i) prior to consummation of the
Reorganization, the Ralcorp Businesses and (ii) upon and after
consummation of the Reorganization, Ralcorp Holdings, Inc., a
Missouri corporation wholly-owned by Ralston Purina as of the
Closing Date.
"Ralcorp Assignment and Assumption Agreement" shall mean
the
Assignment, Assumption and Release Agreement among Ralston
Purina, Ralcorp and the Agent, substantially in the form of
Schedule 8.
"Ralcorp Businesses" shall have the meaning assigned to
such
term in the Form 10.
"Ralston Purina" shall have the meaning assigned to such
term in the heading hereof.
"Regulation D, G, T, U or X" shall mean Regulation D, G,
T,
U or X, as applicable, of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Reorganization" shall have the meaning assigned to such
term in the first recital paragraph hereof.
"Reorganization Agreement" shall mean that certain
Agreement
and Plan of Reorganization between Ralston Purina and Ralcorp in
the form of Exhibit 2.1 to the Form 10.
"Reorganization Documents" shall mean collectively, the
Reorganization Agreement and the agreements and instruments to be
executed and delivered as of the effective date of Distribution
as contemplated by the Reorganization Agreement, including
without limitation the Tax Sharing Agreement, the Bridging
Agreement, the Trademark Agreement and the Technology Agreement.
"Required Financial Information" shall mean,
with respect to
the applicable Calculation Date, (i) the financial statements of
the Borrower required to be delivered pursuant to Section 7.01
for the fiscal period or quarter ending as of such Calculation
Date, and (ii) the certificate of the chief financial officer of
the Borrower required by Section 7.01(c) to be delivered with the
financial statements described in clause (i) above.
"Required Lenders" shall mean, at any time, Lenders which
are then in compliance with their obligations hereunder (as
determined by the Agent) and holding in the aggregate at least
51% of (i) the Commitments to make Revolving Loans and the Term
Loan or (ii) if the Commitments have been terminated, the
outstanding Loans.
"Required Term Loan Principal Payment" shall mean, for
any
Term Loan Installment Payment Date, the amount corresponding to
such date as set forth below:
Term Loan Installment Required
Term Loan
Payment Date Principal
Payment
March 31, 1995
$12,500,000
September 30, 1995
$12,500,000
March 31, 1996
$25,000,000
September 30, 1996
$25,000,000
March 31, 1997
$25,000,000
September 30, 1997
$25,000,000
March 31, 1998
$31,250,000
September 30, 1998
$31,250,000
March 31, 1999
$62,500,000
"Revolving Committed Amount" shall have the meaning
assigned
to such term in Section 2.01(a).
"Revolving Loans" shall have the meaning assigned to such
term in Section 2.01(a).
"S&P" shall mean Standard & Poors Corporation.
"SEC" shall mean the Securities and Exchange Commission.
"Solvent" shall mean, with respect to any Person as of a
particular date, that on such date (a) the fair value of the
Property of such Person is greater than the total amount of
liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair saleable value
of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person is
able to realize upon its assets and pay its debts and other
liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (d) such Person does not
intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and
liabilities mature in their ordinary course and (e) such Person
is not engaged in a business or a transaction, and is not about
to engage in a business or a transaction, for which such Person's
Property would constitute unreasonably small capital after giving
due consideration to the prevailing practice in the industry in
which such Person is engaged or is to engage. In computing the
amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in light
of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become
an actual or matured liability.
"Subsidiary" of any Person shall mean (i) any corporation
more than 50% of whose Voting Stock is at the time owned by such
Person directly or indirectly through Subsidiaries, and (ii) any
partnership, association, joint venture or other entity in which
such Person directly or indirectly through Subsidiaries has more
than 50% equity interest at any time.
"Swingline Committed Amount" shall have the meaning
assigned
to such term in Section 2.04.
"Swingline Lender" shall mean NationsBank, or, if
NationsBank shall no longer be the Agent, such Lender which shall
become the Agent hereunder in accordance with the provisions of
Section 10.11.
"Swingline Loan" shall have the meaning assigned to such
term in Section 2.04.
"Tax Sharing Agreement" shall mean that certain Tax
Sharing
Agreement between Ralston Purina and Ralcorp in the form of
Exhibit 2.2 to the Form 10.
"Technology Agreement" shall mean that certain Technology
Agreement between Ralston Purina and Ralcorp substantially in the
form of Exhibit 2.4 to the Form 10.
"Term Loan" shall mean the term loan made pursuant to
Section 2.02.
"Term Loan Installment Payment Date" shall have the
meaning
assigned to such term in Section 2.02(d).
"Trademark Agreement" shall mean that certain Trademark
Agreement between Ralston Purina and Ralcorp substantially in the
form of Exhibit 2.5 to the Form 10.
"Unused Fee" shall have the meaning assigned to such term
in
Section 2.06(b).
"Unused Fee Calculation Period" shall have the meaning
assigned to such term in Section 2.06(b).
"Unused Revolving Committed Amount" shall mean,
for any
period, the amount by which (i) the then applicable Revolving
Committed Amount exceeds (ii) the daily average sum for such
period of the outstanding aggregate principal amount of all
Revolving Loans.
"Upfront Fee" shall have the meaning assigned to such
term
in Section 2.06(a).
"Voting Stock" shall mean, with respect to any Person,
capital stock issued by a corporation, or equivalent interests in
any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such
Person, even though the right so to vote has been suspended by
the happening of such a contingency.
"Weighted Average Life to Maturity" shall mean, with
respect
to any Funded Indebtedness at any time, the number of years
obtained by dividing the then Remaining Dollar-years of such
Funded Indebtedness by the then outstanding principal amount of
such Funded Indebtedness. For purposes hereof, "Remaining
Dollar-years" shall mean the amount obtained by (i) multiplying
(A) the amount of each then remaining required principal payment
on the related Funded Indebtedness (including the principal
payment required at maturity of such Funded Indebtedness), by (B)
the number of years (calculated at the nearest one-twelfth) which
will elapse between the date of determination of the Weighted
Average Life to Maturity of such Funded Indebtedness and the date
of such required principal payment, and (ii) totaling all of the
products obtained in clause (i) above.
SECTION 1.02. Accounting Terms. Except as otherwise
expressly provided herein, all accounting terms used herein shall
be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the
Lenders hereunder shall be prepared in accordance with GAAP
applied on a consistent basis (including, but not limited to, the
non-inclusion of footnotes in any unaudited financial statements
covering a period of less than a full fiscal year). All
calculations made for the purposes of determining compliance with
this Agreement shall (except as otherwise expressly provided
herein) be made by application of GAAP applied on a basis
consistent with those used in the preparation of the latest
annual or quarterly financial statements of the applicable
Person(s) required to be delivered to the Agent and each Lender
pursuant to Section 7.01 (or prior to the delivery of the first
financial statements pursuant to Section 7.01 used in the
preparation of the audited financial statements of such Person(s)
as at September 30, 1993); provided, however, if (i) the Borrower
shall have objected to determining such compliance on such basis
at the time of delivery of such financial statements or (ii) the
Agent or the Required Lenders shall so object in writing within
30 days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with those used
in the preparation of the latest financial statements as to which
no such objection shall have been made (which, if objection is
made in respect of the first financial statements delivered
pursuant to Section 7.01, shall mean the audited financial
statements of the applicable Person(s) dated September 30, 1993).
The Borrower shall deliver to the Agent and each Lender,
at
the same time as the delivery of any annual or quarterly
financial statement pursuant to Section 7.01, (i) a description
in reasonable detail of any material variation between the
application of accounting principles employed in the preparation
of such statement and the application of accounting principles
employed in the preparation of the most recent preceding annual
or quarterly financial statements as to which no objection has
been made in accordance with the paragraph above and (ii)
reasonable estimates of the difference between such statements
arising as a consequence thereof.
SECTION 1.03. Terms Generally. The definitions in
Section
1.01 shall apply equally to both the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter
forms. The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation." All
references herein to Articles, Sections and Schedules shall be
deemed references to Articles and Sections of, and Schedules to,
this Agreement unless the context shall otherwise require.
Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance
with GAAP.
ARTICLE II. THE LOANS
SECTION 2.01. Revolving Loans.
(a) Revolving Commitment. Subject to and upon the terms
and
conditions and relying upon the representations and warranties
herein set forth, each Lender agrees, severally and not jointly,
at any time and from time to time from the Closing Date until the
Maturity Date, to make revolving credit loans (each a "Revolving
Loan" and, collectively, "Revolving Loans") to the Borrower for
the purposes set forth in Section 7.10; provided, however, (i)
with regard to each Lender individually, such Lender's pro rata
share of outstanding Revolving Loans shall not exceed such
Lender's Commitment Percentage of the Revolving Committed Amount,
(ii) with regard to the Lenders collectively, the aggregate
amount of Revolving Loans outstanding shall not exceed TWO
HUNDRED MILLION DOLLARS ($200,000,000), as such maximum amount
may be reduced from time to time as provided in Section 2.05 or
as otherwise provided herein (such amount, as so reduced from
time to time, the "Revolving Committed Amount"), and (iii) in
addition to the limitations set forth in the preceding
subparagraphs (i) and (ii), in no event shall the sum of
Revolving Loans outstanding plus Competitive Loans outstanding
plus Swingline Loans outstanding exceed the Revolving Committed
Amount. Revolving Loans hereunder may consist of Base Rate Loans
or Eurodollar Loans (or a combination thereof) as the Borrower
may request, and may be repaid and reborrowed in accordance with
the provisions hereof.
(b) Advances.
(i) Notices. Whenever the Borrower desires a
Revolving
Loan advance hereunder, it shall give an appropriate
Notice
of Borrowing to the Agent by hand delivery, telex or
telecopy not later than 11:00 A.M. (Charlotte, North
Carolina time) on the Business Day of the requested
advance
in the case of Base Rate Loans, and on the third Business
Day prior to the requested advance in the case of
Eurodollar
Loans. Each such Notice of Borrowing shall be
irrevocable
and shall specify (A) that a Revolving Loan is requested,
(B) the date of the requested advance (which shall be a
Business Day), (C) the aggregate principal amount of the
Revolving Loan requested, and (D) whether the Revolving
Loan
requested shall consist of Base Rate Loans, Eurodollar
Loans
or a combination thereof, and if Eurodollar Loans are
requested, the Interest Periods with respect thereto. If
the Borrower shall fail to specify in any such Notice of
Borrowing (i) an applicable Interest Period in the case
of a
Eurodollar Loan, then such notice shall be deemed to be a
request for an Interest Period of one month, or (ii) the
type of Revolving Loan requested, then such notice shall
be
deemed to be a request for a Base Rate Loan hereunder.
The
Agent shall as promptly as practicable give each Lender
notice of each requested Revolving Loan advance, of such
Lender's pro rata share thereof and of the other matters
covered in the applicable Notice of Borrowing.
(ii) Minimum Amounts. Each Revolving Loan shall be in
an
aggregate principal amount that is not less than the
lesser
of $5,000,000 or the remaining amount available to be
borrowed with respect to the Revolving Loans in
accordance
with the terms of Section 2.01(a). Any Revolving Loan
requested in excess of $5,000,000 shall be in an integral
multiple of $500,000.
(iii) Funding of Advances. Each Lender will make its
pro
rata share of each Revolving Loan available to the Agent
by
1:00 P.M. (Charlotte, North Carolina time) on the date
specified in the applicable Notice of Borrowing by
deposit
in dollars of immediately available funds at the offices
of
the Agent in Charlotte, North Carolina, or at such other
address as the Agent may designate in writing, and the
Agent
shall, by 3:00 p.m. (Charlotte, North Carolina time) on
the
same day, credit the amount so received to the general
deposit account of the Borrower with the Agent. All
Revolving Loans shall be made by the Lenders pro rata on
the
basis of each Lender's Commitment Percentage. No Lender
shall be responsible for the failure or delay by any
other
Lender in its obligation to make Revolving Loans
hereunder;
provided, however, that the failure of any Lender to
fulfill
its Commitment hereunder shall not relieve any other
Lender
of its Commitment hereunder. Unless the Agent shall have
been notified by any Lender prior to the date of any
Revolving Loan advance that such Lender does not intend
to
make available to the Agent its portion of the Revolving
Loan advance to be made on such date, the Agent may
assume
that such Lender has made such amount available to the
Agent
on the date of such Revolving Loan advance, and the
Agent,
in reliance upon such assumption, may (in its sole
discretion without any obligation to do so) make
available
to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the
Agent, the Agent shall be entitled to recover such
corresponding amount from such Lender. If such Lender
does
not pay such corresponding amount forthwith upon the
Agent's
demand therefor, the Agent will promptly notify the
Borrower
and the Borrower shall immediately pay such corresponding
amount to the Agent. The Agent shall also be entitled to
recover from such Lender or the Borrower, as the case may
be, interest on such corresponding amount in respect of
each
day from the date such corresponding amount was made
available by the Agent to the Borrower to the date such
corresponding amount is recovered by the Agent, at a per
annum rate equal to, with respect to the Borrower, the
then
applicable rate calculated in accordance with Section
2.01(d) and, with respect to such Lender, the Federal
Funds
Effective Rate.
(c) Repayment. The Borrower hereby promises to pay to
the
Lenders the principal amount of all Revolving Loans outstanding
hereunder on the Maturity Date.
(d) Interest. (i) Interest Rates. Subject to the
provisions
of Section 3.01, Revolving Loans shall bear interest as follows:
(A) Base Rate Loans. During such periods
as Revolving
Loans shall consist of Base Rate Loans, at a per annum
rate
(computed on the basis of the actual number of days
elapsed
over a year of 365 days) equal to the Base Rate in effect
from time to time.
(B) Eurodollar Loans. During such periods
as
Revolving Loans shall consist of Eurodollar Loans, at a
per
annum rate (computed on the basis of the actual number of
days elapsed over a year of 360 days) equal to the sum of
the Adjusted Eurodollar Rate for the Interest Period in
effect for such Eurodollar Loan plus the Applicable
Margin
in effect from time to time.
(ii) Payment of Interest. The Borrower hereby promises
to
pay to the Lenders on each applicable Interest Payment Date (or
at such other times as may be specified herein) accrued interest
on the Revolving Loans.
SECTION 2.02. Term Loan.
(a) Term Commitment. Subject to and upon the terms and
conditions and relying upon the representations and warranties
herein set forth, each Lender agrees, severally and not jointly,
to make available to the Borrower such Lender's Commitment
Percentage of a term loan (the "Term Loan") in the aggregate
amount of TWO HUNDRED FIFTY MILLION DOLLARS ($250,000,000) on the
Closing Date for the purposes set forth in Section 7.10.
(b) Borrowing Procedures. The Borrower shall submit an
appropriate Notice of Borrowing to the Agent on the Closing Date,
with respect to the portion of the Term Loan initially consisting
of a Base Rate Loan, or three Business Days prior to the Closing
Date, with respect to the portion of the Term Loan initially
consisting of one or more Eurodollar Loans, which Notice of
Borrowing shall specify (i) the portion (if any) of the Term Loan
that is to be a Base Rate Loan and/or the portion (if any) of the
Term Loan, that is to be a Eurodollar Loan or Eurodollar Loans,
and (ii) if a portion of the Term Loan is to be one or more
Eurodollar Loans, the Interest Periods with respect thereto. If
the Borrower shall fail to deliver such Notice of Borrowing to
the Agent at least three Business Days prior to the Closing Date
then the full amount of the Term Loan shall be disbursed on the
Closing Date as a Base Rate Loan. Each Lender shall make its
Commitment Percentage of the Term Loan available to the Agent for
the account of the Borrower on or before 10:00 a.m. (Charlotte,
North Carolina time) on the Closing Date by deposit of dollars in
immediately available funds in an account designated by the Agent
to the Lenders.
(c) Minimum Amounts. Each Eurodollar Loan and Base Rate
Loan that is part of the Term Loan shall be in an aggregate
principal amount that is not less than the lesser of $5,000,000
or the then remaining principal balance of the Term Loan. Each
Eurodollar Loan and Base Rate Loan that is part of the Term Loan
and is in excess of $5,000,000 shall be in an integral multiple
of $500,000.
(d) Repayment. Subject to the provisions of Section
3.02(b)(ii), the Borrower hereby promises to pay to the Lenders
the principal amount of the Term Loan in nine (9) consecutive
semi-annual installments on each March 31 and September 30,
beginning with the installment due March 31, 1995 and ending with
the installment due on the Maturity Date (each such date a "Term
Loan Installment Payment Date"). Each installment shall be in an
amount equal to the Required Term Loan Principal Payment for the
applicable Term Loan Installment Payment Date.
(e) Interest. (i) Interest Rates. Subject to the
provisions
of Section 3.01, the Term Loan shall bear interest as follows:
(A) Base Rate Loans. During such periods as the Term
Loan
(or any portion thereof) shall consist of Base Rate
Loans,
at a per annum rate (computed on the basis of the actual
number of days elapsed over a year of 365 days) equal to
the
Base Rate in effect from time to time.
(B) Eurodollar Loans. During such periods as the Term
Loan (or any portion thereof) shall consist of Eurodollar
Loans, at a per annum rate (computed on the basis of the
actual number of days elapsed over a year of 360 days)
equal
to the sum of the Adjusted Eurodollar Rate for the
Interest
Period in effect for such Eurodollar Loan plus the
Applicable Margin in effect from time to time.
(ii) Payment of Interest. The Borrower hereby promises
to
pay to the Lenders on each applicable Interest Payment Date (or
at such other times as may be specified herein) accrued interest
on the Term Loan.
SECTION 2.03. Competitive Loan Subfacility.
(a) Competitive Loans. Subject to the terms and
conditions
and relying upon the representations and warranties herein set
forth, the Borrower may, from time to time from the Closing Date
until the earlier of the Maturity Date or the termination of the
Commitments hereunder, request and each Lender may, in its sole
discretion, agree to make Competitive Loans to the Borrower;
provided, however, (i) the Borrower may not request Competitive
Loans at any time on or after the Effective Date of Assignment
unless the Consolidated Debt Coverage Ratio as of the then most
recent Calculation Date to occur after the Effective Date of
Assignment with respect to which the Agent shall have received
the Required Financial Information is less than 3.00 to 1.00; and
(ii) the sum of Revolving Loans outstanding plus Competitive
Loans outstanding plus Swingline Loans outstanding shall not at
any time exceed the Revolving Committed Amount. Each Competitive
Loan shall be comprised entirely of Fixed Rate Loans. Each
Competitive Loan shall be not less than $5,000,000 in the
aggregate and in integral multiples of $500,000 in excess thereof
(or the remaining portion of the Revolving Committed Amount, if
less).
(b) Competitive Bid Requests. The Borrower may solicit
Competitive Bids by delivery of a Competitive Bid Request
substantially in the form of Schedule 9 to the Agent by 12:00
noon (Charlotte, North Carolina time) on a Business Day not less
than three (3) nor more than ten (10) Business Days prior to the
date of a requested Competitive Loan advance. A Competitive Bid
Request (i) shall specify (A) the date of the requested
Competitive Loan advance (which shall be a Business Day), (B) the
amount of the requested Competitive Loan advance and (C) the
applicable Interest Periods requested, and (ii) shall be
accompanied by payment of the Competitive Bid Request Fee. The
Agent shall notify the Lenders of its receipt of a Competitive
Bid Request and the contents thereof and invite the Lenders to
submit Competitive Bids in response thereto. No more than five
(5) Competitive Bid Requests (e.g., the Borrower may request
Competitive Bids for no more than five (5) different Interest
Periods at a time) shall be submitted at any one time.
(c) Competitive Bid Procedure. Each Lender may, in its
sole discretion, make one or more Competitive Bids to the
Borrower in response to a Competitive Bid Request. Each
Competitive Bid must be received by the Agent not later than
10:00 a.m. (Charlotte, North Carolina time) on the proposed date
of a Competitive Loan advance; provided, however, that should the
Agent, in its capacity as a Lender, desire to submit a
Competitive Bid it shall notify the Borrower of its Competitive
Bid and the terms thereof not later than 9:30 a.m. (Charlotte,
North Carolina time) on the proposed date of a Competitive Loan
advance. A Lender may offer to make all or part of the requested
Competitive Loan advance and may submit multiple Competitive Bids
in response to a Competitive Bid Request. The Competitive Bid
shall specify (i) the particular Competitive Bid Request as to
which the Competitive Bid is submitted, (ii) the minimum (which
shall be not less than $1,000,000 and in integral multiples of
$500,000 in excess thereof) and maximum principal amounts of the
requested Competitive Loan or Loans as to which such Lender is
willing to make, and (iii) the applicable interest rate or rates
and Interest Period or Periods therefor. A Competitive Bid
submitted by a Lender in accordance with the provisions hereof
shall be irrevocable. The Agent shall promptly notify the
Borrower of all Competitive Bids made and the terms thereof. The
Agent shall send a copy of each of the Competitive Bids to the
Borrower for its records as soon as practicable.
(d) Acceptance of Competitive Bids. The Borrower may,
in
its sole and absolute discretion, subject only to the provisions
of this subsection (d), accept or refuse any Competitive Bid
offered to it. To accept a Competitive Bid, the Borrower shall
give written notification of its acceptance of any or all such
Competitive Bids to the Agent by 11:00 a.m. (Charlotte, North
Carolina time) on the proposed date of Competitive Loan advance;
provided, however, (i) the failure by the Borrower to give timely
notice of its acceptance of a Competitive Bid shall be deemed to
be a refusal thereof, (ii) the Borrower may accept Competitive
Bids only in ascending order of rates, (iii) the aggregate amount
of Competitive Bids accepted by the Borrower shall not exceed the
principal amount specified in the Competitive Bid Request, (iv)
if the Borrower shall accept a bid or bids made at a particular
Competitive Bid Rate, but the amount of such bid or bids shall
cause the total amount of bids to be accepted by the Borrower to
be in excess of the amount specified in the Competitive Bid
Request, then the Borrower shall accept a portion of such bid or
bids in an amount equal to the amount specified in the
Competitive Bid Request less the amount of all other Competitive
Bids accepted with respect to such Competitive Bid Request, which
acceptance in the case of multiple bids at such Competitive Bid
Rate, shall be made pro rata in accordance with the amount of
each such bid at such Competitive Bid Rate, and (v) no bid shall
be accepted for a Competitive Loan unless such Competitive Loan
is in a minimum principal amount of $1,000,000 and integral
multiples of $500,000 in excess thereof, except that where a
portion of a Competitive Bid is accepted in accordance with the
provisions of subsection (iv) of this Section 2.03, then in a
minimum principal amount of $100,000 and integral multiples
thereof (but not in any event less than the minimum amount
specified in the Competitive Bid), and in calculating the pro
rata allocation of acceptances of portions of multiple bids at a
particular Competitive Bid Rate pursuant to subsection (iv) of
this Section 2.03, the amounts shall be rounded to integral
multiples of $100,000 in a manner which shall be in the
discretion of the Borrower. A notice of acceptance of a
Competitive Bid given by the Borrower in accordance with the
provisions hereof shall be irrevocable. The Agent shall, not
later than 12:00 noon (Charlotte, North Carolina time) on the
proposed date of Competitive Loan advance, notify each bidding
Lender whether or not its Competitive Bid has been accepted (and
if so, in what amount and at what Competitive Bid Rate), and each
successful bidder will thereupon become bound, subject to the
other applicable conditions hereof, to make the Competitive Loan
in respect of which its bid has been accepted.
(e) Funding of Competitive Loans. Each Lender which is
to
make a Competitive Loan shall make its Competitive Loan advance
available to the Agent by 2:00 P.M. (Charlotte, North Carolina
time) on the date specified in the Competitive Bid Request by
deposit in dollars of immediately available funds at the office
of the Agent in Charlotte, North Carolina, or at such other
address as the Agent may designate in writing. The Agent shall,
by 3:00 p.m. (Charlotte, North Carolina time) on the same day,
credit the amount so received to the general deposit account of
the Borrower with the Agent.
(f) Repayment of Competitive Loans. Subject to the
terms
of Section 3.02(b)(i), the Borrower hereby promises to pay to
each Competitive Loan Lender the principal amount of the
Competitive Loans of such Lender on the last day of the Interest
Period applicable thereto; provided, however, unless the Borrower
shall give notice to the Agent otherwise, the Borrower, subject
to the provisions of Section 5.03, shall be deemed to have
requested a Revolving Loan comprised solely of Base Rate Loans in
the amount of a maturing Competitive Loan, the proceeds of which
will be used to repay such Competitive Loan.
(g) Interest. (i) Interest Rates. Subject to the
provisions of Section 3.01, each Competitive Loan shall bear
interest at the Competitive Bid Rate applicable thereto.
(ii) Payment of Interest. The Borrower hereby promises
to
pay to each Competitive Loan Lender on each applicable Interest
Payment Date (or at such other times as may be specified herein)
accrued interest on the Competitive Loans made by such Lender.
SECTION 2.04. Swingline Loan Subfacility.
(a) Swingline Commitment. Subject to and
upon the terms
and conditions and relying upon the representations and
warranties herein set forth, the Swingline Lender, in its
individual capacity, agrees to make certain revolving credit
loans to the Borrower (each a "Swingline Loan" and, collectively,
the "Swingline Loans") from time to time from the Closing Date
until the Maturity Date for the purposes hereinafter set forth;
provided, however, (i) the aggregate amount of Swingline Loans
outstanding at any time shall not exceed FIFTEEN MILLION DOLLARS
($15,000,000) (the "Swingline Committed Amount"), and (ii) the
sum of Revolving Loans outstanding plus Competitive Loans
outstanding plus Swingline Loans outstanding shall not exceed at
any time the Revolving Committed Amount. Swingline Loans
hereunder shall be made as Base Rate Loans or Quoted Rate
Swingline Loans as the Borrower may request in accordance with
the provisions of this Section 2.04, and may be repaid and
reborrowed in accordance with the provisions hereof.
(b) Swingline Loan Advances.
(i)Notices; Disbursement. Whenever the
Borrower
desires a Swingline Loan advance hereunder it shall give
written notice (or telephone notice promptly confirmed in
writing) to the Swingline Lender not later than 11:00
a.m.
(Charlotte, North Carolina time) on the Business Day of
the
requested Swingline Loan advance. Each such notice shall
be
irrevocable and shall specify (A) that a Swingline Loan
advance is requested, (B) the date of the requested
Swingline Loan advance (which shall be a Business Day)
and
(C) the principal amount of the Swingline Loan advance
requested. Each Swingline Loan shall be made as a Base
Rate
Loan or a Quoted Rate Swingline Loan and shall have such
maturity date as the Swingline Lender and the Borrower
shall
agree upon receipt by the Swingline Lender of any such
notice from the Borrower. The Swingline Lender shall
initiate the transfer of funds representing the Swingline
Loan advance to the Borrower by 3:00 p.m. (Charlotte,
North
Carolina time) on the Business Day of the requested
borrowing.
(ii)Minimum Amounts. Each Swingline Loan
advance
shall be in a minimum principal amount of $500,000 and in
integral multiples of $100,000 in excess thereof.
(iii)Repayment of Swingline Loans. The
Borrower
hereby promises to pay to the Swingline Lender the
principal
amount of each Swingline Loan on the earlier of (A) the
maturity date agreed to by the Swingline Lender and the
Borrower with respect to such Loan (which maturity date
shall not be a date more than 7 Business Days from the
date
of advance thereof) or (B) the Maturity Date. The
Swingline
Lender may, at any time, in its sole discretion, by
written
notice to the Borrower and the Lenders, demand repayment
of
its Swingline Loans by way of a Revolving Loan advance,
in
which case the Borrower shall be deemed to have requested
a
Revolving Loan advance comprised solely of Base Rate
Loans
in the amount of such Swingline Loans; provided, however,
that any such demand shall be deemed to have been given
one
Business Day prior to the Maturity Date and on the date
of
the occurrence of any Event of Default described in
Section
9.01(e) and upon acceleration of the indebtedness
hereunder
and the exercise of remedies in accordance with the
provisions of Section 9.02 (each such Revolving Loan
advance
made on account of any such deemed request therefor as
provided herein being hereinafter referred to as a
"Mandatory Borrowing"). Each Lender hereby irrevocably
agrees to make its pro rata share of each Revolving Loan
constituting a Mandatory Borrowing in the amount, in the
manner and on the date specified in the preceding
sentence
notwithstanding (I) the amount of Mandatory Borrowing may
not comply with the minimum amount for advances of
Revolving
Loans otherwise required hereunder, (II) whether any
conditions specified in Section 5.03 are then satisfied,
(III) whether a Default or an Event of Default then
exists,
(IV) failure of any such request or deemed request for
Revolving Loan to be made by the time otherwise required
hereunder, (V) whether the date of such Mandatory
Borrowing
is a date on which Revolving Loans are otherwise
permitted
to be made hereunder or (VI) any termination of the
Commitments relating thereto immediately prior to or
contemporaneously with such Mandatory Borrowing. In the
event that any Mandatory Borrowing cannot for any reason
be
made on the date otherwise required above (including,
without limitation, as a result of the commencement of a
proceeding under the U.S. Bankruptcy Code with respect to
the Borrower or any other Credit Party), then each Lender
hereby agrees that it shall forthwith purchase (as of the
date the Mandatory Borrowing would otherwise have
occurred,
but adjusted for any payments received from the Borrower
on
or after such date and prior to such purchase) from the
Swingline Lender such participations in the outstanding
Swingline Loans as shall be necessary to cause each such
Lender to share in such Swingline Loans ratably based
upon
its Commitment Percentage of the Revolving Committed
Amount
(determined before giving effect to any termination of
the
Commitments pursuant to Section 9.02), provided that (A)
all
interest payable on the Swingline Loans shall be for the
account of the Swingline Lender until the date as of
which
the respective participation is purchased and (B) at the
time any purchase of participations pursuant to this
sentence is actually made, the purchasing Lender shall be
required to pay to the Swingline Lender interest on the
principal amount of participation purchased for each day
from and including the day upon which the Mandatory
Borrowing would otherwise have occurred to but excluding
the
date of payment for such participation, at the rate equal
to
the Federal Funds Effective Rate.
(c) Interest on Swingline Loans. (i) Subject
to the
provisions of Section 3.01, each Swingline Loan shall bear
interest as follows:
(A)Base Rate Loans. If such Swingline Loan
is a
Base Rate Loan, at a per annum rate (computed on the
basis
of the actual number of days elapsed over a year of 365
days) equal to the Base Rate.
(B)Quoted Rate Swingline Loans. If such
Swingline
Loan is a Quoted Rate Swingline Loan, at a per annum rate
(computed on the basis of the actual number of days
elapsed
over a year of 360 days) equal to the Quoted Rate
applicable
thereto.
Notwithstanding any other provision to the contrary set forth in
this Agreement, in the event that the principal amount of any
Quoted Rate Swingline Loan is not repaid on the last day of the
Interest Period for such Loan, then such Loan shall be
automatically converted into a Base Rate Loan at the end of such
Interest Period.
(ii) Payment of Interest. The Borrower hereby promises
to
pay to the Swingline Lender on each applicable Interest Payment
Date (or at such other times as may be specified herein) accrued
interest on the Swingline Loans.
SECTION 2.05. Termination and Reduction of Commitments.
The Borrower may from time to time permanently reduce or
terminate the aggregate Revolving Committed Amount in whole or in
part (in minimum aggregate amounts of the lesser of $5,000,000 or
the full remaining amount of the Revolving Committed Amount) upon
three Business Days' prior written notice to the Agent; provided,
however, no such termination or reduction shall be made which
would reduce the Revolving Committed Amount to an amount less
than the sum of Revolving Loans outstanding plus Competitive
Loans outstanding. The commitments of the Lenders to make,
extend or convert Revolving Loans shall automatically terminate
on the Maturity Date. The Agent shall promptly notify each of
the Lenders of receipt by the Agent of any notice from the
Borrower pursuant to this Section 2.05.
SECTION 2.06. Fees.
(a) Upfront Fee. The Borrower agrees to pay to the
Agent
for the account of each Lender on or before the Closing Date the
upfront fee ("Upfront Fee") for such Lender set forth on
Schedule 1.
(b) Unused Fee. In consideration of the Revolving
Committed Amount made available by the Lenders hereunder, the
Borrower agrees to pay to the Agent for the account of the
Lenders a fee (the "Unused Fee") computed at a rate for each day
during the applicable Unused Fee Calculation Period (hereinafter
defined) equal to (i) for any such day occurring prior to the
Effective Date of Assignment, one-eighth of one percent (1/8%)
per annum on the Unused Revolving Committed Amount and (ii) for
any such day occurring on or after the Effective Date of
Assignment, one-fourth of one percent (1/4%) per annum on the
Unused Revolving Committed Amount. The accrued Unused Fee shall
be due and payable in arrears on the fifteenth (15th) day of each
January, April, July and October (and on the Effective Date of
Assignment and the Maturity Date and on any date that the
Revolving Committed Amount is reduced as provided in Section 2.05
or as otherwise provided herein) for the immediately preceding
fiscal quarter (or portion thereof) (each such fiscal quarter or
portion thereof for which the Unused Fee is payable hereunder
being herein referred to as an "Unused Fee Calculation Period"),
beginning with the first of such dates to occur after the Closing
Date.
(c) Agent's Fee. The Borrower agrees to pay to the
Agent,
for its own account or for the account of NationsBanc Capital
Markets, Inc., as applicable, the structuring, administrative and
other fees referred to in the Agent's Fee Letter (the "Agent's
Fees").
(d) Competitive Bid Request Fee. The Borrower shall pay
to
the Agent for its own account, a fee of $1,000 (the "Competitive
Bid Request Fee") for each Competitive Bid Request, such fee to
be payable concurrently with delivery of such Competitive Bid
Request (whether or not any Competitive Bid is offered by a
Lender, accepted by the Borrower or extended by the offering
Lender pursuant thereto).
ARTICLE III. ADDITIONAL PROVISIONS REGARDING LOANS
SECTION 3.01. Default Rate. Upon the occurrence, and
during the continuance, of an Event of Default, the principal of
and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit
Documents shall bear interest, payable on demand, at a per annum
rate 2% greater than the rate which would otherwise be
applicable.
SECTION 3.02. Prepayments.
(a) Voluntary Prepayments.
(i)Revolving Loans and Term Loan. The
Borrower
shall have the right to prepay Revolving Loans and the
Term
Loan in whole or in part from time to time without
premium
or penalty; provided, however, that (A) each such partial
prepayment shall be a minimum principal amount of
$5,000,000
or an integral multiple of $1,000,000 in excess thereof
and
(B) no Eurodollar Loan may be prepaid prior to the last
day
of the Interest Period applicable thereto unless
accompanied
by payment of amounts specified in Section 3.07. Amounts
prepaid on the Revolving Loans may be reborrowed in
accordance with the provisions hereof. Amounts prepaid
on
the Term Loan may not be reborrowed.
(ii)Competitive Loans. Competitive Loans may
not be
prepaid unless accompanied by payment of amounts
specified
in Section 3.07.
(iii)Swingline Loans. The Borrower shall have
the
right to prepay Swingline Loans which are Base Rate Loans
in
whole or in part from time to time without premium or
penalty; provided, however, that each such partial
prepayment shall be a minimum principal amount of
$100,000
or an integral multiple of $100,000 in excess thereof.
Swingline Loans which are Quoted Rate Swingline Loans may
not be prepaid unless accompanied by payments of amounts
specified in Section 3.07. Amounts prepaid on the
Swingline
Loans may be reborrowed in accordance with the provisions
hereof.
(iv)Application. Amounts prepaid hereunder
shall be
applied to the Revolving Loans, the Term Loan, the
Competitive Loans and the Swingline Loans as the Borrower
may elect, provided that (A) if the Borrower shall fail
to
specify its application, prepayments shall be applied
first
to the Swingline Loans (and with respect to Base Rate
Loans
and Quoted Rate Swingline Loans comprising such Loans,
first
to Base Rate Loans and then to Quoted Rate Swingline
Loans
in direct order of Interest Period maturities), second to
Revolving Loans (and with respect to Base Rate Loans and
Eurodollar Loans comprising such Loans, first to Base
Rate
Loans and then to Eurodollar Loans in direct order of
Interest Period maturities), third to the Competitive
Loans
(in direct order of Interest Period maturities) and
fourth
to the Term Loan (and with respect to Base Rate Loans and
Eurodollar Loans comprising such Loans, first to Base
Rate
Loans and then to Eurodollar Loans in direct order of
Interest Period maturities) and (B) prepayments on the
Term
Loan shall be applied first to accrued interest and then
pro
rata to each of the then remaining principal installments
due on the Term Loan.
(b) Mandatory Prepayments. (i) Competitive Loans.
Ralston Purina shall prepay the principal of and all accrued
interest on each Competitive Loan outstanding on the Effective
Date of Assignment.
(ii) Capital Transactions. Immediately upon receipt by
Ralcorp or any of its Subsidiaries of proceeds in the form of
cash or Cash Equivalents from any Capital Transaction (other than
pursuant to the exercise of stock-based awards granted by Ralcorp
to any of its directors, officers or employees) at any time prior
to repayment of all principal and accrued interest on the Term
Loan, the Borrower shall prepay the Term Loan in an amount equal
to the Net Proceeds of such Capital Transaction. Any prepayment
pursuant to this Section 3.02(b)(ii) shall be applied first to
accrued interest and then pro rata to each of the then remaining
principal installments due on the Term Loan, and with respect to
Base Rate Loans and Eurodollar Loans comprising the Term Loan,
first to Base Rate Loans and then to Eurodollar Loans in direct
order of Interest Period maturities.
(c) General. All prepayments of Loans shall be subject
to
Section 3.07 but otherwise without premium or penalty and shall
be accompanied by accrued interest on the principal amount being
prepaid to the date of prepayment and all other amounts due and
payable hereunder with respect to such Loans.
SECTION 3.03. Extension and Conversion. The Borrower
shall
have the option, on any Business Day, to extend existing Loans
into a subsequent Interest Period or to convert Loans into Loans
of another type; provided, however, that (i) except as provided
in Section 3.06, Eurodollar Loans may be converted into Base Rate
Loans only on the last day of the Interest Period applicable
thereto, (ii) Eurodollar Loans may be extended, and Base Rate
Loans may be converted into Eurodollar Loans, only if no Default
or Event of Default is in existence on the date of extension or
conversion, (iii) Loans extended as, or converted into,
Eurodollar Loans shall be in such minimum amounts as provided in
Section 2.01(b) and Section 2.02(c), (iv) any request for
extension or conversion of a Eurodollar Loan which shall fail to
specify an Interest Period shall be deemed to be a request for an
Interest Period of one month, and (v) Competitive Loans and
Swingline Loans may not be converted or extended pursuant to this
Section 3.03. Each such extension or conversion shall be
effected by the Borrower by giving a Notice of
Extension/Conversion (or telephone notice promptly confirmed in
writing) to the Agent prior to 11:00 A.M. (Charlotte, North
Carolina time) on the Business Day of, in the case of the
conversion of a Eurodollar Loan into a Base Rate Loan and on the
third Business Day prior to, in the case of the extension of a
Eurodollar Loan as, or conversion of a Base Rate Loan into, a
Eurodollar Loan, the date of the proposed extension or
conversion, specifying the date of the proposed extension or
conversion, the Loans to be so extended or converted, the types
of Loans into which such Loans are to be converted and, if
appropriate, the applicable Interest Periods with respect
thereto. Each request for extension or conversion shall
constitute a representation and warranty by the Borrower of the
matters specified in Section 5.03(b), (c), (d) and (e). In the
event the Borrower fails to request extension or conversion of
any Eurodollar Loan in accordance with this Section, or any such
conversion or extension is not permitted or required by this
Section, then such Loans shall be automatically converted into
Base Rate Loans at the end of their Interest Period. The Agent
shall give each Lender notice as promptly as practicable of any
such proposed extension or conversion affecting any Loan.
SECTION 3.04. Alternate Rate of Interest. In the event,
and on each occasion, that on the day two Business Days prior to
the commencement of any Interest Period for a Eurodollar Loan the
Agent shall have determined in good faith (i) that dollar
deposits in the principal amounts of such Eurodollar Loan are not
generally available in the London interbank market or (ii) that
reasonable means do not exist for ascertaining the Adjusted
Eurodollar Rate, the Agent shall, as soon as practicable
thereafter, give telex or telecopy notice of such determination
to the Borrower and the Lenders. In the event of any such
determination under clause (i) or (ii) above, until the Agent
shall have advised the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (A) any
request by the Borrower for a Eurodollar Loan pursuant to Section
2.01(b) or Section 2.02(b) shall be deemed to be a request for a
Base Rate Loan and (B) any request by the Borrower for conversion
into or extension of a Eurodollar Loan pursuant to Section 3.03
shall be deemed to be a request for conversion into or extension
of a Base Rate Loan. Each determination by the Agent hereunder
shall be in good faith and shall be conclusive absent manifest
error.
SECTION 3.05. Reserve Requirements; Change in
Circumstances. (a) Notwithstanding any other provision herein,
if after the date of this Agreement any change in applicable law
or regulation or in the interpretation or administration thereof
by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law)
shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with
or for the account of or credit extended by such Lender, or shall
impose on such Lender or the London interbank market any other
condition affecting this Agreement, such Lender's Commitment or
any Loan made by such Lender, and the result of any of the
foregoing shall be to increase the cost to such Lender of making
or maintaining such Loan or to reduce the amount of any sum
received or receivable by such Lender hereunder (whether of
principal, interest or otherwise) by an amount deemed by such
Lender to be material, then the Borrower will pay to such Lender
in accordance with paragraph (c) below upon demand such
additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered.
(b) If any Lender shall have determined that after the
date of this Agreement the applicability of any law, rule,
regulation or guideline adopted pursuant to or arising out of the
July 1988 report of the Basle Committee on Banking Regulations
and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards," or the adoption after
the date hereof of any other law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing
or in the interpretation or administration of any of the
foregoing by any governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding company
with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's capital or on the
capital of such Lender's holding company, if any, as a
consequence of this Agreement, such Lender's Commitment or any
Loan made by such Lender pursuant hereto to a level below that
which such Lender or such Lender's holding company could have
achieved but for such adoption, change or compliance (taking into
consideration such Lender's policies and the policies of such
Lender's holding company with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to
time the Borrower shall pay to such Lender in accordance with
paragraph (c) below such additional amount or amounts as will
compensate such Lender or such Lender's holding company for any
such reduction suffered.
(c) A certificate signed by a duly authorized officer
of a
Lender setting forth such amount or amounts (including
computation of such amount or amounts) as shall be necessary to
compensate such Lender or its holding company as specified in
paragraph (a) or (b) above, as the case may be, shall be
delivered to the Borrower and the Agent, and the Borrower shall
pay to such Lender, within 30 Business Days after receipt by the
Borrower of such certificate delivered by the Lender, the amount
shown as due on any such certificate.
(d) Notwithstanding the foregoing, if any Lender fails
to
notify the Borrower of any event that will entitle such Lender to
compensation pursuant to paragraph (a) or (b) above, as the case
may be, within 90 days after such Lender becomes aware of such
event, then such Lender shall not be entitled to any compensation
from the Borrower for any increased costs or reduction in amounts
received or receivable or reduction in return on capital arising
prior to the date that is 90 days before the date on which such
Lender notifies the Borrower of such event. The protection of
this Section shall be available to each Lender regardless of any
possible contention of the invalidity or inapplicability of the
law, rule, regulation, guideline or other change or condition
which shall have occurred or been imposed. Each determination by
a Lender under this Section 3.05 shall be in good faith and shall
be conclusive absent manifest error.
SECTION 3.06. Change in Legality. (a) Notwithstanding
any
other provision herein, if any change in any law or regulation or
in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall
make it unlawful for any Lender to make or maintain any
Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by
30 days' (or such shorter period as shall be required in order to
comply with applicable law) written notice to the Borrower and to
the Agent, such Lender may:
(i)declare that Eurodollar Loans, and
conversions
into or extensions of Eurodollar Loans, will not
thereafter
be made by such Lender hereunder, whereupon any request
by
the Borrower for, or for conversion into or extension of,
a
Eurodollar Loan shall, as to such Lender only, be deemed
a
request for, or for conversion into or extension of, a
Base
Rate Loan, unless such declaration shall be subsequently
withdrawn; and
(ii)require that all outstanding Eurodollar
Loans
made by it be converted to Base Rate Loans, in which
event
all such Eurodollar Loans shall be automatically
converted
to Base Rate Loans as of the effective date of such
notice
as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or
(ii) above, all payments and prepayments of principal which would
otherwise have been applied to repay the Eurodollar Loans that
would have been made by such Lender or the converted Eurodollar
Loans of such Lender shall instead be applied to repay the Base
Rate Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
(b) For purposes of this Section 3.06, a notice to the
Borrower by any Lender shall be effective as to each Eurodollar
Loan, if lawful, on the last day of the Interest Period currently
applicable to such Eurodollar Loan; in all other cases such
notice shall be effective on the date of receipt by the Borrower.
Each determination by a Lender under this Section 3.06 shall be
in good faith and shall be conclusive absent manifest error.
SECTION 3.07. Indemnity. The Borrower shall indemnify
each
Lender against any loss, cost or expense which such Lender may
sustain or incur as a consequence of (a) any failure by the
Borrower to borrow or to refinance, convert or extend any Loan
hereunder after notice of such borrowing, refinancing, conversion
or extension has been given pursuant to Section 2.01, 2.02, 2.03,
2.04 or 3.03, or (b) any payment, prepayment or conversion by the
Borrower of a Eurodollar Loan, a Competitive Loan or a Quoted
Rate Swingline Loan required by any other provision of this
Agreement or otherwise made or deemed made on a date other than
the last day of the Interest Period, if any, applicable thereto.
In the case of any such event, the Borrower shall, upon demand by
such Lender (with a copy of such demand to the Agent), pay to
such Lender any amounts required to compensate such Lender for
any reasonable loss, cost or expense which such Lender may incur
as a result of such action or inaction by the Borrower, including
without limitation any reasonable loss, cost or expense incurred
by reason, of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such Loan
or proposed Loan. Each determination by a Lender under this
Section 3.07 shall be in good faith and shall be conclusive
absent manifest error.
SECTION 3.08. Mandatory Assignment; Commitment
Termination.
In the event any Lender delivers to the Agent or the Borrower, as
appropriate, a certificate in accordance with Section 3.05(c) or
a notice in accordance with Section 3.06, then, provided that no
Default or Event of Default has occurred and is continuing at
such time, the Borrower may, at its own expense (such expense to
include any transfer fee payable to the Agent under
Section 11.04(c)), and in its sole discretion (a) require such
Lender to transfer and assign in whole or in part, without
recourse (in accordance with and subject to the terms and
conditions of Section 11.04(c)), all or part of its interests,
rights and obligations under this Agreement to an assignee which
shall assume such assigned obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided
that (i) such assignment shall not conflict with any law, rule or
regulation or order of any court or other Governmental Authority
and (ii) the Borrower or such assignee shall have paid to the
assigning Lender in immediately available funds the principal of
and interest accrued to the date of such payment on the Loans
made by it hereunder and all other amounts owed to it hereunder
or (b) terminate the Commitment of such Lender and prepay all
outstanding Loans of such Lender; provided that (i) such
termination of the Commitment of such Lender and prepayment of
Loans does not conflict with any law, rule or regulation or order
of any court or other Governmental Authority and (ii) the
Borrower shall have paid to such Lender in immediately available
funds the principal of and interest accrued to the date of such
payment on the Loans made by it hereunder and all other amounts
owed to it hereunder.
ARTICLE IV. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; U.S.
TAXES; EVIDENCE OF LOANS
SECTION 4.01. Payments and Computations. Except as
otherwise specifically provided herein, all payments hereunder
shall be made to the Agent in dollars in immediately available
funds, without offset, deduction or withholding of any kind, at
its offices at NationsBank Corporate Center, Charlotte, North
Carolina not later than 2:00 p.m. (Charlotte, North Carolina
time) on the date when due. The Agent may (but shall not be
obligated to) debit the amount of any such payment which is not
made by such time to any ordinary deposit account of the Borrower
maintained with the Agent (with notice to the Borrower). The
Borrower shall, at the time it makes any payment under this
Agreement, specify to the Agent the Loans, Fees or other amounts
payable by the Borrower hereunder to which such payment is to be
applied (and in the event that it fails so to specify, or if such
application would be inconsistent with the terms hereof, the
Agent shall distribute such payment to the Lenders in such manner
as the Agent may determine to be appropriate in respect of
obligations owing by the Borrower hereunder, subject to the terms
of Section 4.02). The Agent will thereafter cause to be
distributed promptly on the same day like funds relating to the
payment of principal or interest or Fees ratably to the Lenders
entitled to receive such payments in accordance with the terms of
this Agreement. Whenever any payment hereunder shall be stated
to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day
(subject to accrual of interest and Fees for the period of such
extension), except that in the case of Eurodollar Loans, if the
extension would cause the payment to be made in the next
following calendar month, then such payment shall instead be made
on the next preceding Business Day. Except as expressly provided
otherwise herein, all computations of interest and fees shall be
made on the basis of actual number of days elapsed over a year of
360 days. Interest shall accrue from and include the date of
advance, but exclude the date of payment.
SECTION 4.02. Pro Rata Treatment. Except to the extent
otherwise provided herein, each Revolving Loan, each Base Rate
Loan or Eurodollar Loan comprising the Term Loan, each payment or
prepayment of principal of any Revolving Loan or the Term Loan,
each payment of interest on the Revolving Loans or the Term Loan,
each payment of Unused Fees, each reduction of the Revolving
Committed Amount and each conversion or extension of any
Revolving Loan or any Base Rate Loan or Eurodollar Loan
comprising part of the Term Loan, shall be allocated pro rata
among the Lenders in accordance with their respective Commitment
Percentages. With respect to Competitive Loans, if the Borrower
fails to specify the particular Competitive Loan or Loans as to
which any payment or other amount should be applied and it is not
otherwise clear as to the particular Competitive Loan or Loans to
which such payment or other amounts relate, or any such payment
or other amount is to be applied to Competitive Loans without
regard to any such direction by the Borrower, then each payment
or prepayment of principal on Competitive Loans and each payment
of interest or other amount on or in respect of Competitive
Loans, shall be allocated pro rata among the relevant Competitive
Loan Lenders in accordance with the then outstanding amounts of
their respective Competitive Loans.
SECTION 4.03. Sharing of Payments. The Lenders agree
among themselves that, in the event that any Lender shall obtain
payment in respect of any Loan or other obligation owing to such
Lender under this Agreement through the exercise of a right of
set-off, banker's lien, counterclaim or otherwise in excess of
its pro rata share as provided for in this Agreement, such Lender
shall promptly purchase from the other Lenders a participation in
such Loans and other obligations in such amounts, and make such
other adjustments from time to time, as shall be equitable to the
end that all Lenders share such payment in accordance with their
respective ratable shares as provided for in this Agreement. The
Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of
set-off, banker's lien, counterclaim or otherwise as aforesaid
shall be rescinded or must otherwise be restored, each Lender
which shall have shared the benefit of such payment shall, by
repurchase of a participation theretofore sold, return its share
of that benefit (together with its share of any accrued interest
payable with respect thereto) to each Lender whose payment shall
have been rescinded or otherwise restored. The Borrower agrees
that any Lender so purchasing such a participation may, to the
fullest extent permitted by law, exercise all rights of payment,
including set-off, banker's lien or counterclaim, with respect to
such participation as fully as if such Lender were a holder of
such Loan or other obligation in the amount of such
participation. Except as otherwise expressly provided in this
Agreement, if any Lender or the Agent shall fail to remit to the
Agent or any other Lender an amount payable by such Lender or the
Agent to the Agent or such other Lender pursuant to this
Agreement on the date when such amount is due, such payments
shall be made together with interest thereon for each date from
the date such amount is due until the date such amount is paid to
the Agent or such other Lender at a rate per annum equal to the
Federal Funds Effective Rate.
SECTION 4.04. U.S. Taxes. (a) The Borrower agrees to
pay
to each Lender that is not a U.S. Person (a "Foreign Lender")
such additional amounts as are necessary in order that the net
payment of any amount due to such Foreign Lender hereunder after
deduction for or withholding in respect of any U.S. Taxes imposed
with respect to such payment (or in lieu thereof, payment of such
U.S. Taxes by such Foreign Lender), will not be less than the
amount stated herein to be then due and payable, provided that
the foregoing obligation to pay such additional amounts shall not
apply:
(i)to any payment to any Foreign Lender
hereunder
unless such Foreign Lender is, on the date hereof (or on
the
date it becomes a Lender as provided in Section 11.04(c))
and on the date of any change in the applicable lending
office of such Foreign Lender, either entitled to submit
a
Form 1001 (relating to such Foreign Lender and entitling
it
to a complete exemption from withholding on all interest
to
be received by it hereunder in respect of the Loans) or
Form
4224 (relating to all interest to be received by such
Foreign Lender hereunder in respect of the Loans); and
any
Foreign Lender that is, on the date hereof (or on the
date
that it becomes a Lender as provided in
Section 11.04(c)) and on the date of any change in its
applicable lending office, entitled to submit a Form 1001
or
a Form 4224 will submit such Form in duplicate to the
Borrower, with a copy to the Agent at such time; or
(ii)to any U.S. Tax imposed solely by
reason of the
failure by such Foreign Lender to comply with applicable
certification, information, documentation or other
reporting
requirements concerning the nationality, residence,
identity, or connections with the United States of
America
of such Foreign Lender if such compliance is required by
statute or regulation of the United States of America as
a
precondition to relief or exemption from such U.S. Taxes.
For the purposes of this Section 4.04(a), (w) "Form 1001" shall
mean Form 1001 (Ownership, Exemption, or Reduced Rate
Certificate) of the Department of the Treasury of the United
States of America, (x) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively
Connected with the Conduct of a Trade or Business in the United
States) of the Department of the Treasury of the United States of
America (or in relation to either such Form such successor and
related forms as may from time to time be adopted by the relevant
taxing authorities of the United States of America to document a
claim to which such Form relates), (y) "U.S. Person" shall mean a
citizen, national or resident of the United States of America, a
corporation, partnership or other entity created or organized in
or under any laws of the United States of America, or any estate
or trust that is subject to Federal income taxation regardless of
the source of its income and (z) "U.S. Taxes" shall mean any
present or future tax, assessment or other charge or levy imposed
by or on behalf of the United States of America or any taxing
authority thereof or herein.
(b) Within thirty (30) days after paying any amount to
the
Agent or any Foreign Lender from which it is required by law to
make any deduction or withholding, and within thirty (30) days
after it is required by law to remit such deduction or
withholding to any relevant taxing or other authority, the
Borrower shall deliver to the Agent for delivery to such Foreign
Lender evidence satisfactory to such Foreign Lender of such
deduction, withholding or payment (as the case may be).
SECTION 4.05. Evidence of Loans. (a) Each Lender shall
maintain an account or accounts evidencing each Loan made by such
Lender to the Borrower from time to time, including the amounts
of principal and interest payable and paid to such Lender from
time to time under this Agreement. Each Lender will make
reasonable efforts to maintain the accuracy of its account or
accounts and to promptly update its account or accounts from time
to time, as necessary.
(b) The Agent shall maintain a register and a
subaccount
for each Lender, in which register and subaccounts (taken
together) shall be recorded (i) the amount, type and Interest
Period of each Loan hereunder, (ii) the amount of any principal
or interest due and payable or to become due and payable to each
Lender hereunder and (iii) the amount of any sum received by the
Agent hereunder from or for the account of the Borrower and each
Lender's share thereof. The Agent will make reasonable efforts
to maintain the accuracy of the subaccounts referred to in the
preceding sentence and to promptly update such subaccounts from
time to time, as necessary.
(c) The entries made in the accounts, register and
subaccounts maintained pursuant to paragraphs (a) and (b) of this
Section 4.05 shall, to the extent permitted by applicable law, be
prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however,
that the failure of any Lender or the Agent to maintain any such
account, such register or such subaccount, as applicable, or any
error therein, shall not in any manner affect the obligation of
the Borrower to repay the Loans made by such Lender in accordance
with the terms hereof.
(d) Each Lender agrees, following the payment
or
prepayment in full by the Borrower of the Term Loan (including
principal and interest) in accordance with the terms of this
Agreement, to execute such documents and to take such other
action as shall be reasonably required by the Borrower to
acknowledge, subject to the terms of this Agreement, the
satisfaction of the Borrower's obligations under Section 2.02 to
pay the principal of and accrued interest on the Term Loan.
ARTICLE V. CONDITIONS PRECEDENT
SECTION 5.01. Conditions to Initial Loans to Ralston
Purina. The obligation of each Lender to make its initial Loans
to Ralston Purina is subject to the satisfaction of the following
conditions on or prior to the Closing Date:
(a) The Agent shall have received
counterparts hereof
signed by each of the parties hereto (or, in the case of
any
party as to which an executed counterpart shall not have
been received, the Agent shall have received in form
satisfactory to it telegraphic, facsimile, telex or other
written confirmation from such party of execution of a
counterpart hereof by such party);
(b)The Agent shall have received, for its
own
account and for the accounts of the Lenders, any Fees
payable on or before the Closing Date;
(c)There shall not have occurred since
December 31,
1993, any material adverse change with respect to the
consolidated financial condition of Ralston Purina;
(d) There shall not exist any action, suit
or
proceeding, pending or threatened, in which there is a
reasonable possibility of an adverse decision, which
would
materially adversely affect the ability of Ralston Purina
to
perform its obligations under the Credit Documents or the
ability of the Lenders to exercise their rights
thereunder;
(e) The Agent and each Lender shall have
received a
legal opinion of Timothy L. Grosch, Esq., Associate
Counsel
of Ralston Purina, dated as of the Closing Date and
substantially in the form of Schedule 10;
(f) The Agent and each Lender shall have
received a
legal opinion of Moore & Van Allen, counsel to the Agent,
dated as of the Closing Date and substantially in the
form
of Schedule 11;
(g) The Agent shall have received all
documents it
may reasonably request relating to the existence of
Ralston
Purina, the corporate authority for and the validity of
this
Agreement executed by Ralston Purina, and any other
matters
relevant hereto, all in form and substance reasonably
satisfactory to the Agent;
(h) The representations and warranties set
forth in
Article VI shall be true and correct in all material
respects as of the Closing Date;
(i) No Default or Event of Default shall
exist
and be continuing either prior to or after giving
effect thereto; and
(j) The Agent shall have received such
other
documents, agreements or information which may be
reasonably
requested by the Agent.
SECTION 5.02. Conditions to Assignment to Ralcorp,
Release
of Ralston Purina and Initial Loans to Ralcorp. The obligations
of the Lenders to accept an assignment to and assumption by
Ralcorp of the rights and obligations of Ralston Purina under
this Agreement and to release Ralston Purina of its direct and
indirect, present and future obligations under this Agreement
pursuant to Section 11.04(b) and to make its initial Loans to
Ralcorp shall be subject to the satisfaction of the following
conditions on or prior to the Effective Date of Assignment:
(a) The Agent shall have received a copy of
the Ralcorp
Assignment and Assumption Agreement duly executed by
Ralston
Purina and Ralcorp;
(b) The Agent shall have received a copy of
the
Guaranty Agreement duly executed by each of the
Guarantors;
(c) The Agent shall have received a
photocopy of a
fully executed copy of each of the Reorganization
Documents;
(d) The Agent shall have received a copy
certified by a
secretary or assistant secretary of Ralston Purina of a
resolution of the directors of Ralston Purina approving
the
Reorganization;
(e) The Agent shall have received a
certificate
executed by the chief financial officer of Ralston Purina
as
of the Effective Date of Assignment stating that,
immediately after giving effect to the Reorganization,
the
Distribution and the Ralcorp Assignment and Assumption
Agreement, Ralston Purina is Solvent;
(f) The Agent shall have received a
certificate
executed by the chief financial officer of Ralston Purina
as
of the Effective Date of Assignment stating that (i) the
terms of the Reorganization, the final corporate
organization and structure of Ralcorp, the structure, tax
treatment, existing and projected tax liabilities and all
documents related to the Reorganization are consistent in
all material respects with the Form 10; (ii) the
Reorganization has been consummated in a manner
consistent
in all material respects with the terms of the Form 10
concurrently with the execution of the Ralcorp Assignment
and Assumption Agreement; (iii) no material adverse
change
has occurred since December 31, 1993, with respect to the
combined financial condition of the Ralcorp Businesses or
the consolidated financial condition of Ralcorp; (iv)
there
does not exist any order, decree, judgment, ruling or
injunction which restrains the consummation of the
Reorganization or the Distribution in the manner
contemplated by the Form 10, and there does not exist any
action, suit or proceeding, pending or threatened, in
which
there is a reasonable possibility of an adverse decision,
which would materially adversely affect the ability of
Ralcorp or any of the Guarantors to perform its
obligations
under the Credit Documents or the ability of the Lenders
to
exercise their rights thereunder; and (v) immediately
after
giving effect to the Reorganization, the Distribution and
the Ralcorp Assignment and Assumption Agreement, (A) no
Default or Event of Default shall have occurred and be
continuing and (B) the representations and warranties set
forth in Article VI will be true and correct in all
material
respects;
(g)The Agent shall have received evidence
satisfactory to it that the shares of Ralcorp's common
stock
shall have been approved for listing on the New York
Stock
Exchange;
(h)The Agent shall have received evidence
satisfactory to it that the Form 10 shall have been filed
with the SEC together with a certification by the chief
financial officer of Ralston Purina that Ralston Purina
has
received no stop order regarding the Form 10 from the SEC
and that the Form 10 shall have become effective;
(i)The Agent shall have received a
certificate
executed by the chief financial officer of Ralston Purina
as
of the Effective Date of Assignment stating that the
Distribution has been consummated substantially in
accordance with the terms and conditions set forth in the
Form 10;
(j)The Agent shall have received a
certificate
executed by Ralston Purina stating that (i) Ralston
Purina
shall ensure within 75 days after the Effective Date of
Assignment that Ralcorp will have a Net Worth as of the
Effective Date of Assignment of at least $130,000,000 and
(ii) within 75 days after the Effective Date of
Assignment,
Ralston Purina shall provide the Agent and the Lenders
with
evidence reasonably satisfactory to the Agent that the
Net
Worth of Ralcorp as of the Effective Date of Assignment
is
at least $130,000,000;
(k)The Agent shall have
received a copy of a ruling
from the Internal Revenue Service to Ralston Purina to
the
effect that the Distribution will have the tax effects
described in the Form 10, and such ruling shall not have
been revised, rescinded or revoked;
(l)The Agent shall have received all
documents it
may reasonably request relating to the existence of each
of
Ralcorp and the Guarantors, the corporate authority for
and
the validity of the Ralcorp Assignment and Assumption
Agreement and any other matters relevant thereto, all in
form and substance reasonably satisfactory to the Agent;
(m)The Agent and each Lender shall have
received (i)
a legal opinion of Timothy L. Grosch, Esq., Associate
Counsel of Ralston Purina, dated as of the Effective Date
of
Assignment and substantially in the form of Schedule 12
and
(ii) a legal opinion of R. W. Lockwood, Esq., General
Counsel of Ralcorp, dated as of the Effective Date of
Assignment and substantially in the form of Schedule 13;
(n)Ralston Purina shall have paid in full (i)
the
principal of and all accrued interest on each Competitive
Loan outstanding on the Effective Date of Assignment,
together with any amounts payable pursuant to Section
3.07
in connection with repayment of such Loans and (ii)
accrued
but unpaid amounts on the Unused Fee through the day
immediately preceding the Effective Date of Assignment;
and
(o)The Agent shall have received such other
documents, agreements or information which may be
reasonably
requested by the Agent.
SECTION 5.03. Each Loan. The obligation of each Lender
to
make, convert or extend any Loan (including the obligation of the
Swingline Lender to make any Swingline Loan) is subject to
satisfaction of the following conditions in addition to (i) with
respect to any Loan to be made, converted or extended on a date
occurring prior to the Effective Date of Assignment, satisfaction
on the Closing Date of the conditions set forth in Section 5.01
and (ii) with respect to any Loan to be made, converted or
extended on a date occurring on or after the Effective Date of
Assignment, satisfaction on the Closing Date of the conditions
set forth in Section 5.01 and satisfaction on the Effective Date
of Assignment of the conditions set forth in Section 5.02:
(a) (i) In the case of any Revolving Loan or
any Base
Rate Loan or Eurodollar Loan comprising part of the Term
Loan, the Agent shall have received an appropriate Notice
of
Borrowing or Notice of Extension/Conversion; (ii) in the
case of any Competitive Loan, the applicable Competitive
Loan Lender shall have received an appropriate notice of
acceptance of its related Competitive Bid; (iii) in the
case
of any Swingline Loan, the Swingline Lender shall have
received an appropriate notice of borrowing in accordance
with the provisions of Section 2.04(b)(i);
(b) The representations and warranties set forth in
Article VI shall be true and correct in all material
respects as of such date (except for those which
expressly
relate to an earlier date);
(c) There shall not have been commenced against the
Borrower an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or
hereafter
in effect, or any case, proceeding or other action for
the
appointment of a receiver, liquidator, assignee,
custodian,
trustee, sequestrator (or similar official) of the
Borrower
or for any substantial part of its Property or for the
winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other
action
shall remain undismissed, undischarged or unbonded;
(d) No Default or Event of Default shall exist and
be continuing either prior to or after giving effect
thereto; and
(e) There shall not have occurred any material
adverse
change with respect to the consolidated financial
condition
of the Borrower since the date of the latest annual or
quarterly financial statements of the Borrower required
to
be delivered to the Agent and each Lender pursuant to
Section 7.01 (or prior to delivery of the first financial
statements pursuant to Section 7.01, since December 31,
1993).
The delivery of each Notice of Borrowing and each Notice of
Extension/Conversion, each request for a Competitive Bid pursuant
to a Competitive Bid Request and each request for a Swingline
Loan pursuant to Section 2.04(b)(i) shall constitute a
representation and warranty by the Borrower of the correctness of
the matters specified in subsections (b), (c), (d) and (e) above.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to each
Lender
that:
SECTION 6.01. Corporate Organization and Validity.
(a) Each Credit Party is a corporation duly organized,
validly
existing and in good standing under the laws of its jurisdiction
of incorporation. Each Credit Party is duly qualified, is
validly existing and in good standing and has lawful power and
authority to engage in the business it conducts in each
jurisdiction where it conducts its business, except where the
failure to so qualify, exist, be in good standing or have power
and authority to conduct such business would not have a Material
Adverse Effect.
(b) The execution, delivery and performance
of the Credit
Documents will not violate any law, government rule or
regulation, any judgment, injunction, order or decree binding
upon any Credit Party or the charter, minutes or bylaw provisions
of any Credit Party or violate or result in a default
(immediately or with the passage of time or upon the giving of
notice or both) under any contract, agreement, or instrument to
which any Credit Party is a party, or by which it is bound. None
of the Credit Parties is in violation of any terms of any
agreement, instrument, judgment, injunction, order or decree to
which it is a party or by which it may be bound or of its
charter, minutes or its bylaws, which violation could have a
Material Adverse Effect.
(c) Each Credit Party has all requisite corporate power
and authority to enter into and perform the Credit Documents to
which it is a party and to incur the obligations herein and
therein provided for, and has taken all proper and necessary
corporate action to authorize the execution, delivery and
performance of the Credit Documents to which it is a party.
(d) Each Credit Document has been duly executed and
delivered and is a legal, valid and binding obligation of each
Credit Party which is a party thereto, enforceable in accordance
with its terms (subject to bankruptcy, insolvency, moratorium or
other laws and equitable principles relating to or affecting
creditors' rights generally).
SECTION 6.02. Pending Litigation. There have been no
judgments issued against and there are no judicial,
administrative or arbitration orders, awards or proceedings
pending, or to the knowledge of the Borrower, threatened against
or affecting the Borrower or any of its Subsidiaries in any court
or before any governmental authority or arbitration board or
tribunal which may have a Material Adverse Effect, except as
shown on Schedule 14. Neither the Borrower nor any of its
Subsidiaries is in default with respect to any order of any
court, governmental authority, regulatory agency or arbitration
board or tribunal, which default would have a Material Adverse
Effect.
SECTION 6.03. Title to Properties. Each of the Borrower
and its Subsidiaries has good and marketable title (or its
equivalent under applicable law) to all the Property it purports
to own which is material to the operation of its business, free
from Liens and the claims of any third party, except for
Permitted Liens.
SECTION 6.04. Patents and Trademarks. Each of the
Borrower
and its Subsidiaries owns or has the right to use all of the
material patents, patent applications, trademarks, trademark
registrations, trademark applications, service marks, service
mark registrations, service mark applications, trade names, trade
name registrations, trade name applications, copyrights,
copyright registrations, copyright applications, franchises,
licenses and rights with respect to the foregoing necessary for
the present conduct of its business, without any known conflict
with the rights of others, excluding conflicts that are not
reasonably expected to have a material adverse effect on the
consolidated financial condition of the Borrower.
SECTION 6.05. Governmental Consent. No consent,
approval
or authorization of, or filing, registration or qualification
with, any Governmental Authority on the part of any Credit Party
is required in conjunction with the execution, delivery or
performance of the Credit Documents to which such Credit Party is
a party.
SECTION 6.06. Taxes. All tax returns required to be
filed
by the Borrower or any of its Subsidiaries in any jurisdiction
have in fact been filed, and all taxes, assessments, fees and
other governmental charges upon any such member, or upon any of
its Property, income or franchises, which are due and payable
have been paid, except for those taxes being contested in good
faith with due diligence by appropriate proceedings for which
appropriate reserves have been maintained under GAAP. The
Borrower is not aware of any proposed tax assessments against it
or any of its Subsidiaries, the payment of which could reasonably
be expected to have a material adverse effect on the consolidated
financial condition of the Borrower.
SECTION 6.07. Financial Statements. (a) The
consolidated
balance sheet of Ralston Purina and its Subsidiaries at
September 30, 1993, and the related statements of earnings and
retained earnings for each of the three fiscal year periods then
ended, all accompanied by unqualified reports thereon from Price
Waterhouse (complete copies of which have been delivered to each
of the Lenders), have been prepared in accordance with GAAP and
present fairly in all material respects the consolidated
financial condition of Ralston Purina and its Subsidiaries as of
such date and the results of the consolidated operations of
Ralston Purina and its Subsidiaries for each such period. The
unaudited consolidated and consolidating balance sheets of
Ralston Purina and its Subsidiaries at December 31, 1993, and the
related statements of earnings and retained earnings for the
three months then ended (complete copies of all of which have
been delivered to each of the Lenders), have been prepared in
accordance with GAAP and present fairly in all material respects
the consolidated and consolidating financial condition of Ralston
Purina and its Subsidiaries as of such date and the result of its
consolidated and consolidating operations for such period,
subject to changes resulting from normal year-end audit
adjustments. Except as otherwise permitted by Section 8.09, the
fiscal year of the Borrower and each of its Subsidiaries ends on
September 30. As of the Closing Date, there has been no material
adverse change since December 31, 1993, with respect to the
consolidated financial condition of Ralston Purina.
(b) The combined balance sheet of Ralcorp at September
30,
1993, and the related statements of earnings and retained
earnings for each of the two fiscal year periods then ended, all
accompanied by unqualified reports thereon from Price Waterhouse
(complete copies of which have been delivered to each of the
Lenders), have been prepared in accordance with GAAP and present
fairly in all material respects the combined financial condition
of Ralcorp as of such date and the results of the combined
operations of Ralcorp for each such period. The unaudited
combined balance sheets of Ralcorp at December 31, 1993, and the
related statements of earnings and retained earnings for the
three months then ended (complete copies of all of which have
been delivered to each of the Lenders), have been prepared in
accordance with GAAP and present fairly in all material respects
the combined financial condition of Ralcorp as of such date and
the results of the combined operations of Ralcorp for such
period, subject to changes resulting from normal year-end audit
adjustments. As of the Closing Date, there has been no material
adverse change since December 31, 1993, with respect to the
consolidated financial condition of Ralcorp.
SECTION 6.08. Full Disclosure. (a) None of the
financial
statements referred to in Section 6.07 contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements contained therein or herein not
misleading.
(b) The information contained in the Form 10, taken
together, does not and will not contain any untrue statement of a
material fact and does not and will not omit to state a material
fact necessary in order to make the statements contained therein,
in light of the circumstances under which they are made, not
misleading.
SECTION 6.09. Reorganization Documents.
(a) The execution, delivery and performance of the
Reorganization Documents by each Person which is a party thereto
and the consummation of the Distribution in accordance with the
Reorganization Documents and the Form 10 are within each such
Person's corporate powers, have been duly authorized by all
necessary corporate action and require no action by or in respect
of, or filing with, any Governmental Authority (except for any
such action or filing that has been taken and is in full force
and effect), and will not contravene, or constitute a default
under, any provision of applicable law or regulation or of the
charter, minutes or by-law provisions of any such Person or of
any material credit agreement, judgment, injunction, order,
decree or other material contract, agreement or instrument
binding upon such Person or result in the creation or imposition
of any Lien on any Property of any such Person.
(b) Each of the representations and warranties
contained
in the Reorganization Documents is true and correct in all
material respects.
SECTION 6.10. Funded Indebtedness. Neither
the Borrower
nor any of its Subsidiaries has any Funded Indebtedness except
(i) as disclosed in the financial statements referenced in
Section 6.07 or (ii) as permitted by Section 8.01.
SECTION 6.11. Affiliates and Subsidiaries. (a) Set
forth
in Schedule 15 is a complete and accurate list as of the
Effective Date of Assignment of all Affiliates of Ralcorp or any
of its Subsidiaries after giving effect to the Reorganization.
(b) Set forth in Schedule 16 is a complete and accurate
list as of the Effective Date of Assignment of all direct and
indirect Subsidiaries of Ralcorp after giving effect to the
Reorganization.
(c) Ralcorp has no Material Subsidiaries as of the
Effective Date of Assignment (after giving effect to the
Reorganization) other than Ralston Foods, Inc., Bremner, Inc.,
Beech-Nut Nutrition Corporation and Keystone Resorts Management,
Inc.
SECTION 6.12. Governmental Regulations, Etc.. (a)
Neither
the use of the Loans or the proceeds thereof by the Borrower,
will directly or indirectly violate or result in a violation of
the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, or regulations issued pursuant
thereto, or Regulation U, G, T or X. The Borrower does not own
or intend to carry or purchase any "margin security" within the
meaning of said Regulations.
(b) Neither the Borrower nor any of its Subsidiaries is
subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Investment Company Act
of 1940 or the Interstate Commerce Act, each as amended. In
addition, neither the Borrower nor any of its Subsidiaries is (i)
an "investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, and is not
controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary" of a "holding company",
within the meaning of the Public Utility Holding Company Act of
1935, as amended.
(c) No director, executive officer or principal
shareholder of any Credit Party is a director, executive officer
or principal shareholder of any Lender, except for W. P. Stiritz,
who is a director of The Boatman's National Bank. For the
purposes hereof the terms "director", "executive officer" and
"principal shareholder" (when used with reference to any Lender)
have the respective meanings assigned thereto in Regulation O
issued by the Board of Governors of the Federal Reserve System.
(d) Each of the Borrower and its Subsidiaries has
obtained
all material licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its respective
Property and to the conduct of its business, the absence of which
would likely have a material adverse effect on the consolidated
financial condition of the Borrower.
(e) Neither the Borrower nor any of its Subsidiaries is
in
material violation of any applicable statute, regulation or
ordinance of the United States of America, or of any state, city,
town, municipality, county or any other jurisdiction, or of any
agency thereof (including without limitation, environmental laws
and regulations).
(f) Each of the Borrower and its Subsidiaries is
current
with all reports and documents, if any, required to be filed with
any state or federal securities commission or similar agency and
is in full compliance in all material respects with all
applicable rules and regulations of such commissions.
SECTION 6.13. Environmental Matters. The Borrower has
no
knowledge after reasonable inquiry, except as disclosed on
Schedule 17, of any spills, releases, discharges or disposals of
Hazardous Substances (as defined herein) by the Borrower, any of
its Subsidiaries or any third party that have occurred or are
currently occurring on any of the real property on which the
Borrower or any of its Subsidiaries conducts its business in a
quantity in excess of the current reportable quantity established
pursuant to any applicable environmental statute, rule or
regulation of any Governmental Authority currently in effect that
could result in any liability of the Borrower or any of its
Subsidiaries under such law and that could reasonably be expected
to have a material adverse effect on the consolidated financial
condition of the Borrower. As used herein, the term "Hazardous
Substances" with respect to a real property means any substance
defined or designated as hazardous or toxic waste, hazardous or
toxic material, hazardous or toxic substance or similar term, by
any environmental statute, rule or regulation of any Governmental
Authority currently in effect and applicable to such real
property.
SECTION 6.14. Solvency. As of the Closing Date and as
of
the Effective Date of Assignment, after giving effect to all
transactions contemplated by the Credit Documents to occur on
such respective dates, each of the Credit Parties is Solvent.
SECTION 6.15. ERISA. (a) (i) No steps have been taken
or
proceedings have been instituted, or, to the knowledge of the
Borrower, planned, to terminate any Plan where such termination
could give rise to any liability under Title IV of ERISA and no
contribution failure has occurred with respect to any Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA
and (ii) no Credit Party has either withdrawn or instituted steps
to withdraw from any Multiemployer Plan, which withdrawal has
resulted or could result in the incurrence by any Credit Party of
liability that could reasonably be expected to have a material
adverse effect on the consolidated financial condition of the
Borrower.
(b) The Borrower has no knowledge of any
circumstances
likely to cause the PBGC to institute steps to terminate any
Material Plans. No condition exists or event or transaction has
occurred in connection with any Plan which could result in the
incurrence by any Credit Party of any liability, fine or penalty
that could reasonably be expected to have a material adverse
effect on the consolidated financial position of the Borrower.
ARTICLE VII. AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that, so long as
this Agreement is in effect or any Loans or any other amounts
payable hereunder shall remain outstanding, and until all of the
Commitments hereunder shall have terminated:
SECTION 7.01. Information Covenants. The Borrower will
furnish, or cause to be furnished, to the Agent and each Lender:
(a)Annual Financial Statements. (i) As
soon as
available and in any event within 90 days after the
close of each fiscal year of the Borrower, a consoli-
dated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal year together
with related consolidated statements of income and
retained earnings and of cash flows for such fiscal
year, setting forth in comparative form consolidated
figures as of the end of and for the preceding fiscal
year, all in reasonable detail and examined by Price
Waterhouse, or other independent certified public
accountants of recognized national standing acceptable
to the Required Lenders and whose opinion shall be to
the effect that such consolidated financial statements
have been prepared in accordance with GAAP (except for
changes with which such accountants concur) and shall
not be qualified as to the scope of the audit or as to
the status of the Borrower or any of its Subsidiaries
as a going concern. It is specifically understood and
agreed that failure of the annual financial statements
to be accompanied by an opinion of such accountants in
form and substance as provided herein or by a
certificate of such accountants as referred to in
paragraph (d) below shall constitute a Default.
(ii) As soon as available and in any event
within 90 days after the close of each fiscal year of
the Borrower, an unaudited consolidating balance sheet
of the Borrower and its Subsidiaries as at the end of
such fiscal year together with related unaudited
consolidating statements of income and retained
earnings and of cash flows for such fiscal year, in
each case setting forth in comparative form unaudited
consolidating figures as of the end of and for the
preceding fiscal year, all in reasonable form and
detail acceptable to the Required Lenders, and
accompanied by a certificate of the chief financial
officer of the Borrower as having been prepared in
accordance with GAAP and as presenting fairly in all
material respects the consolidating financial condition
of the Borrower and its Subsidiaries as of the date of
such financial statements, subject to changes resulting
from audit and normal year-end audit adjustments.
(b)Quarterly Financial Statements. As soon
as
available and in any event within 45 days after the end
of each of the first three fiscal quarters of each
fiscal year of the Borrower, an unaudited consolidated
and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such quarterly period
together with related consolidated and consolidating
statements of income and retained earnings and of cash
flows for such quarterly period and for the portion of
the fiscal year ending with such period, in each case
setting forth in comparative form unaudited
consolidated and consolidating figures for the
corresponding date or period of the preceding fiscal
year, all in reasonable form and detail acceptable to
the Required Lenders, and accompanied by a certificate
of the chief financial officer of the Borrower as
having been prepared in accordance with GAAP and as
presenting fairly in all material respects the
consolidated and consolidating financial condition of
the Borrower and its Subsidiaries as of the date of
such financial statements, subject to changes resulting
from audit and normal year-end audit adjustments.
(c)Officer's Certificate. At the time of
delivery of the financial statements provided for in
Sections 7.01(a) and (b), a certificate of the chief
financial officer of the Borrower substantially in the
form of Schedule 18 to the effect that the Borrower is
in substantial compliance with the terms of this
Agreement and that no Default or Event of Default
exists, or if any Default or Event of Default does
exist specifying the nature and extent thereof and what
action the Borrower proposes to take with respect
thereto. In addition, such certificate shall
demonstrate compliance with the financial covenants
contained in Section 7.11 by calculation thereof as of
the end of each such fiscal period.
(d)Accountant's Certificate. Within the
period
for delivery of the annual financial statements
provided in Section 7.01(a)(i), a certificate of the
accountants conducting the annual audit stating that in
the course of its regular audit of the business of the
Borrower and its Subsidiaries, which audit was
conducted in accordance with generally accepted
auditing standards (including tests of the accounting
records and such other auditing procedures as were
considered necessary in the circumstances), they have
reviewed this Agreement and they have obtained no
knowledge of any violation of any of the financial
covenants set forth in Section 7.11 or, if in the
opinion of such accounting firm such a violation has
occurred and is continuing, a statement as to the
nature thereof, all of the foregoing to be in
reasonable detail and in form and substance
satisfactory to the Required Lenders.
(e)SEC and Other Reports. Promptly upon
transmission thereof, copies of any filings and
registrations with, and reports to, the Securities and
Exchange Commission, or any successor agency, by the
Borrower or any of its Subsidiaries, and copies of all
financial statements, proxy statements, notices and
reports as the Borrower or its Subsidiaries shall send
to its shareholders or to the holders of any other
Funded Indebtedness in their capacity as such holders.
(f)Other Information. With reasonable
promptness upon any such request, such other
information not otherwise required to be delivered by
any other provision of this Agreement regarding the
business, properties or financial condition of the
Borrower and its Subsidiaries as the Agent or the
Required Lenders may reasonably request (any such
information being collectively referred to for purposes
of this paragraph (f) as "Additional Information");
provided, however, that if the Borrower reasonably
believes that any material interests of the Borrower or
any of its Subsidiaries relating to any such Additional
Information which is non-public, confidential or
proprietary in nature are not adequately protected in
connection with the delivery of such Additional
Information to the Agent and the Lenders by any then
existing confidentiality agreements entered into by the
Agent and the Lenders with respect to the Borrower and
its Subsidiaries, then the Borrower shall not be
required to deliver such Additional Information
pursuant to this paragraph (f) until the Agent and the
Lenders shall have executed an additional
confidentiality agreement regarding such Additional
Information in form and substance mutually satisfactory
to the Borrower and the Lenders.
(g)Notice of Default or Litigation. Upon
the
Borrower obtaining knowledge thereof, written notice to
the Agent and the Lenders (i) immediately, of the
occurrence of an event or condition consisting of a
Default or Event of Default, specifying the nature and
existence thereof and what action the Borrower proposes
to take with respect thereto, and (ii) promptly, but in
any event within five (5) Business Days, of the
occurrence of any of the following with respect to the
Borrower or any of its Subsidiaries which are,
individually or collectively, likely to have a Material
Adverse Effect: (A) the pendency or commencement of
any litigation, arbitral or governmental proceedings
against the Borrower or any of its Subsidiaries, (B)
any one or more levies of an attachment, executions or
other processes against any Property of the Borrower or
any of its Subsidiaries, (C) the occurrence of an event
or condition which shall constitute a default or event
of default with respect to any Funded Indebtedness of
the Borrower or any of its Subsidiaries (other than
Funded Indebtedness outstanding under this Agreement
and the other Credit Documents) or (D) any notice or
determination concerning the imposition of any
withdrawal liability by a Multiemployer Plan against
any Credit Party or any of its ERISA Affiliates.
SECTION 7.02. Preservation of Existence and
Franchises. Except as otherwise permitted under Section
8.04, the Borrower will, and will cause each of its
Subsidiaries to, do or cause to be done, all things
necessary to preserve and keep in full force and effect its
existence, rights, franchises and authority, unless the
failure to do so is not likely to have a Material Adverse
Effect.
SECTION 7.03. Books, Records and Inspections. The
Borrower will, and will cause each of its Subsidiaries to,
keep books and records of its transactions in accordance
with good accounting practices on the basis of GAAP
(including the establishment and maintenance of appropriate
reserves). The Borrower will, and will cause each of its
Subsidiaries to, permit on reasonable notice officers or
designated representatives of the Agent to visit and inspect
its books of account and records and any of its properties
or assets (in whomever's possession) up to 2 times during
each calendar year and to permit the Agent to discuss the
affairs, finances and accounts of the Borrower and its
Subsidiaries with, and be advised as to the same by, its and
their officers, directors and independent accountants;
provided, however, that if the Borrower reasonably believes
that any material interests of the Borrower or any of its
Subsidiaries relating to any non-public, confidential or
proprietary information which could become available to the
Agent during the course of such inspections or such
discussions are not adequately protected by any then
existing confidentiality agreements entered into by the
Agent and the Lenders with respect to the Borrower and its
Subsidiaries, then the Agent shall not be entitled to make
any such inspections or to have any such discussions, as the
case may be, pursuant to this Section 7.03 until the Agent
and the Lenders shall have executed an additional
confidentiality agreement regarding such non-public,
confidential or proprietary information in form and
substance mutually satisfactory to the Borrower and the
Lenders.
SECTION 7.04. Compliance with Law. The Borrower will,
and will cause each of its Subsidiaries to, comply in all
material respects with all laws, rules, regulations and
orders of, and all restrictions imposed by, any Governmental
Authority, applicable to it or its Subsidiaries or its or
their Property, the violation of which is likely to have a
Material Adverse Effect.
SECTION 7.05. Payment of Taxes and Other Claims. The
Borrower will, and will cause each of its Subsidiaries to,
pay and discharge (i) all material taxes, assessments and
governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its Property, before they
shall become delinquent and (ii) all material lawful claims
(including claims for labor, materials and supplies) which,
if unpaid, might give rise to a Lien or charge upon any of
its Property; provided, however, that neither the Borrower
nor any of its Subsidiaries shall be required to pay any
such tax, assessment, charge, levy or claim which is being
contested in good faith by appropriate proceedings and as to
which adequate reserves therefor have been established in
accordance with GAAP.
SECTION 7.06. Insurance. The Borrower will, and will
cause each of its Subsidiaries to, at all times maintain in
full force and effect insurance in such amounts, covering
such risks and liabilities and with such deductibles or
self-insurance retentions as are in accordance with normal
industry practice for consumer food companies with similar
sales and profits.
SECTION 7.07. Maintenance of Property. The Borrower
will, and will cause each of its Subsidiaries to, maintain
and preserve its material properties and equipment used or
useful in its business (in whomsoever's possession as they
may be) in good repair, working order and condition, normal
wear and tear excepted, and will make, or cause to be made,
in such properties and equipment from time to time all
repairs, renewals, replacements, extensions, additions,
betterments and improvements thereto as may be needed or
proper, to the extent and in the manner customary for
companies in similar businesses, unless the failure to do so
is not likely to have a material adverse effect on the
conduct of the operations of the Borrower and its
Subsidiaries taken as a whole.
SECTION 7.08. Performance of Obligations. The
Borrower will, and will cause each of its Subsidiaries to,
perform in all material respects all of its obligations
under the terms of all material agreements (including
without limitation the Reorganization Documents),
indentures, mortgages, security agreements or other debt
instruments to which it is a party or by which it is bound,
unless the failure to do so is not likely to have a material
adverse effect on the conduct of the operations of the
Borrower and its Subsidiaries taken as a whole.
SECTION 7.09. ERISA. The Borrower will, and will
cause each of its Subsidiaries to, at all times, make prompt
payment when due of all contributions required under all
Plans and required to meet the minimum funding standard set
forth in ERISA with respect to its Plans. The Borrower will
not, nor will it permit any of its Subsidiaries or ERISA
Affiliates to, (i) terminate a Plan or withdraw from any
Multiemployer Plan or (ii) cause or permit to exist any
condition under Section 4.02(a) of ERISA or other event or
condition which presents a material risk of termination of a
Plan at the request of the PBGC, the result of which would
be to cause the Borrower and its Subsidiaries to incur a
present liability which would result in the occurrence of a
Default under Section 9.01(f).
SECTION 7.10. Use of Proceeds. The proceeds of the
Loans hereunder shall be used, subject to the terms of
Section 8.05, for the working capital purposes of the
Subsidiaries of the Borrower, for the general corporate
purposes of the Borrower and its Subsidiaries and to finance
the costs and expenses of the Reorganization, including the
repayment of certain indebtedness of Ralston Purina
outstanding immediately prior to the Closing Date. As of
the Closing Date, the Borrower expects that the Loans will
be applied to finance the working capital needs and the
general corporate purposes of Ralcorp and its Subsidiaries
in the manner described in Schedule 20. Nothing contained
in this Section 7.10 shall limit any of the rights of the
Agent and the Lenders hereunder or under any of the other
Credit Documents as against any Credit Party.
SECTION 7.11. Financial Covenants.
(a) Consolidated Debt Coverage Ratio. The Borrower
shall cause the Consolidated Debt Coverage Ratio at each
Calculation Date to be no greater than the following
proportions:
Calculation Date
Ratio
Each Calculation Date occurring
during the period from the
Closing Date through and
including March 31, 1995
to 3.75 to 1.00
June 30, 1995 and each
Calculation Date thereafter
3.25 to 1.00
(b) Consolidated Interest Coverage Ratio. (i) Ralston
Purina shall cause the Consolidated Interest Coverage Ratio
at each Calculation Date prior to the Effective Date of
Assignment (calculated for the four fiscal-quarter period
ending on such Calculation Date) to be no less than 3.00 to
1.00
(ii) Ralcorp shall cause the Consolidated Interest Coverage
Ratio at each Calculation Date on or after the Effective
Date of Assignment to be no less than 3.00 to 1.00, as
calculated:
(A) for the first Calculation Date to occur after the
Effective Date of Assignment, based on (1) Consolidated
EBIT for the four fiscal-quarter period then ended and
(2) Consolidated Interest Expense for the one fiscal-
quarter period then ended multiplied by 4;
(B) for the second Calculation Date to occur after the
Effective Date of Assignment, based on (1) Consolidated
EBIT for the four fiscal-quarter period then ended and
(2) Consolidated Interest Expense for the two fiscal-
quarter period then ended multiplied by 2;
(C) for the third Calculation Date to occur after the
Effective Date of Assignment, based on (1) Consolidated
EBIT for the four fiscal-quarter period then ended and
(2) Consolidated Interest Expense for the three fiscal-
quarter period then ended multiplied by 1.33; and
(D) for each Calculation Date thereafter, based on (1)
Consolidated EBIT for the four fiscal-quarter period
then ended and (2) Consolidated Interest Expense for
the four fiscal-quarter period then ended.
SECTION 7.12. Material Subsidiaries. Ralcorp shall
cause each of its Material Subsidiaries to guarantee
pursuant to the Guaranty Agreement the obligations of
Ralcorp under the Credit Documents. In furtherance of the
above, Ralcorp shall notify the Agent and the Lenders
promptly upon any Person becoming a Material Subsidiary and
shall cause such Person (i) to execute a Guarantor Joinder
Agreement and (ii) to deliver such other documentation as
the Agent may reasonably request in connection with the
foregoing, including without limitation certified corporate
resolutions and other corporate documents of such Person and
favorable opinions of counsel to such Person (which shall
cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to
above), all in form, content and scope reasonably
satisfactory to the Agent.
In the event that any Guarantor shall cease to be a
direct or indirect Subsidiary of Ralcorp as a result of any
transaction permitted by Section 8.04(a) or (b), then,
promptly upon the request of the Borrower, the Agent (on
behalf of the Lenders) shall thereupon execute such
documents and take such other action reasonably requested by
the Borrower to cause such Guarantor to be released from its
obligations arising under the Guaranty Agreement.
SECTION 7.13. Domestic Revenues. Ralcorp shall cause
the majority of revenues of Ralcorp and its consolidated
Subsidiaries for all periods subsequent to the Effective
Date of Assignment to be generated by Property owned or held
by one or more of the Domestic Subsidiaries of Ralcorp.
ARTICLE VIII. NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that, so long
as this Agreement is in effect or any Loans or any other
amounts payable hereunder shall remain outstanding, and
until all of the Commitments hereunder shall have
terminated:
SECTION 8.01. Funded Indebtedness. The Borrower will
not, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any
Funded Indebtedness, except:
(a)Funded Indebtedness arising under this
Agreement and the other Credit Documents;
(b)Funded Indebtedness existing as of the
Closing Date and disclosed in the financial statements
referenced in Section 6.07 (and renewals, refinancings
or extensions thereof on terms and conditions no less
favorable to the applicable obligor than such existing
Funded Indebtedness and in a principal amount not in
excess of that outstanding as of the date of such
renewal, refinancing or extension);
(c)Funded Indebtedness incurred or arising
under
or in connection with Permitted Liens;
(d)reimbursement obligations of the
Borrower in
respect of letters of credit or acceptances issued or
created for the account of the Borrower provided that
the total of all such reimbursement obligations shall
not exceed an aggregate principal amount of $20,000,000
at any time outstanding;
(e)purchase money Funded Indebtedness
(including
Capital Leases) hereafter incurred by the Borrower or
any of its Subsidiaries to finance the purchase of
fixed assets provided that (i) the total of all such
Funded Indebtedness for the Borrower and its
Subsidiaries shall not exceed an aggregate principal
amount of $50,000,000 at any time outstanding; (ii)
such Funded Indebtedness when incurred shall not exceed
the purchase price of the assets financed; and (iii) no
such Funded Indebtedness shall be refinanced for a
principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing;
and
(f)in addition to the Funded Indebtedness
otherwise permitted by this Section 8.01, other Funded
Indebtedness hereafter incurred by the Borrower
provided that (i) at any time prior to repayment of all
principal and accrued interest on the Term Loan, the
Borrower shall prepay the Term Loan pursuant to Section
3.02(b)(ii) in an amount equal to the Net Proceeds of
such Funded Indebtedness, (ii) the loan documentation
with respect to such Funded Indebtedness shall not
contain covenants or default provisions more
restrictive than the covenants and default provisions
contained in the Credit Documents, (iii) the Weighted
Average Life to Maturity of such Funded Indebtedness as
of the date of incurrence thereof shall be a period
extending beyond the Maturity Date and (iv) on the date
of incurrence of such Funded Indebtedness after giving
effect on a Pro Forma Basis to the incurrence of such
Funded Indebtedness and to the concurrent retirement of
any other Funded Indebtedness of the Borrower or any of
its consolidated Subsidiaries, no Default or Event of
Default would exist hereunder.
SECTION 8.02. Liens. The Borrower will not, nor will in
permit any of its Subsidiaries to, contract for, create, incur,
assume or permit to exist any Lien with respect to any of its
Property, whether now owned or after acquired, except for
Permitted Liens.
SECTION 8.03. Nature of Business. The Borrower will
not,
nor will it permit any of its Subsidiaries to, engage in any
business other than consumer product businesses, coupon and
promotion businesses, all seasons resort businesses, other
businesses related to the existing businesses of the Borrower and
its Subsidiaries as of the Closing Date and any other business
reasonably acceptable to the Required Lenders.
SECTION 8.04. Consolidation, Merger, Sale or Purchase of
Assets, etc.. The Borrower will not, nor will it permit any of
its Subsidiaries to:
(a) dissolve, liquidate or wind up its affairs, or
enter
into any transaction of merger or consolidation; provided,
however, that, so long as no Default or Event of Default would be
directly or indirectly caused as a result thereof, (i) the
Borrower may merge or consolidate with any other Credit Party
provided that the Borrower is the surviving corporation; (ii) any
Domestic Credit Party (other than the Borrower) may merge or
consolidate with any other Domestic Credit Party; (iii) any
Domestic Credit Party may merge or consolidate with any Person
that is not a Domestic Credit Party provided that (A) such
Domestic Credit Party is the surviving corporation and (B) after
giving effect on a Pro Forma Basis to such merger or
consolidation, no Default or Event of Default would exist
hereunder; (iv) any Subsidiary of the Borrower that is not a
Domestic Credit Party may merge or consolidate with any other
Person that is not a Domestic Credit Party provided that after
giving effect on a Pro Forma Basis to such merger or
consolidation, no Default or Event of Default would exist
hereunder; and (v) any wholly-owned Subsidiary of the Borrower
other than a Material Subsidiary may dissolve, liquidate or wind
up its affairs;
(b) sell, lease, transfer or otherwise dispose of any
Property (including without limitation pursuant to any
sale/leaseback transaction) other than (i) the sale of inventory
in the ordinary course of business for fair consideration, (ii)
the sale or disposition of machinery and equipment no longer used
or useful in the conduct of such Person's business and (iii)
subject to the terms of Section 8.05, other sales or
dispositions, provided that (A) after giving effect to such sale
or other disposition, the aggregate book value of assets sold or
otherwise disposed of pursuant to this clause (iii) since the
Closing Date (if Ralston Purina is the Borrower) or the Effective
Date of Assignment (if Ralston Purina is no longer the Borrower)
does not exceed the majority of Consolidated Total Assets as of
the most recent fiscal year end preceding the date of such sale
or other disposition with respect to which the Agent shall have
received the Required Financial Information and (B) after giving
effect on a Pro Forma Basis to such sale or other disposition, no
Default or Event of Default would exist hereunder;
(c) except as otherwise permitted under Section 8.07,
acquire all or any substantial part of the capital stock or
securities of any other Person or purchase, lease or otherwise
acquire (in a single transaction or a series of related
transactions) all or any substantial part of the Property of any
other Person; provided that, subject to the terms of Section 7.12
and Section 8.05, the Borrower or any of its Subsidiaries shall
be permitted to make acquisitions of the type referred to in this
Section 8.04(c) provided that after giving effect on a Pro Forma
Basis to any such acquisition (including but not limited to any
Funded Indebtedness to be incurred or assumed by the Borrower or
any of its Subsidiaries in connection therewith), no Default or
Event of Default would exist hereunder; or
(d) with respect to any such Person which is a Domestic
Credit Party, take any action in furtherance of causing such
Person not to be incorporated or organized under the laws of any
State of the United States or the District of Columbia.
SECTION 8.05. Transactions with Affiliates. The
Borrower
will not, nor will it permit any of its Subsidiaries to, enter
into or permit to exist any transaction or series of transactions
with any officer, director, shareholder, Subsidiary or Affiliate
of such Person other than (a) advances by the Borrower or any of
its Subsidiaries of working capital to (i) any Subsidiary of the
Borrower that is a Guarantor or (ii) any other Subsidiary of the
Borrower or any partnership or joint venture in which the
Borrower or any of its Subsidiaries is a partner, provided that
(A) such advances are necessary to meet the working capital needs
of such Subsidiary and such transfer will not impair the
Borrower's operations or its ability to meet its obligations,
(B) to the extent made with proceeds of any Loans hereunder, such
advances shall not be applied to any Long Term Debt of such
Subsidiary, partnership or joint venture and (C) the aggregate
amount of such advances at any time outstanding for all
Subsidiaries shall not exceed $25,000,000, (b) transfers of cash
and assets to any Domestic Credit Parties, (c) transfers of cash
and assets to any Foreign Subsidiary of the Borrower, provided
that after giving effect to any such transfer the aggregate
amount of cash and assets (valued at book value) transferred
pursuant to this clause (c) since the Closing Date (if Ralston
Purina is the Borrower) or the Effective Date of Assignment (if
Ralston Purina is no longer the Borrower), together with the
aggregate amount of Investments in Foreign Subsidiaries of the
Borrower made pursuant to Section 8.07 and clause (iv)(B) of the
definition of "Permitted Investments" set forth in Section 1.01,
does not exceed 5% of Consolidated Total Assets as of the most
recent fiscal year end preceding the date of such transfer with
respect to which the Agent shall have received the Required
Financial Information, (d) transactions pursuant to or
contemplated by the Reorganization Documents, (e) transactions
permitted by Section 8.07, (f) normal compensation and
reimbursement of expenses of officers and directors and (g)
except as otherwise specifically limited in this Agreement, other
transactions which are entered into in the ordinary course of
such Person's business on terms and conditions substantially as
favorable to such Person as would be obtainable by it in a
comparable arms-length transactions with a Person other than an
officer, director, shareholder, Subsidiary or Affiliate.
SECTION 8.06. Dividends. Ralcorp will not, nor will it
permit any of its Subsidiaries to, declare or pay any Dividends
(other than Dividends payable solely in the same class of capital
stock of such Person), except that (i) any Subsidiary of Ralcorp
may declare or pay Dividends with respect to any shares of its
capital stock held by any Credit Party and (ii) provided that no
Default or Event of Default has occurred and is continuing at
such time or would be directly or indirectly caused as a result
thereof, (A) during the period after such time as the Agent shall
have received the annual audited financial statements required to
be delivered pursuant to Section 7.01(a)(i) for the fiscal year
ending September 30, 1994, but prior to repayment of all amounts
outstanding on the Term Loan (including principal, interest and
Fees), Ralcorp may declare and pay Dividends in an amount at any
time not to exceed 50% of cumulative Consolidated Net Income for
fiscal year 1994 and each fiscal quarter thereafter for which
financial statements have been delivered to the Agent pursuant to
Section 7.01, (B) after repayment of all amounts outstanding on
the Term Loan (including principal, interest and Fees), Ralcorp
may declare and pay Dividends in any amount and (C) without
limiting the generality of clauses (A) and (B) above, Ralcorp may
redeem, retire, purchase or otherwise acquire any shares of any
class of its capital stock now or hereafter outstanding (or any
warrants for or options or stock appreciation rights in respect
of any such shares) in an aggregate amount not to exceed
$15,000,000 for all such transactions occurring subsequent to the
Closing Date.
SECTION 8.07. Advances, Investments, Loans, etc.. The
Borrower will not, nor will it permit any of its Subsidiaries to,
make Investments in or to any Person, except for Permitted
Investments.
SECTION 8.08. No Dividend Restrictions. The Borrower
will
not permit any of its Subsidiaries to, directly or indirectly,
create or otherwise cause, incur, assume, suffer or permit to
exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such Person to: (a)
pay dividends or make any other distribution on any of such
Person's capital stock, (b) subject to subordination provisions,
pay any indebtedness owed to the Borrower or any other Credit
Party, (c) make loans or advances to the Borrower or any other
Credit Party or (d) transfer any of its Property to the Borrower
or any other Credit Party.
SECTION 8.09. Fiscal Year. Without giving prior written
notice thereof to the Agent, the Borrower will not change, or
permit a change, in the fiscal year for it and its Subsidiaries
on a consolidated basis.
ARTICLE IX. EVENTS OF DEFAULT
SECTION 9.01. Events of Default. Each of the following
shall be an event of default (each an "Event of Default")
hereunder:
(a) Payment. The Borrower shall
(i) default in the payment when due of any
principal of
any of the Loans, or
(ii) default, and such default shall
continue for five
(5) or more days, in the payment when due of any interest
on
the Loans, or of any Fees or other amounts owing
hereunder,
under any of the other Credit Documents or in connection
herewith or therewith; or
(b) Representations. (i) Any representation, warranty
or
statement made or deemed to be made by any Credit Party herein,
in any of the other Credit Documents, or in any written statement
or certificate delivered or required to be delivered pursuant
hereto or thereto shall prove untrue in any material respect on
the date as of which it was made or deemed to have been made or
delivered; or
(ii) On and after the Effective Date of Assignment (and
without limiting the generality of clause (i) above), any
representation, warranty or statement made by Ralston Purina in
any certificate delivered to the Agent pursuant to Section 5.02,
or any representation, warranty or statement made or deemed to be
made by Ralston Purina herein, in any of the other Credit
Documents, or in any written statement or certificate delivered
or required to be delivered pursuant hereto or thereto shall
prove untrue (on the date as of which it was made or deemed to
have been made or delivered) in any respect material (A) to the
consolidated operations or consolidated financial condition of
Ralcorp, (B) the ability of Ralcorp and the Guarantors taken as a
whole to perform any material obligation under the Credit
Documents or (C) the material rights and remedies of the Lenders
as against Ralcorp and the Guarantors taken as a whole under the
Credit Documents; or
(c) Covenants. (i) The Borrower shall
(A) default in the due performance or
observance of any
term, covenant or agreement contained in Section 7.02,
7.10,
7.11 or 7.12 or Sections 8.01 through Section 8.09,
inclusive and such default shall continue unremedied for
a
period of at least ten (10) days after the earlier of an
officer of the Borrower becoming aware of such default or
notice thereof by the Agent, or
(B) default in the due performance or
observance by it
of any term, covenant or agreement (other than those
referred to in subsection (a), (b) or (c)(i)(A) of this
Section 9.01) contained in this Agreement and such
default
shall continue unremedied for a period of at least thirty
(30) days after the earlier of an officer of the Borrower
becoming aware of such default or notice thereof by the
Agent; or
(ii) On or after the Effective Date of Assignment (and
without limiting the generality of clause (i) above), Ralston
Purina shall default in any material respect in the due
performance or observance of any covenant or agreement of Ralston
Purina contained in the certificate delivered to the Agent
pursuant to Section 5.02(j); or
(d) Guaranty Agreement. The guaranty given by any
Guarantor pursuant to the Guaranty Agreement or any provision
thereof shall cease to be in full force and effect, or any
Guarantor or any Person acting by or on behalf of such Guarantor
shall deny or disaffirm such Guarantor's obligations under the
Guaranty Agreement, or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement on
its part to be performed or observed pursuant to the Guaranty
Agreement; or
(e) Bankruptcy Event. Any Bankruptcy Event
shall occur
with respect to the Borrower or any of its Subsidiaries; or
(f) Defaults Under Other Agreements; Judgments; ERISA.
If
at any time, (i) the aggregate amount of
(A) Funded Indebtedness of the Borrower or
any of its
Subsidiaries (other than Funded Indebtedness outstanding
under this Agreement and the other Credit Documents), (1)
with respect to which there has occurred (I) a default in
any payment (beyond the applicable grace period with
respect
thereto, if any) or (II) a default in the observance or
performance relating to such Funded Indebtedness or
contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event or
condition, the effect of which default or other event or
condition is to cause, or permit, the holder or holders
of
such Funded Indebtedness (or trustee or agent on behalf
of
such holders) to cause (determined without regard to
whether
any notice or lapse of time is required), any such Funded
Indebtedness to become due prior to its stated maturity;
or
(2) which shall have been declared due and payable, or
required to be prepaid other than by a regularly
scheduled
required prepayment, prior to the stated maturity
thereof;
plus
(B) the amount of liability with respect to
any
judgments or decrees which shall have been entered
against
the Borrower or any of its Subsidiaries and not paid or
fully covered by insurance provided by a carrier who has
acknowledged coverage or not vacated, paid, discharged or
stayed or bonded pending appeal within forty-five (45)
days
from the entry thereof;
plus
(C) (1) the aggregate amount which any of
the Credit
Parties or any member of the Controlled Group shall have
failed to pay when due under Title IV of ERISA, (2) the
unfunded liabilities under any Plans with respect to
which a
notice of intent to terminate has been filed by any
Credit
Party or any member of the Controlled Group, any Plan
administrator or any combination of the foregoing, (3)
the
unfunded liabilities of any Plans with respect to which
(I)
the PBGC shall have instituted proceedings under Title IV
of
ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of or to
cause a trustee to be appointed to administer or (II) a
condition shall exist by reason of which the PBGC would
be
entitled to obtain a decree adjudicating that such Plans
must be terminated, and (4) the current payment
obligations
which likely have been incurred by one or more members of
the Controlled Group as a result of a complete or partial
withdrawal from, or a default, within the meaning of
Section
4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans,
shall exceed (ii) $50,000,000; or
(g) Ownership. There shall occur a Change of Control.
SECTION 9.02. Acceleration; Remedies. Upon the
occurrence
of an Event of Default, and at any time thereafter unless and
until such Event of Default has been waived by the Lenders or
cured to the satisfaction of the Lenders (pursuant to the voting
procedures in Section 11.08), the Agent, upon the request of the
Required Lenders, shall, by written notice to the Borrower, take
any of the following actions without prejudice to the rights of
the Agent or any Lender to enforce its claims against the
Borrower, except as otherwise specifically provided for herein:
(i)Termination of Commitments. Declare the
Commitments terminated whereupon the Commitments shall be
immediately terminated.
(ii)Acceleration of Loans. Declare the unpaid
principal of and any accrued interest in respect of all
Loans and any and all other indebtedness or obligations
of
any and every kind owing by the Borrower to any of the
Lenders hereunder to be due whereupon the same shall be
immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are
hereby
waived by the Borrower.
(iii)Enforcement of Rights. Enforce any and
all rights
and interests created and existing under the Credit
Documents and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified
in Section 9.01(e) shall occur, then the Commitments shall
automatically terminate and all Loans, all accrued interest in
respect thereof, all accrued and unpaid Fees and other
indebtedness or obligations owing to the Lenders hereunder
automatically shall immediately become due and payable without
the giving of any notice or other action by the Agent.
ARTICLE X. AGENT
SECTION 10.01. Appointment and Authorization. Each
Lender
hereby irrevocably appoints and authorizes the Agent to take such
action on its behalf and to exercise such powers under this
Agreement and the other Credit Documents as are delegated to the
Agent by the terms hereof or thereof, together with such powers
as are reasonably incidental thereto.
SECTION 10.02. General Immunity. In performing its
duties
to the Lenders as Agent hereunder, the Agent will take the same
care as it takes in connection with credit transactions in which
it alone is interested. However, neither the Agent nor any of
its directors, officers, agents or employees shall be liable to
the Lenders for any action taken or omitted to be taken by it or
them hereunder or in connection herewith except for its own or
their own gross negligence or willful misconduct.
SECTION 10.03. Consultation with Professionals. The
Agent
may consult with legal counsel and other professionals selected
by it and shall not be liable to the Lenders for any action taken
or suffered in good faith by it in accordance with the advice of
such counsel and professionals in their respective areas of
expertise.
SECTION 10.04. Documents; Reliance on Borrowing Base
Statements. The Agent shall not be under any duty to examine or
pass upon the effectiveness, genuineness or validity of this
Agreement or any of the other Credit Documents or any other
instrument or document furnished pursuant hereto or in connection
herewith, and the Agent shall be entitled to assume that the same
are valid, effective and genuine and what they purport to be.
SECTION 10.05. Rights as a Lender. With respect to its
Commitment, the Agent shall have the same rights and powers
hereunder as any Lender and may exercise the same as though it
were not the Agent, and the terms "Lender" and "Lenders" shall,
as applicable and unless the context otherwise indicates, include
the Agent in its individual capacity. The Agent may accept
deposits from, lend money to and generally engage in any kind of
banking or trust business with any Credit Party as if it were not
the Agent.
SECTION 10.06. Responsibility of Agent. It is expressly
understood and agreed that the obligations of the Agent hereunder
to the Lenders are only those expressly set forth in this
Agreement and the other Credit Documents and that the Agent shall
be entitled to assume that no Default or Event of Default has
occurred and is continuing unless the Agent has actual knowledge
of such fact or has received notice from a Lender or a Credit
Party that such Lender or Credit Party considers that a Default
or an Event of Default has occurred and is continuing and
specifying the nature thereof.
SECTION 10.07. Action by Agent. So long as the Agent
shall
be entitled, pursuant to Section 10.06, to assume that no Default
or Event of Default has occurred and is continuing, the Agent
shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights that may be
vested in it by, or with respect to taking or refraining from
taking any action or actions that it may be able to take under or
in respect of, this Agreement or any of the other Credit
Documents. The Agent shall incur no liability to the Lenders
under or in respect of this Agreement or any of the other Credit
Documents by acting upon any notice, consent, certificate,
warranty or other paper or instrument believed by it to be
genuine or authentic or to be signed by the proper party or
parties, or with respect to anything that it may do or refrain
from doing in the reasonable exercise of its judgment, or that
may seem to it to be necessary or desirable under the
circumstances.
Without limiting the generality of the foregoing
provisions
of this Section 10.07, the Agent shall be conclusively entitled
to assume that the conditions precedent set forth in Section 5.03
have been satisfied unless it shall have acquired actual
knowledge that any such condition precedent has not been
satisfied.
SECTION 10.08. Notices of Event of Default, Etc.. In
the
event that the Agent shall have acquired actual knowledge of any
Default or Event of Default, the Agent shall promptly give notice
thereof to the Lenders, and the Agent may take such action and
assert such rights with respect to taking or refraining from
taking any action or actions that it may be able to take under or
in respect of, this Agreement or any of the other Credit
Documents, as it deems to be advisable in its discretion for the
protection of the interests of the Lenders, including, without
limitation, the exercise of rights and remedies under Article IX
and under any of the other Credit Documents; provided that, as
between the Agent and the Lenders only, after the occurrence of
an Event of Default, the Agent (i) shall not exercise any rights
or remedies granted to it hereunder, under any other of the
Credit Documents, or otherwise available to it at law or in
equity, without the approval of the Required Lenders (or all of
the Lenders, if otherwise required by this Agreement) and (ii)
upon the direction of the Required Lenders (or all of the
Lenders, if otherwise required by this Agreement), shall exercise
such rights and remedies as so directed; provided further that,
notwithstanding the above, the Agent shall not be required to
take any action which would expose the Agent to personal
liability or which is contrary to law unless it shall be
indemnified to its satisfaction against any and all amounts,
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature which may be imposed on, incurred by or asserted against
the Agent by reason of taking or continuing to take any such
action.
SECTION 10.09. Indemnification of Agent. The Lenders
agree
to indemnify the Agent (to the extent not reimbursed by the
Credit Parties), ratably according to their respective Commitment
Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this
Agreement or any of the other Credit Documents or any action
taken or omitted by the Agent under this Agreement or any of the
other Credit Documents; provided that, no Lender shall be liable
for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation to the foregoing, each
Lender agrees to reimburse the Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel
fees) incurred by the Agent in connection with the preparation,
execution, delivery, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities
under, this Agreement or any of the other Credit Documents, to
the extent not reimbursed by the Credit Parties.
SECTION 10.10. No Representations. Each Lender
expressly
acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has
made any representations or warranties to it and that no act by
the Agent or any of its directors, employees, agents, attorneys-
in-fact or affiliates hereafter taken, including any review of
the affairs of any Credit Party, shall be deemed to constitute
any representation or warranty by the Agent to such Lender. Each
Lender represents to the Agent that it has, independently and
without reliance upon the Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made
its own appraisal of and investigations into the business,
operations, property, financial and other condition and
creditworthiness of each Credit Party and made its own decision
to make Loans hereunder and to enter into this Agreement. Each
Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement and
the other Credit Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of
each Credit Party. The Agent agrees that (i) it shall promptly
deliver to each Lender copies of all notices, reports and other
documents expressly required to be furnished to the Agent by any
of the Credit Parties pursuant to any of the Credit Documents and
(ii) upon the reasonable request of any Lender, it shall promptly
deliver to such Lender such other information as the Agent shall
receive regarding the Credit Parties or the performance of the
respective obligations of the Credit Parties under the Credit
Documents; otherwise, the Agent shall have no duty or
responsibility to provide any Lender with any credit or other
information concerning the business, operations, property,
financial and other condition or creditworthiness of any Credit
Party which may come into the possession of the Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
SECTION 10.11. Resignation. Subject to the appointment
and
acceptance of a successor as provided below, the acting Agent may
resign at any time by notifying the Lenders and the Borrower.
Upon any such resignation, the Required Lenders shall have the
right to appoint a successor acceptable to the Borrower, which
successor shall be a Lender that is a bank having a combined
capital and surplus of at least $500,000,000 or an affiliate of
any such bank. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor satisfying the requirements set
forth above. Upon the acceptance of any appointment hereunder by
a successor Lender, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder. After the Agent's
resignation hereunder, the provisions of this Article and Section
11.07 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
Agent.
ARTICLE XI. MISCELLANEOUS
SECTION 11.01. Notices. Notices and other
communications
provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed or sent by telex,
telecopy, graphic scanning or other telegraphic communications
equipment of the sending party, as follows:
(a) if to Ralston Purina, to it at Checkerboard Square,
St.
Louis, Missouri 63164, Attention of R. D. Winney, Treasurer
(Facsimile No. 314-982-1620);
(b) if to Ralcorp, to it at 901 Chouteau Avenue, St.
Louis,
Missouri 63102 Attention of T. C. Oviatt, Treasurer (Facsimile
No. 314-982-4074);
(c) if to the Agent, to it at 70 West Madison, Suite
5300,
Chicago, Illinois 60602, Attention of Lucine Kirchhoff (Facsimile
No. 312-372-9194);
With a copy to: NationsBank of North Carolina, N.A.
NationsBank Corporate Center, 6th Floor
NC1-002-06-19
Charlotte, North Carolina 28255
Attention of Mary W. Barnette
(Facsimile No. 704-386-9923)
(d) if to a Lender, to it at its address (or telecopy
number) set forth in Schedule 1 or in the assignment agreement
pursuant to which such Lender became a party hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed
to have been given on the date of receipt if delivered by hand or
overnight courier service or sent by telex, telecopy, graphic
scanning or other telegraphic communications equipment of the
sender, or on the date five (5) Business Days after dispatch by
certified or registered mail if mailed, in each case delivered,
sent or mailed (properly addressed) to such party as provided in
this Section 11.01 or at such other address or telex, telecopy or
other number as shall be designated by such party in a notice to
each other party complying with the terms of this Section 11.01.
SECTION 11.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement shall
be considered to have been relied upon by the Lenders and shall
survive the making of Loans by the Lenders hereunder regardless
of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect as long as any Loans or
any amounts are outstanding under this Agreement or any of the
other Credit Documents and so long as the Commitments have not
been terminated.
SECTION 11.03. Binding Effect. This Agreement shall
become
effective when it shall have been executed by Ralston Purina and
the Agent, and the Agent shall have received copies hereof
(telefaxed or otherwise) which, when taken together, bear the
signatures of each Lender, and thereafter this Agreement shall be
binding upon and inure to the benefit of the Borrower, the Agent
and each Lender and their respective successors and assigns.
SECTION 11.04. Benefit of Agreement. (a) Generally.
This
Agreement shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the
parties hereto; provided that, except for the assignment by
Ralston Purina to Ralcorp contemplated by subsection (b) below,
the Borrower may not assign or transfer any of its interests
without prior written consent of the Lenders; provided further
that the rights of each Lender to transfer, assign or grant
participations in its rights and/or obligations hereunder shall
be limited as set forth in this Section 11.04, provided, however,
that nothing herein shall prevent or prohibit any Lender from (i)
pledging its Loans hereunder to a Federal Reserve Bank in support
of borrowings made by such Lender from such Federal Reserve Bank,
or (ii) granting assignments or participations in such Lender's
Loans and/or Commitments hereunder to its parent company and/or
to any affiliate of such Lender which is at least 50% owned by
such Lender or its parent company. To the extent required in
connection with a pledge of Loans by any Lender to a Federal
Reserve Bank, the Borrower agrees that, upon request of any such
Lender, it will promptly provide such Lender a promissory note
evidencing the repayment obligations of the Borrower with respect
to the principal of and interest on the Loans of such Lender
arising under Section 2.01, 2.02, 2.03 and/or 2.04, as
applicable, such promissory note to be in a form reasonably
satisfactory to the Borrower and the applicable Lender.
(b) Assignment to Ralcorp. At such time as the Agent
shall
have determined that each of the conditions set forth in Section
5.02 shall have been satisfied, then, at the request of Ralston
Purina and Ralcorp, the Agent, on behalf of the Lenders, shall
accept the Ralcorp Assignment and Assumption Agreement. Each
Lender hereby (i) irrevocably authorizes the Agent to accept the
Ralcorp Assignment and Assumption Agreement on behalf of such
Lender on the terms set forth in the immediately preceding
sentence and (ii) acknowledges and agrees that such acceptance by
the Agent of the Ralcorp Assignment and Assumption Agreement
shall be binding upon and enforceable against such Lender. Upon
acceptance by the Agent of the Ralcorp Assignment and Assumption
Agreement (i) Ralcorp shall succeed to all of the rights and
obligations of Ralston Purina as "Borrower" under this Agreement,
and all references to the "Borrower" in the Credit Documents
henceforth shall be deemed to refer to Ralcorp and (ii) Ralston
Purina shall be released and discharged (except as otherwise
provided in the Ralcorp Assignment and Assumption Agreement) from
any obligation or liability arising under or relating to this
Agreement, in each case on the terms more fully set forth in the
Ralcorp Assignment and Assumption Agreement. The date as of
which the Agent accepts the Ralcorp Assignment and Assumption
Agreement shall be referred to herein as the "Effective Date of
Assignment." The Agent shall promptly notify Ralston Purina,
Ralcorp and each Lender of the acceptance by the Agent of the
Ralcorp Assignment and Assumption Agreement and the date of the
Effective Date of Assignment.
(c) Assignments by Lenders. Each Lender may assign all
or
a portion of its rights and obligations hereunder pursuant to an
assignment agreement substantially in the form of Schedule 19 to
one or more Eligible Assignees, provided that any such assignment
shall be in a minimum aggregate amount of $10,000,000 of the
Commitments and in integral multiples of $1,000,000 above such
amount, and that each such assignment shall be of a constant, and
not a varying, percentage of all of the assigning Lender's rights
and obligations under this Agreement. Any assignment hereunder
shall be effective upon delivery to the Agent of written notice
of the assignment together with a transfer fee of $5,000 payable
to the Agent for its own account; provided that no such transfer
fee shall be payable in connection with an assignment by any
Lender to an Affiliate or Subsidiary of such Lender. The
assigning Lender will give prompt notice to the Agent and the
Borrower of any such assignment. Upon the effectiveness of any
such assignment (and after notice to the Borrower as provided
herein), the assignee shall become a "Lender" for all purposes of
this Agreement and the other Credit Documents and, to the extent
of such assignment, the assigning Lender shall be relieved of its
obligations hereunder to the extent of the Loans and Commitment
components being assigned. By executing and delivering an
assignment agreement in accordance with this Section 11.04(c),
the assigning Lender thereunder and the assignee thereunder shall
be deemed to confirm to and agree with each other and the other
parties hereto as follows: (i) such assigning Lender warrants
that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim; (ii) except
as set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with this Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant
hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this
Agreement, any of the other Credit Documents or any other
instrument or document furnished pursuant hereto or thereto or
the financial condition of any Credit Party or the performance or
observance by any Credit Party of any of its obligations under
this Agreement, any of the other Credit Documents or any other
instrument or document furnished pursuant hereto or thereto;
(iii) such assignee represents and warrants that it is legally
authorized to enter into such assignment agreement; (iv) such
assignee confirms that it has received a copy of this Agreement,
the other Credit Documents and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such assignment agreement;
(v) such assignee will independently and without reliance upon
the Agent, such assigning Lender or any other Lender, and based
on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Credit
Documents; (vi) such assignee appoints and authorizes the Agent
to take such action on its behalf and to exercise such powers
under this Agreement or any other Credit Document as are
delegated to the Agent by the terms hereof or thereof, together
with such powers as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this
Agreement and the other Credit Documents are required to be
performed by it as a Lender.
(d) Participations. Each Lender may sell, transfer,
grant
or assign participations in all or any part of such Lender's
interests and obligations hereunder; provided that (i) such
selling Lender shall remain a "Lender" for all purposes under
this Agreement and the other Credit Documents (such selling
Lender's obligations under this Agreement remaining unchanged)
and the participant shall not constitute a Lender hereunder, (ii)
no such participant shall have, or be granted, rights to approve
any amendment or waiver relating to this Agreement or any of the
other Credit Documents except with respect to any such amendment
or waiver which would, under the terms of Section 11.08, require
the consent of all of the Lenders, (iii) sub-participations by
the participant (except to an affiliate, parent company or
affiliate of a parent company of the participant) shall be
prohibited and (iv) any such participations shall be in a minimum
aggregate amount of $5,000,000 of the Commitments and in integral
multiples of $1,000,000 in excess thereof. In the case of any
such participation, the participant shall not have any rights
under this Agreement or under any of the other Credit Documents
(the participant's rights against the selling Lender in respect
of such participation to be those set forth in the participation
agreement with such Lender creating such participation) and all
amounts payable by the Borrower hereunder shall be determined as
if such Lender had not sold such participation, provided,
however, that such participant shall be entitled to receive
additional amounts under Sections 3.05 and 3.07 on the same basis
as if it were a Lender.
(e) Disclosure of Confidential Information. (i) Any
Lender
may, in connection with any assignment pursuant to paragraph (c)
above, disclose to the assignee or the proposed assignee any
information relating to Ralston Purina, Ralcorp, any Subsidiary
of Ralston Purina or Ralcorp, the Reorganization or the
Distribution furnished to such Lender by or on behalf of Ralston
Purina, Ralcorp or any Subsidiary of Ralston Purina or Ralcorp in
connection with this Agreement, provided that, prior to any such
disclosure each such assignee or proposed assignee shall execute
an agreement containing substantially the terms of all then
existing confidentiality agreements entered into by the assigning
Lender with respect to the Borrower and its Subsidiaries, in each
case whereby such assignee or proposed assignee shall agree to
preserve the confidentiality of any non-public, confidential or
proprietary information relating to Ralston Purina, Ralcorp, any
Subsidiary of Ralston Purina or Ralcorp, the Reorganization or
the Distribution.
(ii) The Lenders may not, in connection with any
participation pursuant to paragraph (d) above, disclose to the
participant or the proposed participant any non-public,
confidential or proprietary information relating to Ralston
Purina, Ralcorp, any Subsidiary of Ralston Purina or Ralcorp, the
Reorganization or the Distribution furnished to such Lender by or
on behalf of Ralston Purina, Ralcorp or any Subsidiary of Ralston
Purina or Ralcorp.
SECTION 11.05. Right of Set-Off. In addition to any
rights
now or hereafter granted under applicable law or otherwise, and
not by way of limitation of any such rights, upon the occurrence
of an Event of Default, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other
notice of any kind (all of which rights being hereby expressly
waived), to set off and to appropriate and apply any and all
deposits (general or special) and any other indebtedness at any
time held or owing by such Lender (including, without limitation,
branches, agencies or Affiliates of such Lender wherever located)
to or for the credit or the account of the Borrower against
obligations and liabilities of the Borrower to such Lender
hereunder or under any of the other Credit Documents or
otherwise, irrespective of whether such Lender shall have made
any demand hereunder and although such obligations, liabilities
or claims, or any of them, may be contingent or unmatured, and
any such set-off shall be deemed to have been made immediately
upon the occurrence of an Event of Default even though such
charge is made or entered on the books of such Lender subsequent
thereto. The Borrower hereby agrees that any Person purchasing a
participation in the Loans and Commitments hereunder pursuant to
Section 4.03 or Section 11.04(d) may exercise all rights of set-
off with respect to its participation interest as fully as if
such Person were a Lender hereunder.
SECTION 11.06. No Waiver; Remedies Cumulative. No
failure
or delay on the part of the Agent or any Lender in exercising any
right, power or privilege hereunder or under any other Credit
Document and no course of dealing between any Credit Party and
the Agent or any Lender shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The
rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies which the Agent or any Lender
would otherwise have. No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances or constitute
a waiver of the rights of the Agent or the Lenders to any other
or further action in any circumstances without notice or demand.
SECTION 11.07. Payment of Expenses, etc.. The Borrower
agrees to: (i) pay all reasonable out-of-pocket costs and
expenses (A) of the Agent in connection with the negotiation,
preparation, execution and delivery and administration of this
Agreement and the other Credit Documents and the documents and
instruments referred to therein (including, without limitation,
the reasonable fees and expenses of Moore & Van Allen, special
counsel to the Agent) and any amendment, waiver or consent
relating hereto and thereto including, but not limited to, any
such amendments, waivers or consents resulting from or related to
any work-out, renegotiation or restructure relating to the
performance by the Borrower under this Agreement and (B) of the
Agent and the Lenders in connection with enforcement of the
Credit Documents and the documents and instruments referred to
therein and/or collection of the obligations of any of the Credit
Parties pursuant to the Credit Documents (including, without
limitation, in connection with any such enforcement or
collection, the reasonable fees and disbursements of counsel for
the Agent and each of the Lenders); (ii) pay and hold each of the
Lenders harmless from and against any and all present and future
stamp and other similar taxes with respect to the foregoing
matters and save each of the Lenders harmless from and against
any and all liabilities with respect to or resulting from any
delay in paying or omission (other than to the extent
attributable to such Lender) to pay such taxes; and (iii)
indemnify each Lender, its officers, directors, employees,
representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or
reasonable out-of-pocket expenses incurred by any of them as a
result of, or arising out of, or in any way related to, or by
reason of, any investigation, litigation or other proceeding
(whether or not any Lender is a party thereto) related to the
entering into and/or performance of any Credit Document, to the
use of proceeds of any Loans hereunder, to the consummation of
any other transactions contemplated in any Credit Document or to
the Reorganization, including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding
any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of gross negligence or willful
misconduct on the part of the Person to be indemnified).
SECTION 11.08. Amendments, Waivers and Consents.
Neither
this Agreement nor any other Credit Document nor any of the terms
hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or
termination is in writing signed by the Required Lenders,
provided that no such amendment, change, waiver, discharge or
termination shall, without the consent of each Lender, (i) extend
the scheduled maturities (including the final maturity and any
mandatory prepayments) of any Loan, or any portion thereof, or
reduce the rate or extend the time of payment of interest (other
than as a result of waiving the applicability of any post-default
increase in interest rates) thereon or fees hereunder or reduce
the principal amount thereof, or increase the Commitment of any
Lender over the amount thereof in effect (it being understood and
agreed that a waiver of any Default or Event of Default shall not
constitute a change in the terms of any Commitment of any
Lender), (ii) except as otherwise permitted by Section 7.12,
release any Guarantor from its obligations under the Guaranty
Agreement, (iii) amend, modify or waive any provision of this
Section or Section 3.05, 3.07, 4.02, 4.03, 9.01(a), 11.04, 11.05,
11.07 or 11.11, (iv) reduce any percentage specified in, or
otherwise modify, the definition of Required Lenders or (v)
consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement and the other
Credit Documents (other than the assignment by Ralston Purina to
Ralcorp contemplated by Section 11.04(b)). No provision of
Article X may be amended without the consent of the Agent.
SECTION 11.09. Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
SECTION 11.10. Headings. The headings of the sections
and
subsections hereof are provided for convenience only and shall
not in any way affect the meaning or construction of any
provision of this Agreement.
SECTION 11.11. Survival of Indemnification. All
indemnities set forth herein, including, without limitation, in
Section 3.05, 3.07, 4.04, 10.09 or 11.07 shall survive the
execution and delivery of this Agreement, and the making of the
Loans, the repayment of the Loans and other obligations and the
termination of the Commitments hereunder.
SECTION 11.12. Governing Law; Submission to
Jurisdiction;
Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA. The Borrower hereby submits to the non-exclusive
jurisdiction of the United States District Court for the Western
District of North Carolina or the courts of the State of North
Carolina in Mecklenburg County for the purposes of any legal
action or proceeding with respect to this Agreement or any of the
other Credit Documents. The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that such
proceeding has been brought in an inconvenient form. The
Borrower hereby consents to process being served in any such
proceeding by the mailing of a copy thereof by registered or
certified air mail, postage prepaid, return receipt requested, to
the address specified for notices to the Borrower pursuant to
Section 11.01 or in any other matter permitted by law. Nothing
herein shall affect the right of the Agent to serve process in
any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against the Borrower in any
other jurisdiction.
(b) EACH OF THE AGENT, THE LENDERS AND THE BORROWER
HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 11.13. Severability. If any provision of this
Agreement is determined to be illegal, invalid or unenforceable,
such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or
unenforceable provisions.
SECTION 11.14. Entirety. This Agreement and the other
Credit Documents represent the entire agreement of the parties
hereto and supersede all prior agreements and understandings,
oral or written, if any, including any commitment letters or
correspondence, relating to this Agreement or any of the other
Credit Documents or the transactions contemplated herein and
therein.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed by its duly authorized officers as
of the day and year first above written.
RALSTON PURINA COMPANY
By______________________________
Title___________________________
NATIONSBANK OF NORTH CAROLINA,
N.A.
By______________________________
Title___________________________
BANK OF AMERICA, NATIONAL TRUST
AND SAVINGS ASSOCIATION
By______________________________
Title___________________________
THE BANK OF NEW YORK
By______________________________
Title___________________________
THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS
By______________________________
Title___________________________
[Signatures Continued]
CREDIT LYONNAIS
CHICAGO BRANCH
By______________________________
Title___________________________
By______________________________
Title___________________________
CREDIT LYONNAIS
CAYMAN ISLAND BRANCH
By______________________________
Title___________________________
By______________________________
Title___________________________
THE FIRST NATIONAL BANK OF CHICAGO
By______________________________
Title___________________________
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By______________________________
Title___________________________
[Signatures Continued]
TORONTO DOMINION (TEXAS), INC.
By______________________________
Title___________________________
THE BANK OF NOVA SCOTIA
By______________________________
Title___________________________
THE FIRST NATIONAL BANK OF BOSTON
By______________________________
Title___________________________
BANK BRUSSELS LAMBERT
By______________________________
Title___________________________
BANKERS TRUST COMPANY
By______________________________
Title___________________________
THE CHASE MANHATTAN BANK, N.A.
By______________________________
Title___________________________
[Signatures Continued]
CREDIT SUISSE
By______________________________
Title___________________________
SOCIETE GENERALE
By______________________________
Title___________________________
WACHOVIA BANK OF GEORGIA, N.A.
By______________________________
Title___________________________
NATIONSBANK OF NORTH CAROLINA,
N.A., as Agent
By______________________________
Title___________________________
Title_________________________
STOCK REDEMPTION AND EXCHANGE AGREEMENT
This STOCK REDEMPTION AND EXCHANGE AGREEMENT (the "Agreement") is
entered into as of March _________, 1994 by and between Ralston
Purina Company, a Missouri Corporation ("Ralston"), and
___________________________, a key employee ("Employee") of
Ralcorp Holdings, Inc., a Missouri corporation and a wholly owned
subsidiary of Ralston ("Ralcorp").
W I T N E S S E T H:
WHEREAS, on March 24, 1994 the Board of Directors of Ralston
approved a plan to consolidate into Ralcorp and spin-off
Ralston's Consumer Foods and Resort Operations businesses and
Ralston, Ralcorp and other directly and indirectly wholly owned
subsidiaries of Ralston entered into an Agreement and Plan of
Reorganization dated as of March 24, 1994 (the "Reorganization
Agreement") providing for, among other things, the principal
corporate transactions required to effect the distribution (the
"Distribution") by Ralston of all of the issued and outstanding
shares of Ralcorp's $.01 par value Common Stock and associated
common stock purchase rights (collectively, the "Ralcorp Stock");
and
WHEREAS, pursuant to the Reorganization Agreement, Ralston
proposes to effect the Distribution by (i) exchanging with
Employee and certain other key Ralcorp employees shares of
Ralcorp Stock for restricted and unrestricted shares of Ralston's
$.10 par value Ralston - Ralston Purina Group Common Stock ("RPG
Stock") and Ralston - Continental Baking Group Common Stock ("CBG
Stock") of approximately equal value held by such employees and
(ii) a dividend of the remaining shares of Ralcorp Stock payable
to holders of a record of RPG Stock as of the close of business
on March 31, 1994 (the "Distribution Date") at the rate of one
share of Ralcorp Stock for each three shares of RPG Stock so
held; and
WHEREAS, pursuant to the Reorganization Agreement, Ralston has
offered to redeem Employee's shares of RPG Stock and CBG Stock by
exchanging such shares for shares of Ralcorp Stock of
approximately equal value on the terms and conditions set forth
herein; and
WHEREAS, Employee desires to accept such offer;
NOW THEREFORE, in consideration of the premises and mutual
covenants herein contained and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
REDEMPTION OF RALSTON STOCK
1.01 Agreement for Redemption. Subject to the terms and
conditions hereof, as of 4:00 p.m. Central Time on the
Distribution Date, Employee will sell to Ralston, and Ralston
will redeem, the shares of RPG Stock and CBG Stock listed on
Schedule 1.01 hereto (the "Shares") in exchange for a number of
shares of Ralcorp Stock determined in accordance with the
provisions of Section 1.02.
1.02 Redemption Price. The redemption price for all of the
Shares shall be the nearest number of full shares of Ralcorp
Stock equal in aggregate market value to the aggregate market
value of the Shares, which market values shall be determined on
the basis the average of the closing sales prices per share as
reported in The Wall Street Journal, New York Stock Exchange
Composite Transactions (i) of the RPG Stock and CBG Stock, on
each of the trading days during the ten (10) consecutive trading
day period ending on the last trading day prior to the
Distribution Date, and (ii) of the Ralcorp Stock, on each of the
trading days during the initial ten (10) consecutive trading day
period during which the Ralcorp Stock shall trade.
1.03 Release of Restrictions. All restrictions on the restricted
Shares listed on Schedule 1.01 shall lapse as of the time of
redemption hereunder and Ralston shall release for payment to the
Employee all of the restricted dividends and interest associated
therewith as of such time, which amounts will be paid to Employee
as soon as practicable following the Distribution Date. Income
taxes (and social security and other employment taxes) with
regard to income realized by Employee by virtue of the lapsing of
restrictions on such restricted Shares, dividends and interest
will be withheld as legally required from amounts due from
Ralston to Employee. Ralston will loan Employee the amount
withheld for payment of such income taxes less the amount of such
dividends and interest. Such loan shall be interest free. The
obligation of Employee to repay such loan shall be evidenced by a
promissory note of Employee in substantially the form attached
hereto as Exhibit A which shall be assigned to Ralcorp as of the
Distribution Date. The amount of interest imputed for tax
purposes shall be deemed additional compensation to Employee for
services heretofore rendered to Ralston and its subsidiaries and,
upon repayment of said promissory note, Ralston will pay Employee
an amount equal to the United States federal income taxes payable
by Employee as a result of such imputed interest and as a result
of such payment.
1.04 Delivery of Certificates. Employee has herewith
delivered to Ralston, in escrow, pending completion of the sale
and redemption of the Shares hereunder, Employee's certificates
for all of the Shares, endorsed in blank. As soon as practicable
after the Distribution Date, Ralston shall deliver to the
Employee certificates, dated the Distribution Date and registered
in the name(s) shown on the Shares, representing all the shares
of Ralcorp Stock issuable to Employee pursuant to Section 1.02,
as well as a statement setting forth the calculation of the
redemption price and Employee's tax basis in the Shares of
Ralston Stock so issued in exchange for the restricted Shares
listed in Schedule 1.01. Ralston will pay any transfer taxes
relating to the exchange of the Shares for shares of Ralcorp
Stock hereunder.
1.05 Conditions. The obligations of Ralston and Employee to
complete the redemption of the Shares in exchange for shares of
Ralcorp Stock hereunder shall be subject to satisfaction or
waiver of the conditions set forth in Section 12.01 of the
Reorganization Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF RALSTON
2.01 Organization. Ralston has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Missouri with full corporate power and authority
to execute, deliver and perform this Agreement.
2.02 Authority. The execution, delivery and performance of this
Agreement by Ralston have been duly authorized by all necessary
corporate action of Ralston. This Agreement has been duly
executed and delivered by the Ralston and, assuming due
authority, execution and delivery by Employee, this Agreement
constitutes a valid and binding obligation of Ralston,
enforceable against Ralston in accordance with its terms.
2.03 Ralcorp Stock. The shares of Ralcorp Stock to be exchanged
pursuant to this Agreement will be duly authorized, validly
issued, fully paid and non-assessable shares of Ralcorp Stock.
2.04 Tax-Free Exchange. Ralston has received rulings from the
Internal Revenue Service to the effect that, among other things,
no gain or loss will be recognized by the Employee by virtue of
the exchange of the Shares for shares of Ralcorp Stock pursuant
to this Agreement and the tax basis of the Ralcorp Stock received
by Employee hereunder will be Employee's aggregate basis in the
Shares, as determined after the Distribution (but Employee
recognizes that, as specified in Section 1.03, income realized by
virtue of the lapse of restrictions on the Shares and any imputed
interest accrued on Employee's promissory note delivered pursuant
to Section 1.03 will be taxable to Employee).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EMPLOYEE
3.01 Authority. This Agreement has been duly executed and
delivered by Employee with full authority and, assuming due
authority, execution and delivery by Ralston, this Agreement
constitutes a valid and binding obligation of Employee
enforceable against Employee in accordance with its terms.
3.02 Ownership and Right to Transfer. Employee is, and at the
Distribution Date will be, the record and beneficial owner of
each of the Shares with full legal right, power and authority to
transfer and deliver each of the Shares to Ralston free and clear
of all adverse claims, options, liens, security interests,
restrictions and other encumbrances.
3.03 Purchase for Investment. Employee represents and warrants
to Ralston and to the directors, officers and control persons
(within the meaning of the Securities Act of 1933) of Ralston as
follows:
(a) Employee recognizes that Ralcorp was recently organized and
has no financial and operating history as an independent company;
(b) As a key employee, Employee is knowledgeable about the
businesses and operations of Ralston and Ralcorp and has been
afforded the opportunity to ask questions and receive answers
concerning the terms and conditions of the exchange of the Shares
for shares for Ralcorp Stock and to obtain any additional
information which Ralston possesses or can acquire without
unreasonable effort or expense that is necessary to verify the
accuracy of the information set forth in the Information
Statement of Ralcorp dated March 24, 1994, a copy of which has
been furnished to Employee ("Information Statement"), including
the reports, proxy statements and other information filed by
Ralston with the Securities and Exchange Commission referenced on
page 2 of the Information Statement under the heading "Available
Information";
(c) Ralston has answered all inquiries that Employee has made of
it concerning Ralston and Ralcorp, and their respective
businesses and financial condition or any other matter relating
to the operations of Ralston and Ralcorp and the exchange of the
Shares for shares of Ralcorp Stock and no oral or written
statement or inducement which is contrary to the information set
forth or referred to in the Information Statement or this
Agreement has been made by or on behalf of Ralston to Employee;
(d) Employee understands that nothing in this Agreement shall
confer on Employee any right to continue in the employ of Ralcorp
or interfere in any way with the right of Ralcorp to terminate
his or her employment at any time;
(e) Employee is purchasing the Ralcorp Stock for his or her own
account, for investment purposes, and not for distribution,
assignment or resale to others and no other person has any direct
or indirect beneficial interest in such Ralcorp Stock except for
any interest of Employee's spouse as indicated on Schedule 1.01;
(f) Employee understands that (i) there has been no prior market
for the Ralcorp Stock, (ii) the prices at which the Ralcorp Stock
may trade cannot be predicted (and may fluctuate significantly
until the Ralcorp Stock is fully distributed and an orderly
market develops) and may be influenced by many factors,
including, among others, the depth and liquidity of the trading
market for Ralcorp Stock, investor perceptions of Ralcorp and its
businesses, Ralcorp's dividend policy and general economic and
market conditions and (iii) there is no way to predict whether an
investment in Ralcorp Stock will outperform, underperform or
perform as well as an investment in shares of RPG Stock and/or
CBG Stock;
(g) Employee understands that (i) the exchange of Ralcorp Stock
for the Shares has not been and will not be registered under the
Securities Act of 1933 or any state securities laws in reliance
on the exemption for nonpublic offerings provided by Section 4(2)
of the Securities Act of 1933 and analogous state securities law
provisions, and such shares of Ralcorp Stock must be held
indefinitely unless they are subsequently registered under the
Securities Act of 1933 and applicable state securities laws or an
exemption from such registration is available, (ii) Ralcorp is
under no obligation to register the Ralcorp Stock on Employee's
behalf or to assist Employee in complying with any exemption from
registration, and (iii) the Ralcorp Stock may be sold pursuant to
Rule 144 promulgated by the Securities and Exchange Commission
pursuant to the Securities Act of 1933 only if all of the
conditions of that Rule are met;
(h) Employee understands that no Federal or state agency has
passed upon the Ralcorp Stock or made any finding or
determination as to the fairness of the exchange of the Shares
for shares of Ralcorp Stock hereunder or any recommendation or
endorsement of the Ralcorp Stock;
(i) Employee will not transfer the Ralcorp Stock without
registering or qualifying the same under applicable state
securities laws unless such transfer is exempt under such laws;
(j) Employee has not been furnished any offering literature other
than the Information Statement and other materials which Ralston
may have provided at the request of Employee, and Employee has
relied only on the information contained or referred to in the
Information Statement and the information furnished or made
available to Employee by Ralston, as described in subparagraphs
(b) and (c) above;
(k) Employee has his or her residence at the address set forth on
Schedule 1.01 hereto;
(l) Employee certifies, under penalties of perjury, (i) that
Employee's social security number is as shown on Schedule 1.01
hereto and (b) that Employee is not subject to backup withholding
either because Employee has not been notified that Employee is
subject to backup withholding as a result of a failure to report
all interest or dividends, or the Internal Revenue Service has
notified Employee that Employee is no longer subject to backup
withholding; and
(m) Each certificate representing shares of Ralcorp Stock shall
be imprinted with a legend in substantially the following form:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES ACT, AND MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO THE REGISTRATION PROVISIONS OF SUCH ACTS OR AN
EXEMPTION THEREFROM.
ARTICLE IV
MISCELLANEOUS
4.01 Amendment and Modification. This Agreement may be amended,
modified or supplemented, and the rights hereunder may be waived,
only by a written agreement signed by Ralston and Employee. No
waiver of any term, provision or condition of or failure to
exercise or delay in exercising any rights or remedies under this
Agreement, in one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of such term,
provision, condition, right or remedy under this Agreement.
4.02 Termination. Notwithstanding any provision hereof, this
Agreement may be terminated and the redemption and exchange
contemplated herein abandoned at any time prior to the
Distribution Date by and in the sole discretion of the Ralston
Board of Directors without the approval of Employee. In the
event of such termination, no party hereto shall have any
liability to any person by reason of this Agreement, except that
Ralston shall return to Employee the certificates representing
the Shares.
4.03 Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the
State of Missouri, without regard to its conflicts of law
principles, as to all matters, including matters of validity,
construction, effect, performance and remedies.
4.04 Notices. All notices, demands and other communications to
be given or delivered under or by reason of this Agreement shall
be in writing and shall be deemed to have been given when
delivered personally to the recipient, one business day after
being sent to the recipient by reputable overnight courier
service (charges prepaid) or three business days after being
mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and
other communications shall be sent to Employee at his or her
address on Schedule 1.01 hereto and to Ralston at its principal
executive offices, or to such other address as the recipient has
specified by prior written notice to the sending party.
4.05 Entire Agreement. This Agreement, Schedule 1.01 hereto and
Exhibit A attached hereto, shall constitute the entire agreement
between the parties hereto with respect to the subject matter
hereof superseding all previous negotiations, commitments,
understandings and writings with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
RALSTON PURINA COMPANY Employee:
By: __________________________ ______________________________
Title: _______________________
