SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Interstate Bakeries Corporation
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(Name of Issuer)
Common Stock, par value $.01
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(Title of Class of Securities)
46072310
- -------------------------------------------------------------------------------
(CUSIP Number)
J. M. Neville, Vice President, Secretary and General Counsel, Ralston Purina
Company, Checkerboard Square, St. Louis, MO 63164 Telephone (314) 982-1266
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
July 24, 1995
-------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [X].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ralston Purina Company
IRS Identification No. 43-0470580
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [x] (See Item 2)
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
[ ].
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Missouri
- --------------------------------------------------------------------------------
Number of 7. SOLE VOTING POWER
Shares Bene-
ficially Owned 16,923,077 (See Item 5)
by Each Reporting ------------------------------------------------------------
Person With 8. SHARED VOTING POWER
-0-
-----------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
16,923,077 (See Item 5)
-----------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
-----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
16,923,077 (See Item 5)
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
[ ].
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
46.3%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
VCS Holding Company
IRS Identification No. 43-1379066
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [x] (See Item 2)
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
[ ].
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
Number of 7. SOLE VOTING POWER
Shares Bene-
ficially Owned 16,923,077 (See Item 5)
by Each Reporting ------------------------------------------------------------
Person With 8. SHARED VOTING POWER
-0-
-----------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
16,923,077 (See Item 5)
-----------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
-----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
16,923,077 (See Item 5)
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
[ ].
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
46.3%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
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RALSTON PURINA COMPANY AND
VCS HOLDING COMPANY
Statement pursuant to Section 13(d) of the
Securities Exchange Act of 1934
-------------------------------
Item 1. Security and Issuer.
-------------------
This Statement relates to the Common Stock, par value $.01 per share, of
Interstate Bakeries Corporation, a Delaware corporation (the "Issuer"), 12 East
Armour Boulevard, Kansas City, Missouri 64111.
Item 2. Identity and Background.
-----------------------
The persons filing this Statement are Ralston Purina Company (`Ralston''),
a Missouri corporation, and VCS Holding Company ("VCS"), a Delaware corporation
and wholly owned subsidiary of Ralston. The principal office and place of
business of Ralston is Checkerboard Square, St. Louis, Missouri 63164 and the
principal address of VCS is 1116 First State Blvd., Wilmington, Delaware 19804.
Ralston (either by itself or through its various operating subsidiaries) is a
major worldwide producer of dog and cat foods and pet products, dry cell battery
products, dietary soy protein, fiber food ingredients, polymer products, feeds
for livestock and poultry (outside the United States) and, until the sale of
Continental Baking Company as set forth in Item 3, a wholesale baker of fresh
delivered bakery products in the United States. VCS is a holding company for
various domestic operating subsidiaries of Ralston and has no direct business
operations.
Set forth in Appendix I with respect to each director and executive officer
of Ralston and VCS are his or her name, business address and present principal
employment or occupation and the name and principal business and address of any
corporation or other organization in which such employment or occupation is
carried on. No person other than persons listed in Appendix I might be deemed
to control Ralston or VCS.
During the last five years, neither Ralston, VCS nor any director or
executive officer of Ralston or VCS has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Each of the directors and executive officers of Ralston and VCS is a United
States citizen, except for Patrick Mannix, who is a citizen of Australia.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
On April 12, 1995, Ralston and VCS entered into a Purchase and Sale
Agreement with the Issuer and its wholly owned subsidiary, Interstate Brands
Corporation ("Brands") pursuant to which the Issuer and Brands agreed to acquire
all of the outstanding capital stock of Continental Baking Company ("CBC"), a
wholly owned subsidiary of VCS engaged in the wholesale baking business. As
consideration for the sale of the stock of CBC, Brands agreed to pay the sum of
$220,000,000 and the Issuer agreed to issue 16,923,077 shares of its Common
Stock to VCS. The transaction closed on July 24, 1995, at which time the
Issuer's Common Stock was issued to VCS (the "Closing").
Mr. W. P. Stiritz, Chairman of the Board and Chief Executive Officer of
Ralston, purchased 16,800 shares of Common Stock of the Issuer in a margin
account in open market transactions described in Item 5.
Item 4. Purpose of Transaction.
-----------------------
VCS, at Ralston's direction, has acquired shares of the Common Stock of the
Issuer for investment purposes. At the time of the acquisition of the Common
Stock, the Issuer, VCS and Ralston entered into a Shareholder Agreement (the
"Shareholder Agreement") related to the ownership by VCS and Ralston of the
Common Stock. Under the terms of the Shareholder Agreement, Ralston and VCS
agreed, for a period of six years, not to acquire any additional shares of
Common Stock except as a result of stock split, stock dividend or
similar recapitalization; provided, however, that if during such period the
Issuer issues any of its Common Stock in a public offering or as consideration
in an acquisition, Ralston and VCS may acquire a number of shares of Common
Stock necessary to bring its percentage of ownership back to the same level as
immediately prior to such offering or acquisition. Ralston and VCS may, from
time to time, depending on market conditions and other considerations, dispose
of some or all of the Common Stock of the Issuer held by it, but they have
agreed, in the Shareholder Agreement, that within five years their ownership of
the Common Stock will be reduced to no more than 14.9% of the total outstanding
shares of Common Stock. Except for certain limited transfers of the Common
Stock to affiliates or shareholders of Ralston, the Shareholder Agreement
provides that Ralston and VCS may not, during the term of the Agreement, sell
any of the Common Stock unless an offer of sale of such securities is first made
to the Issuer. Pursuant to the Shareholder Agreement, the Issuer nominated and
appointed Mr. Stiritz and J. R. Elsesser, Vice President and Chief Financial
Officer of Ralston, to serve on the Board of Directors of Issuer. Mr. Stiritz
will hold office until the 1997 Annual Meeting of Shareholders. Mr. Elsesser
will hold office until the 1996 Annual Meeting of Shareholders, at which time
Issuer has agreed to nominate and elect him to an additional term of not less
than two years. The foregoing description of the Shareholder Agreement is only
a summary and is qualified in its entirety by reference to the full Agreement
which is set forth as an exhibit to this Schedule 13D.
In a transaction described in Item 5, Mr. Stiritz has acquired 16,800
shares of Common Stock of the Issuer for investment purposes.
Except as set forth in this Item 4 and in Item 6 below, Ralston and VCS,
and their respective directors and executive officers, have no plans or
proposals which relate to or would result in any of the actions enumerated in
clauses (a)-(j) of Item 4 of Schedule 13D under the Securities Exchange Act of
1934, as amended.
Item 5. Interest in Securities of the Issuer.
------------------------------------
The Issuer is believed to have 36,559,005 shares of Common Stock
outstanding. VCS directly owns 16,923,077 shares of Common Stock of the Issuer
or approximately 46.3% of the outstanding Common Stock described above.
Ralston, which owns all of the stock of VCS, indirectly and beneficially owns
such 16,923,077 shares of Common Stock. Except as provided in the Shareholder
Agreement described in response to Items 4 and 6, the reporting persons have
sole power to vote or to direct the vote and sole power to dispose or direct the
disposition of such shares. Except as set forth below and in Item 3, neither
VCS, Ralston nor any director or executive officer of VCS or Ralston
beneficially owns or has a right to acquire, directly or indirectly, any other
shares of the Common Stock of the Issuer, nor during the past sixty days have
there been any transactions in shares of Common Stock of the Issuer by VCS,
Ralston or any director or executive officer of either of them.
Mr. Stiritz directly owns 16,800 shares of the outstanding Common Stock of
the Issuer. He purchased such shares in a margin account in open market
transactions as follows: 3,000 shares on July 26, 1995 at an average price of
$17.92 per share; 12,000 shares on July 27, 1995 at an average price of $18.16
per share; and 1,800 shares on July 28, 1995 at an average price of $18.48 per
share. He has sole power to vote or direct the vote and sole power to dispose
or direct the disposition of such shares.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
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to Securities of the Issuer.
- ---------------------------
The Shareholder Agreement contains a number of standstill covenants on the
part of Ralston and VCS providing that, in effect, they will not attempt to
control or act to change control of the management of the Issuer for a period of
six years following the Closing. During the term of the Shareholder Agreement,
that Agreement provides that the Common Stock owned by VCS will be voted (i)
"for" nominees recommended by the Issuer's Board of Directors; (ii) in
accordance with the recommendation of the Issuer's Board on security holder
proposals; and (iii) with respect to all other matters, "for" and "against" any
proposal in the same proportion as the votes of all other security holders of
the Issuer; provided, however, VCS retains the right to vote the Common Stock as
it sees fit with respect to any proposals for (i) the merger of the Issuer with
or into any other corporation; (ii) the sale, lease, exchange, transfer or other
disposition of all or substantially all of the assets of the Issuer; or (iii)
the creation by the Issuer of any other class of stock with voting rights. The
Shareholder Agreement provides for limited registration rights with respect to
the Common Stock held by VCS, and provides for indemnification of an injured
party for losses and damages resulting from the untrue statements of the other
party to that Agreement which may be contained in any registration statement.
The Shareholder Agreement provides that the Issuer will nominate and appoint the
Chairman of the Board and the Chief Financial Officer of Ralston to the Board of
the Issuer, one to hold office until the 1996 Annual Meeting of the Issuer, and
then to be nominated and elected to an additional two-year term, and one to hold
office until the 1997 Annual Meeting. Pursuant to this provision, Mr. Stiritz
has been elected to the term ending in 1997 and Mr. Elsesser has been elected to
the term ending 1996. Finally, the Shareholder Agreement provides that at any
time during the last year of the term of that Agreement, the Issuer will have
the right to acquire all of its Common Stock then held by VCS at a price equal
to 110% of the then current market price of the Common Stock. The foregoing
description of the Shareholder Agreement is only a summary and is qualified in
its entirety by reference to the full Agreement which is set forth as an exhibit
to this Schedule 13D.
In a Supplement to Shareholder Agreement entered into by and among the
parties to the Shareholder Agreement, the Issuer, Ralston and VCS agreed that
Ralston would not be in violation of the Shareholder Agreement if, independent
of action by Ralston, those persons who are or would be deemed Affiliates of
Ralston under the Shareholder Agreement acquired securities of the Issuer during
the term of the Shareholder Agreement. If Ralston is aware that such Affiliates
own voting securities, in the aggregate, in excess of 2% of the outstanding
voting securities of Issuer and, despite the reasonable best efforts of Ralston
to cause them to reduce their ownership levels below the 2% threshold, such
individuals maintain such ownership levels, Ralston has agreed to take such
action necessary to divest that number of shares of the Issuer equal to the
number of shares owned by such Affiliates in excess of the 2% threshold. The
foregoing description of the Supplement to Shareholder Agreement is only a
summary and is qualified in its entirety by reference to the full Agreement
which is set forth as an exhibit to this Schedule 13D.
Item 7. Materials to be Filed as Exhibits.
---------------------------------
Exhibit 1: Shareholder Agreement with attached Exhibit A, dated July 22,
1995, by and among Interstate Bakeries Corporation, Ralston Purina Company and
VCS Holding Company.
Exhibit 2: Supplement to Shareholder Agreement, dated July 25, 1995, by and
among Interstate Bakeries Corporation, Ralston Purina Company and VCS Holding
Company.
Signature
- ---------
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct. The undersigned hereby agree that this Statement is filed
on behalf of each of Ralston and VCS.
Dated July 31, 1995
RALSTON PURINA COMPANY
By: James M. Neville
---------------------------------------
Name: James M. Neville
Title: Vice President
VCS HOLDING COMPANY
By: J. R. Elsesser
---------------------------------------
Name: James R. Elsesser
Title: Chief Executive Officer and President
APPENDIX I
RALSTON PURINA COMPANY
----------------------
Set forth below with respect to each director and executive officer of
Ralston Purina Company (`Ralston'') are his or her name and (a) his or her
business address (unless another address is set forth, the business address of
each person is Checkerboard Square, St. Louis, Missouri 63164); (b) his or her
present principal employment or occupation and the name and (if not Ralston)
principal business of any corporation or other organization in which such
employment or occupation is carried on and the address of such corporation or
other organization (which, unless another address is set forth, is the same as
the business address set forth for such person); and (c) the number of shares of
the Common Stock of the Issuer beneficially owned by him or her.
The reporting persons believe that the information regarding Stock ownership set
forth below is correct as of July 31, 1995. It will be updated when amendments
to this Schedule 13D are filed.
EXECUTIVE OFFICERS
------------------
R. W. Bracken: (a) see above; (b) Vice President of Ralston; (c) none.
J. W. Brown: (a) see above; (b) Vice President of Ralston; and Chief Executive
Officer and President, Protein Technologies International, Inc. (a wholly
owned subsidiary of Ralston); (c) none.
J. R. Elsesser: (a) see above; (b) Vice President and Chief Financial Officer
of Ralston; (c) none.
P. C. Mannix: (a) see above; (b) Vice President of Ralston; and President of
the Specialty Business of Eveready Battery Company, Inc. (a wholly owned
subsidiary of Ralston); (c) none.
W. P. McGinnis: (a) see above; (b) Vice President of Ralston; and President and
Chief Executive Officer, Pet Products Group (a division of Ralston); (c)
none.
G. L. Meffert, Jr.: (a) see above; (b) Vice President of Ralston; and
President, Eveready Battery Company, Inc. (a wholly owned subsidiary of
Ralston); (c) none.
J. P. Mulcahy: (a) see above; (b) Vice President of Ralston; and Chairman of
the Board, Chief Executive Officer and President, Eveready Battery Company,
Inc. (a wholly owned subsidiary of Ralston); (c) none.
J. M. Neville: (a) see above; (b) Vice President, General Counsel and Secretary
of Ralston; (c) none.
A. M. Wray: (a) see above; (b) Vice President and Controller of Ralston; (c)
none.
R. D. Winney: (a) see above; (b) Treasurer of Ralston; (c) none.
DIRECTORS
---------
David R. Banks: (a) 5111 Rogers Avenue, Suite 40A, Ft. Smith, Arkansas 92919;
(b) Chairman, President and Chief Executive Officer of Beverly Enterprises,
Inc.; (c) none.
John H. Biggs: (a) 730 Third Avenue, New York, New York 10017; (b) Chairman and
Chief Executive Officer of TIAA-CREF; (c) none.
APPENDIX I continued
Donald Danforth, Jr.: (a) Suite 330, 700 Corporate Park Drive, St. Louis,
Missouri 63105; (b) President of Danforth Agri-Resources; (c) none.
William H. Danforth: (a) Campus Box 1044, 7425 Forsyth Boulevard, Suite 262,
Clayton, Missouri 63105; (b) Chairman of the Board of Washington
University; (c) none.
David C. Farrell: (a) 611 Olive Street, St. Louis, Missouri 63101; (b) Chairman
of the Board and Chief Executive Officer of The May Department Stores
Company; (c) none.
M. Darrell Ingram: (a) 44 Tiburon Drive, Austin, Texas 78738; (b) Retired
President and Chief Executive Officer of Petrolite Corporation; (c) none.
Richard A. Liddy: (a) 700 Market Street, St. Louis, MO 63101; (b) Chairman,
President and Chief Executive Officer of General American Life Insurance
Company; (c) none
John F. McDonnell: (a) P. O. Box 516, St. Louis, Missouri 63166; (b) Chairman
of the Board of McDonnell Douglas Corporation; (c) none.
Katherine D. Ortega: (a) 800 25th Street, N.W. #1003, Washington, D.C. 20037;
(b) Former Alternate Representative of the United States to the 45th General
Assembly of the United Nations; (c) none.
W. P. Stiritz: (a) see above; (b) Chairman of the Board, Chief Executive
Officer and President of Ralston; (c) See Item 5.
APPENDIX I continued
VCS HOLDING COMPANY
-------------------
Set forth below with respect to each director and executive officer of VCS
Holding Company (`VCS'') are his or her name and (a) his or her business
address (unless another address is set forth, the business address of each
person is Checkerboard Square, St. Louis, Missouri 63164); (b) his or her
present principal employment or occupation and the name and (if not VCS)
principal business of any corporation or other organization in which such
employment or occupation is carried on and the address of such corporation or
other organization (which, unless another address is set forth, is the same as
the business address set forth for such person); and (c) the number of shares of
the Common Stock of the Issuer beneficially owned by him or her.
EXECUTIVE OFFICERS
------------------
J. R. Elsesser, Chief Executive Officer and President: (a) see above; (b) Vice
President and Chief Financial Officer of Ralston Purina Company; (c) none.
P. C. Fulweiler, Vice President: (a) 222 Delaware Avenue, 17th Floor,
Wilmington, Delaware 19801; (b) Vice President and Department Manager,
Corporate Financial Services of PNC Bank; (c) none.
J. P. Mulcahy, Vice President: (a) see above; (b) Vice President of Ralston
Purina Company; and Chairman of the Board, Chief Executive Officer and
President, Eveready Battery Company, Inc. (a wholly owned subsidiary of
Ralston Purina Company); (c) none.
T. L. Grosch, Secretary: (a) see above; (b) Senior Legal Counsel, Ralston
Purina Company; (c) none.
M. J. Costello, Vice President and Assistant Secretary: (a) see above; (b)
International Counsel, Ralston Purina International, Inc. (a division of
Ralston Purina Company); (c) none.
R. D. Winney: (a) see above; (b) Treasurer of Ralston Purina Company; (c) none.
DIRECTORS
---------
J. R. Elsesser: (a) see above; (b) Vice President and Chief Financial Officer
of Ralston Purina Company; (c) none.
P. C. Fulweiler: (a) 222 Delaware Avenue, 17th Floor, Wilmington, Delaware
19801; (b) Vice President and Department Manager, Corporate Financial
Services of PNC Bank; (c) none.
SHAREHOLDER AGREEMENT
by and among
INTERSTATE BAKERIES CORPORATION,
RALSTON PURINA COMPANY
and
VCS HOLDING COMPANY
Dated July 22, 1995
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS 1
Section 1.1 Affiliate 1
Section 1.2
Applicable Acceptance Period 1
Section 1.3
Associate 1
Section 1.4
Business Day 1
Section 1.5 CBC
2
Section 1.6
Closing 2
Section 1.7
Control 2
Section 1.8
Demand Notice 2
Section 1.9
Demand Registration 2
Section 1.10
Exchange Act 2
Section 1.11 First
Offer 2
Section 1.12 First
Registration Rights Agreement 2
Section 1.13 Group
2
Section 1.14 IBC
2
Section 1.15 IBC
Call 2
Section 1.16 IBC
Equity 2
Section 1.17 IBC
Indemnified Party 2
Section 1.18 IBC
Market Price 2
Section 1.19 IBC
Stock 3
Section 1.20 IBC
Securities 3
Section 1.21
Incidental Notice 3
Section 1.22 Loss
3
Section 1.23
Marketable Number 3
Section 1.24
Notice of Exercise 3
Section 1.25
Notice of Intention 3
Section 1.26
Offered Shares 3
Section 1.27
Person 3
Section 1.28
Purchase
Section 1.29 RAL
Stock 4
Section 1.30
Ralston 4
Section 1.31
Ralston Indemnified Party 4
Section 1.32
Registration Statement 4
Section 1.33 RPC
4
Section 1.34 SEC
4
Section 1.35
Securities Act 4
Section 1.36
Securities Exchange Act 4
Section 1.37
Transfer 4
Section 1.38 VCS
4
ARTICLE II - STANDSTILL AND VOTING PROVISIONS 4
Section 2.1
Standstill Covenants 4
Section 2.2
Issuance of IBC Securities 6
Section 2.3
Voting of IBC Equity 6
ARTICLE III - TRANSFERS OF IBC EQUITY 6
Section 3.1
Restrictions on Transfer 6
Section 3.2
Exceptions to Restrictions 7
Section 3.3 Other
Transfers 7
Section 3.4
Improper Transfer 7
Section 3.5
Restrictive Legend 7
ARTICLE IV - RIGHT OF FIRST OFFER 9
Section 4.1 Sales
by Ralston 9
Section 4.2
Purchase of the Offered Shares 9
Section 4.3
Waiting Period with Respect to Subsequent Transfers 10
ARTICLE V - REGISTRATION 10
Section 5.1
Demand Registration 10
Section 5.2 Delay
of Demand Registration 11
Section 5.3
Incidental Registration 12
Section 5.4 Delay
of Incidental Registration 13
Section 5.5 Third
Party Registration Rights 13
ARTICLE VI - REGISTRATION EXPENSES 13
Section 6.1
Registration Expenses 13
ARTICLE VII - REGISTRATION PROCEDURE 14
Section 7.1
Ralston Information 14
Section 7.2
Compliance 15
Section 7.3
Provision of Prospectuses 15
Section 7.4 Blue
Sky Compliance 15
Section 7.5
Maintenance of Effectiveness 15
Section 7.6
Listing of IBC Equity 16
Section 7.7 Stop-
Orders 16
ARTICLE VIII - INDEMNIFICATION AND CONTRIBUTION 16
Section 8.1
Indemnification 16
Section 8.2
Contribution 19
ARTICLE IX - CALL RIGHTS 19
Section 9.1 IBC
Call 19
ARTICLE X - ADDITIONAL COVENANTS 20
Section 10.1
Maintain Listing or Quotation 20
Section 10.2 Board
of Directors 20
Section 10.3 No
Inconsistent Agreements 20
Section 10.4
Preferred Stock 21
Section 10.5 Rule
144 and 144A 21
Section 10.6
Maximum Allowed Ownership of IBC Securities 21
ARTICLE XI - MISCELLANEOUS 21
Section 11.1
Entire Agreement 21
Section 11.2
Headings and Captions 21
Section 11.3
Choice of Law 21
Section 11.4 Venue
21
Section 11.5
Notices 21
Section 11.6
Amendments 22
Section 11.7
Extended Meanings 22
Section 11.8
Assignments 22
Section 11.9
Severability 23
Section 11.10
Counterparts 23
Section 11.11
Remedies Cumulative 23
Section 11.12
Binding Agreement 23
Section 11.13
Recapitalizations, Exchanges, Etc., Affecting IBC Securities
23
Section 11.14 Other
Agreements 23
Section 11.15 Term;
Effectiveness 23
Section 11.16
Enforcement 24
Section 11.17
Confidentiality 24
Section 11.18
Fiduciary Accounts 24
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT dated July 22, 1995 (the
"Agreement"), is made by and among INTERSTATE BAKERIES
CORPORATION, a Delaware corporation ("IBC"), RALSTON PURINA
COMPANY, a Missouri corporation ("RPC") and VCS HOLDING COMPANY,
a Delaware corporation and a wholly-owned subsidiary of RPC
("VCS") (RPC, VCS and any of their Affiliates (as defined below)
which own IBC Equity (as defined below) are collectively referred
to as "Ralston").
WHEREAS, pursuant to that certain Sale and Purchase
Agreement dated as of April 12, 1995 (the "Purchase Agreement")
by and among IBC, RPC, VCS and CONTINENTAL BAKING COMPANY, a
Delaware corporation and wholly-owned subsidiary of VCS ("CBC"),
IBC acquired all of the outstanding shares of capital stock of
CBC, par value $100 per share, from VCS in exchange for cash in
the amount of $220,000,000 and 16,923,077 shares of IBC Stock (as
defined below); and
WHEREAS, the parties hereto desire to enter into this
Agreement to provide for certain rights and restrictions with
respect to the shares of IBC Equity.
NOW, THEREFORE, in consideration of the mutual
covenants and obligations set forth herein, each of IBC and
Ralston agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, and unless the context
requires a different meaning, the following terms (whether used
in the singular or plural) have the meanings indicated. Any term
used and not defined herein has the meaning set forth in the
Purchase Agreement.
Section 1.1 Affiliate. An "Affiliate" of
a Person, means any other Person that directly or indirectly
through one or more intermediaries Controls, is controlled by or
is under common control with such Person. When used in this
Agreement with respect to IBC, the term applies only to other
Persons that are Affiliates, as so defined, as of the date of
this Agreement.
Section 1.2 Applicable Acceptance Period.
"Applicable Acceptance Period" has the meaning set forth in
Section 4.1(c) of this Agreement.
Section 1.3 Associate. An "Associate" of a Person,
means any of such Person's directors, officers, shareholders,
representatives, trustees, employees, attorneys, advisors, or
agents.
Section 1.4 Business Day. "Business Day" means any
day other than a Saturday, Sunday or legal holiday for commercial
banks in Kansas City, Missouri.
Section 1.5 CBC. "CBC" has the meaning set forth
above in the recitals to this Agreement.
Section 1.6 Closing. "Closing" means the closing of
the transactions contemplated by the Purchase Agreement.
Section 1.7 Control. "Control" (including the terms
"controlling," "controlled by" and "under common control with")
means the possession of the power, directly or indirectly, (a) to
elect a majority of the board of directors (or equivalent
governing body) of the entity in question; or (b) to direct or
cause the direction of the management and policies of or with
respect to the entity or assets in question, whether through
ownership of securities, by contract or otherwise.
Section 1.8 Demand Notice. "Demand Notice" has the
meaning set forth in Section 5.1 of this Agreement.
Section 1.9 Demand Registration. "Demand
Registration" has the meaning set forth in Section 5.1 of this
Agreement.
Section 1.10 Exchange Act. "Exchange Act" means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
Section 1.11 First Offer. "First Offer" has the
meaning set forth in Section 4.1(a) of this Agreement.
Section 1.12 First Registration Rights Agreement.
"First Registration Rights Agreement" has the meaning set forth
in Section 5.5 of this Agreement.
Section 1.13 Group. "Group" means any group of
Persons within the meaning of Section 13(d)(3) of the Exchange
Act.
Section 1.14 IBC. "IBC" has the meaning set forth
above in the recitals to this Agreement.
Section 1.15 IBC Call. "IBC Call" means the right of
IBC to acquire certain IBC Equity pursuant to Section 9.1(a) of
this Agreement.
Section 1.16 IBC Equity. "IBC Equity" means shares
of IBC Stock acquired by Ralston at the Closing and any other IBC
Securities owned, beneficially or of record, by Ralston at any
time during the term of this Agreement.
Section 1.17 IBC Indemnified Party. "IBC Indemnified
Party" has the meaning set forth in Section 8.1(a) of this
Agreement.
Section 1.18 IBC Market Price. "IBC Market Price"
means the average of the closing sale prices of the class of IBC
Securities being valued on the New York Stock Exchange or if such
IBC Securities are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated
transaction reporting system of the principal national securities
exchange on which the security is listed or admitted to trading,
for the twenty (20) trading days which end on the day immediately
prior to the date of the (i) Notice of Exercise delivered
pursuant to an IBC Call; (ii) Notice of Intention; (iii) Demand
Notice; or (iv) Incidental Notice, as the case may be. If the
IBC Securities are not listed or admitted to trading on any
national securities exchange, the IBC Market Price means the last
quoted sale price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotations System or such other system then in use, for
the twenty (20) trading days which end on the day immediately
prior to such date, or, if on any such trading day such IBC
Securities are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by two
professional market makers making a market in such securities,
one selected in good faith by the board of directors of IBC and
the other selected in good faith by Ralston. If the IBC
Securities are not publicly held or so listed or publicly traded,
IBC Market Price means the cash price at which a willing seller
would sell and a willing buyer would buy such securities in an
arm's-length negotiated transaction without undue time
restraints, as determined in good faith by, an investment banking
firm selected by agreement between IBC and Ralston
Section 1.19 IBC Stock. "IBC Stock" means the $.01
par value common stock of IBC.
Section 1.20 IBC Securities. "IBC Securities" means
any voting securities of IBC or its affiliates, including any
securities convertible into or exercisable or exchangeable for
any voting securities of IBC.
Section 1.21 Incidental Notice. "Incidental Notice"
has the meaning set forth in Section 5.3(a) of this Agreement.
Section 1.22 Loss. "Loss" has the meaning set forth
in Section 8.1(a)(i) of this Agreement.
Section 1.23 Marketable Number. "Marketable Number"
has the meaning set forth in Section 5.3(b) of this Agreement.
Section 1.24 Notice of Exercise. "Notice of
Exercise" has the meaning set forth in Section 4.1(c) of this
Agreement.
Section 1.25 Notice of Intention. "Notice of
Intention" has the meaning set forth in Section 4.1(b) of this
Agreement.
Section 1.26 Offered Shares. "Offered Shares" has
the meaning set forth in Section 4.1(b) of this Agreement.
Section 1.27 Person. "Person" means an individual,
corporation, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, limited
liability company, government (or an agency or political
subdivision thereof) or other entity of any kind.
Section 1.28 Purchase Agreement. "Purchase
Agreement" has the meaning set forth above in the recitals to
this Agreement.
Section 1.29 RAL Stock. "RAL Stock" means RPC's
Ralston-Ralston Purina Group Common Stock, $.10 par value per
share, or any such other class of common stock of RPC at any time
outstanding.
Section 1.30 Ralston. "Ralston" has the meaning set
forth above in the recitals to this Agreement.
Section 1.31 Ralston Indemnified Party. "Ralston
Indemnified Party" has the meaning set forth in Section 8.1(b) of
this Agreement.
Section 1.32 Registration Statement. "Registration
Statement" means any registration statement or comparable
document under Section 5 of the Securities Act through which a
public sale or disposition of IBC Securities may be registered
other than a registration statement (a) relating to an Employee
Benefit Plan or similar plan, or a business combination; or
(b) on any form that is not available for a secondary offering.
Section 1.33 RPC. "RPC" has the meaning set forth
above in the recitals to this Agreement.
Section 1.34 SEC. "SEC" means the Securities and
Exchange Commission or other federal agency at the time
administering the Securities Act, the Exchange Act or any
successor acts thereto.
Section 1.35 Securities Act. "Securities Act" means
the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
Section 1.36 Securities Exchange Act. "Securities
Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
Section 1.37 Transfer. "Transfer" with respect to
all or any part of the IBC Equity means to directly or indirectly
(whether or not through an underwriter) offer, sell, convey,
distribute, transfer (by merger or otherwise), assign, devise,
exchange, encumber, gift, pledge, hypothecate or otherwise
dispose of such IBC Equity.
Section 1.38 VCS. "VCS" has the meaning set forth
above in the recitals to this Agreement.
ARTICLE IISTANDSTILL AND VOTING PROVISIONS
Section 2.1 Standstill Covenants. Unless
specifically requested or permitted in writing in advance by the
Chairman of the Board of IBC or unless otherwise permitted in
this Agreement, Ralston agrees that until the sixth anniversary
date of this Agreement, it will not, directly or indirectly:
(a) acquire, offer to acquire, or agree to
acquire by purchase or otherwise, any IBC Securities except
as a result of a stock split, stock dividend or similar
recapitalization by IBC;
(b) except in the ordinary course of business,
acquire, offer to acquire, or agree to acquire by purchase
or otherwise, any assets of IBC;
(c) initiate, solicit, propose, seek to effect or
negotiate, alone or with any other Person, (i) any form of
business combination transaction involving IBC or any
Affiliate thereof, or (ii) any restructuring,
recapitalization or similar transaction with respect to IBC
or any Affiliate thereof;
(d) initiate, solicit, propose, seek to effect,
negotiate, or announce an intent to make, alone or with any
other Person, any tender offer, exchange offer, merger,
consolidation or share exchange for any IBC Securities, or
disclose an intent, purpose, plan or proposal with respect
to IBC, any of its Affiliates or any IBC Securities
inconsistent with the provisions of this Agreement;
(e) make, or in any way participate in, any
"solicitation" of "proxies" (as such terms are defined or
used in Regulation 14A under the Exchange Act) with respect
to IBC or any of its Affiliates or become a "participant" in
any "election contest" (as such terms are defined or used in
Rule 14a-11 under the Exchange Act) involving IBC or any of
its Affiliates;
(f) initiate, solicit, or propose the approval of
one or more shareholder proposals with respect to IBC or any
of its Affiliates or induce or attempt to induce any other
Person to initiate any such shareholder proposal;
(g) form, join or in any way participate in a
Group with respect to the IBC Securities;
(h) except as expressly provided herein, seek
election to or seek to place a representative on the board
of directors of IBC or any of its affiliates or seek the
removal of any member of the board of directors of IBC or
any of its Affiliates;
(i) except for participation on the board of
directors of IBC, act in concert with any other Person to
seek to affect the management or board of directors of IBC
or any of its Affiliates or the business, operations or
affairs of IBC or any of its Affiliates;
(j) call or seek to have called any meeting of
the shareholders of IBC or any of its Affiliates;
(k) disclose to any third party or in any filing
with any governmental authority any intention, plan or
arrangement inconsistent with any of the foregoing or with
the restrictions on transfer set forth in this Agreement; or
(l) enter into any discussions, negotiations,
arrangements or understandings with any third party with
respect to any of the foregoing, or advise, assist,
encourage or influence any other Person to take any action
with respect to any of the foregoing.
Section 2.2 Issuance of IBC Securities.
Notwithstanding anything in Section 2.1 herein, during the term
of this Agreement, if IBC issues any IBC Securities in a public
offering (other than a public offering of Ralston's IBC Equity)
or as consideration in an acquisition, Ralston may purchase in
one or more open market transactions or otherwise that number of
shares necessary to bring its percentage of ownership in IBC to
the same level as immediately prior to such offering or
acquisition; provided, however, that Ralston must still comply
with the provisions of Section 10.6.
Section 2.3 Voting of IBC Equity. Ralston agrees
that during the term of this Agreement, with respect to the
election of directors of IBC, each class of IBC Equity owned by
Ralston shall be voted (i) "for" the nominees recommended by the
Board of Directors of IBC, provided IBC is in compliance with the
terms of Section 10.2 of this Agreement, (ii) in accordance with
the recommendation of the Board of Directors of IBC on each
proposal of a security holder pursuant to Rule 14a-8 under the
Securities Exchange Act, so long as the subject matter of such
proposal does not fall within the proviso hereto, and, (iii) with
respect to all other matters requiring a vote of the IBC Equity,
"for" any proposal in the same proportion as the votes cast "for"
such proposal by the holders of the IBC Securities of the same
class (excluding the IBC Equity owned by Ralston), and "against"
any proposal in the same proportion as the votes cast "against"
such proposal by the holders of each such class of IBC Securities
(excluding the IBC Equity owned by Ralston) and that with respect
to broker non-votes and abstentions, each class of IBC Equity
owned by Ralston will be voted in the same proportion as votes
deemed "for," "against" or "abstain," giving the effect to broker
non-votes and abstentions as required under the laws and rules
then applicable; provided, however, that Ralston shall retain the
right to vote its IBC Equity in any manner it sees fit with
respect to any proposals for (1) the merger of IBC or any
subsidiary of IBC with or into any other corporation, (2) the
sale, lease, exchange, transfer or other disposition of all or
substantially all of the assets of IBC and all of its
subsidiaries taken together as a single business, or (3) the
creation of any other class of stock with voting rights. The
provisions of this Section 2.3 shall apply to both the casting of
votes at meetings of shareholders and execution of actions by
written consent.
ARTICLE III TRANSFERS OF IBC EQUITY
Section 3.1 Restrictions on Transfer. During the
term of this Agreement, Ralston agrees that it will not, and it
will cause each of its Affiliates who acquire IBC Equity pursuant
to Sections 3.2(c) or 3.3(c) of this Agreement not to, Transfer
any IBC Equity, except as permitted by or in accordance with this
Agreement.
Section 3.2 Exceptions to Restrictions. Subject to
all applicable laws, the restrictions on Transfer set forth in
Section 3.1 hereof shall not apply to any of the following:
(a) a Transfer of some or all of the IBC Equity
pro rata to all of the holders of the RAL Stock as a
dividend or distribution or similar transaction;
(b) a Transfer of some or all of the IBC Equity
to an Affiliate of Ralston, provided that such Affiliate
shall agree to the provisions of this Agreement and Ralston
will remain liable for the performance by such Affiliate of
its obligations under this Agreement;
(c) a Transfer of some or all of the IBC Equity
in accordance with Section 5.3 of this Agreement;
(d) a Transfer of some or all of the IBC Equity
in any tender offer, self-tender, exchange offer, going
private transaction or other transaction involving a
Transfer which is recommended to shareholders of IBC by the
board of directors of IBC;
(e) a Transfer of some or all of the IBC Equity
in accordance with Section 5.1 of this Agreement; and
(f) a Transfer of some or all of the IBC Equity
allowed under Rule 144 of the Securities Act.
Section 3.3 Other Transfers. In the event Ralston
desires to Transfer the IBC Equity in a manner not specifically
permitted under Sections 3.2 of this Agreement, Ralston may
submit a written Notice of Intention (as defined in Section 4.1
hereof) to IBC. In the event IBC declines to purchase the IBC
Equity described in the Notice of Intention, and if, in the sole
and absolute discretion of IBC, the Chairman of the Board of IBC
notifies Ralston in writing that such Transfer may occur, the
Transfer may proceed strictly in accordance with Ralston's Notice
of Intention and with any terms and conditions imposed by IBC on
such Transfer and the transferee.
Section 3.4 Improper Transfer. Any attempt to
Transfer any shares of IBC Equity during the term of this
Agreement not in accordance with this Agreement will be null and
void and IBC will not give nor permit the transfer agent of IBC
to give any effect to such attempted Transfer in its stock
records.
Section 3.5 Restrictive Legend.
(a) A copy of this Agreement will be filed with
the Secretary of IBC and kept with the records of IBC. All
certificates representing shares of IBC Equity hereafter
issued to or acquired by Ralston, if applicable, (or, if
applicable, its successors in a Transfer pursuant to Section
3.3) will bear the following legend noted conspicuously on
such certificates:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT ONLY, AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED (BY MERGER OR OTHERWISE) ASSIGNED,
DEVISED, EXCHANGED, GIFTED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND
ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH
TRANSFER IS EXEMPT FROM REGISTRATION, AND AN ACCEPTABLE
OPINION OF COUNSEL IS DELIVERED TO IBC WITH REGARD TO
SUCH EXEMPTION, OR IS OTHERWISE IN COMPLIANCE WITH THE
ACT AND SUCH STATE SECURITIES LAWS.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO THE RESTRICTIONS ON TRANSFER AS SET FORTH IN
THE SHAREHOLDER AGREEMENT, DATED JULY 22, 1995. NO
TRANSFER OF THESE SHARES WILL BE EFFECTIVE UNLESS AND
UNTIL THE TERMS AND CONDITIONS OF SUCH SHAREHOLDER
AGREEMENT HAVE BEEN COMPLIED WITH IN FULL AND NO PERSON
MAY REQUEST INTERSTATE BAKERIES CORPORATION TO RECORD
THE TRANSFER OF ANY SHARES IF SUCH TRANSFER IS IN
VIOLATION OF SUCH SHAREHOLDER AGREEMENT. A COPY OF THE
SHAREHOLDER AGREEMENT IS ON FILE AT THE EXECUTIVE
OFFICES OF INTERSTATE BAKERIES CORPORATION AND WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES
UPON WRITTEN REQUEST. THE SHARES EVIDENCED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON VOTING
PROVIDED FOR IN THE SHAREHOLDER AGREEMENT AND NO VOTE
OF SUCH SHARES THAT CONTRAVENES THE SHAREHOLDER
AGREEMENT SHALL BE EFFECTIVE.
(b) Until such time as the IBC Equity has been
registered pursuant to a registration statement under the
Securities Act or sold pursuant to Rule 144 of the
Securities Act, the certificates representing IBC Equity
(including, without limitation, all certificates issued upon
Transfer or in exchange thereof or substitution therefor)
will also bear any legend required under any other
applicable laws, including state securities or blue sky
laws.
(c) IBC may make a notation on its records or
give stop-transfer instructions to any transfer agents or
registrars for the IBC Equity in order to implement the
restrictions set forth in this Article III hereof.
(d) In the event Ralston acquires any other or
additional IBC Securities, Ralston will submit all
certificates representing such IBC Securities to IBC so that
the legend or legends required by this Section 3.5 may be
placed thereon.
ARTICLE IVRIGHT OF FIRST OFFER
Section 4.1 Sales by Ralston.
(a) Except for Transfers permitted by Section 3.2
(a), (b) or (e), during the term of this Agreement, Ralston
shall not sell any shares of IBC Equity to any Person unless
it has first made an offer (the "First Offer") to sell such
shares to IBC in accordance with this Article IV and such
First Offer shall have been rejected or not accepted within
the Applicable Acceptance Period (as hereinafter defined).
(b) The First Offer to IBC s hall be set forth in
the form of a notice made in writing (the "Notice of
Intention") to IBC setting forth (i) Ralston's desire to
make a sale; and (ii) the number of shares of IBC Equity
proposed to be sold (the "Offered Shares").
(c) Upon receipt of the Notice of Intention, IBC
will have the right to purchase the Offered Shares at the
IBC Market Price, exercisable by the delivery of an
acceptance in the form of a notice in writing to Ralston by
IBC (the "Notice of Exercise") at any time within twenty
(20) calendar days from the date of receipt of the Notice of
Intention (the "Applicable Acceptance Period"). The right
of IBC to purchase IBC Equity will terminate if such Notice
of Exercise is not delivered within Applicable Acceptance
Period. IBC may assign its right to purchase the Offered
Shares pursuant to a specific Notice of Intention, once
received by IBC, to any Person, but may not otherwise assign
its rights under this Article IV.
(d) In the event that IBC exercises its right to
purchase the Offered Shares in accordance with Section
4.1(c) hereof, then Ralston must sell the Offered Shares to
IBC at the IBC Market Price within twenty (20) days from the
date of receipt of the Notice of Exercise delivered by IBC,
subject to receipt of any required material third-party or
governmental approvals, compliance with applicable laws and
the absence of any injunction or similar legal order
preventing such transaction.
Section 4.2 Purchase of the Offered Shares. In the
event IBC rejects the First Offer or fails to deliver a Notice of
Exercise within the Applicable Acceptance Period, then Ralston
may (a) proceed with the Transfer pursuant to Articles V, VI, VII
and VIII hereof, if applicable, or (b) otherwise sell such
Offered Shares to transferees who agree to be bound by the terms
and conditions of this Agreement, in the case of a rejection,
within ninety (90) days after the delivery of such rejection or,
in the case of a failure to deliver a Notice of Exercise, within
ninety (90) days after the expiration of the Applicable
Acceptance Period, subject to the other terms and conditions of
this Agreement
Section 4.3 Waiting Period with Respect to
Subsequent Transfers. In the event that IBC does not deliver a
Notice of Exercise within the Applicable Acceptance Period and
Ralston does not sell the Offered Shares, then Ralston may not
offer to sell any additional IBC Equity (other than the Offered
Shares) for a period of ninety (90) days from the expiration of
the Applicable Acceptance Period.
ARTICLE VREGISTRATION
Section 5.1 Demand Registration.
(a) During the term of this Agreement, upon
Ralston's written request specifying the intended manner of
disposition (a "Demand Notice"), IBC will use its best
efforts to prepare and file with the SEC, as expeditiously
as possible, a Registration Statement on an available form
for which IBC then qualifies and which legal counsel for IBC
deems appropriate and which form is available for the sale
of IBC Equity in accordance with the intended method of
distribution thereof to permit an offering of some or all of
the shares of IBC Equity then held by Ralston and use its
best efforts to cause such registration statement to become
effective (a "Demand Registration"); provided, however, that
with respect to proposed dispositions of IBC Equity to
shareholders of Ralston, Ralston and IBC will cooperate and
use their respective reasonable best efforts to obtain a "no-
action letter" from the SEC allowing such dispositions
without registration.
(b) A Demand Registration will not be deemed to
have occurred until it has become effective under the
Securities Act (unless Ralston delivers a Demand Notice and
subsequently withdraws the Demand Notice, in which case such
a Demand Registration will be deemed to have occurred unless
Ralston agrees to pay all reasonable out-of-pocket expenses
associated with such registration actually incurred by IBC);
provided, however, that if, after a Demand Registration has
become effective, the offering of IBC Equity pursuant to
such Demand Registration is prohibited by any stop-order,
injunction or other order or requirement of the SEC or other
governmental agency or court, such Demand Registration will
be deemed not to have occurred (unless such prohibition on
the sale of the IBC Equity is based on actions or omissions
of Ralston, in which case such a Demand Registration will be
deemed to have occurred unless Ralston agrees to pay all
reasonable out-of-pocket expenses associated with such
registration actually incurred by IBC).
(c) IBC will only be obligated to effect a total
of five (5) Demand Registrations under Section 5.1 hereof
and shall not be obligated under Section 5.1 hereof to
effect more than one (1) Demand Registration in any twelve-
month period (except that during each of the twelve-month
periods commencing on the date hereof and on the fourth
anniversary of this Agreement, Ralston shall be entitled to
request up to two (2) Demand Registrations); provided,
however, that IBC will not be required to register the IBC
Equity pursuant to a Demand Notice under Section 5.1 hereof
if at such time (i) the shares of IBC Equity which Ralston
is requesting to be registered pursuant to Section 5.1
hereof constitute less than five percent (5%) of such class
or series of the outstanding IBC Securities so requested to
be registered or (ii) such Demand Notice is given within six
(6) months after the effective date of any other
registration of any IBC Securities under the Securities Act.
(d) If any Demand Registration involves an
underwritten offering, the first lead underwriter, and,
subject to the last sentence of this Section 5.1(d), any
other underwriter that will administer the offering will be
selected by Ralston; provided, however, that such
underwriter(s) shall be subject to the approval of IBC which
approval shall not be unreasonably withheld. In the event
there is one or more co-managers, the first such co-manager
shall be selected by IBC, provided that such co-manager
shall be subject to the approval of Ralston, which approval
shall not be unreasonably withheld.
(e) If any Demand Registration involves an
underwritten offering, then as many shares of IBC Securities
that IBC elects may be included in such offering on the same
terms and conditions as the IBC Equity; provided, however,
that if the managing underwriter(s) advises Ralston and IBC
that, in its judgment, the number of shares proposed to be
included in such offering should be limited, then the total
number of shares to be included in such offering will be
determined by the managing underwriter(s) and IBC shall
include in such offering (i) first, all the shares of IBC
Equity that Ralston proposes to sell and (ii) second all the
shares of IBC Securities that IBC proposes to sell. Except
as otherwise provided for in this Agreement or the First
Registration Rights Agreement (as hereinafter defined), no
person other than Ralston shall be permitted to offer any
IBC Securities under any Demand Registration pursuant to
this Section 5.1 without the prior written consent of
Ralston.
Section 5.2 Delay of Demand Registration.
(a) Notwithstanding anything to the contrary in
Article V hereof, in the event that IBC determines in its
reasonable judgment that it may be advisable to delay filing
a Registration Statement described in Section 5.1 hereof or,
to withdraw such Registration Statement if such Registration
Statement has already been filed, IBC may delay filing such,
or withdraw such previously filed, Registration Statement
for a period of not more than ninety (90) days from the date
of receipt of the request for the Demand Registration if IBC
furnishes to Ralston a certificate signed by the Chairman of
the Board of IBC stating that IBC has reasonably determined
that (i) such a filing would adversely affect any proposed
financing or acquisition by IBC or (ii) such a filing would
otherwise represent an undue hardship for IBC; provided,
however, that IBC will be responsible for any reasonable out
of pocket costs (excluding any decline in the IBC Market
Price) which arise out of such delay and IBC will, at the
request of Ralston, file or refile, as the case may be, such
Registration Statement promptly after IBC, in its judgment,
determines that it is no longer advisable to delay filing or
to continue the withdrawal of such Registration Statement.
(b) IBC may not delay filing or refiling, as the
case may be, a Registration Statement pursuant to Section
5.2(a) hereof, if following the delay IBC would be required
to file audited financial statements other than audited
financial statements included in IBC's annual report on Form
10-K, unless IBC agrees to provide such audited financial
statements
Section 5.3 Incidental Registration.
(a) Right To Include IBC Equity.
(i) If IBC or any other Person at any
time proposes to register any IBC Securities under the
Securities Act (other than a registration of securities
in connection with a merger, an acquisition, an
exchange offer, or an Employee Benefit Plan maintained
by IBC or its Affiliates or on Form S-4 or S-8 or any
successor or similar form), whether or not for sale for
its own account, in a manner which would permit
registration of the IBC Equity for sale to the public
under the Securities Act, it will give written notice
to Ralston (to the extent permitted by such other
Person's current contractual registration rights, if
any) of its intention to do so and of Ralston's rights
under this Section 5.3(a)(i), at least thirty (30)
calendar days prior to the anticipated filing date of a
Registration Statement relating to such registration
(an "Incidental Notice"). Such Incidental Notice will
offer Ralston the opportunity to include in such
Registration Statement that number of shares of IBC
Equity as Ralston may request. Upon the written
request (which request will specify the number of
shares of IBC Equity intended to be disposed of by
Ralston pursuant to such Registration Statement) of
Ralston made within ten (10) calendar days after the
receipt of the Incidental Notice, IBC will use its best
efforts to effect the registration under the Securities
Act of all shares of IBC Equity which IBC has been so
requested to register; provided, however, that (A) if
such registration involves an underwritten offering,
Ralston must sell its IBC Equity requested to be
included in such registration to the underwriter(s)
selected by IBC on the same terms and conditions as
apply to other Persons, including IBC, and (B) if, at
any time after receiving a reply from Ralston to an
Incidental Notice, and prior to the effective date of
the Registration Statement filed in connection with
such registration, IBC decides for any reason not to
register any shares of IBC Securities, IBC will notify
Ralston and thereupon be relieved of its obligation to
register any IBC Equity in connection with such
registration.
(ii) No registration, whether or not
effected under Section 5.3(a) hereof will relieve IBC
of its obligations to effect Demand Registrations under
Section 5.1 hereof.
(b) Priority in Incidental Registrations. If a
registration pursuant to Section 5.3(a) hereof involves an
underwritten offering and the managing underwriter advises IBC in
writing, that, in its opinion, the number of IBC Securities
intended to be included in such Registration Statement exceeds
the largest number of IBC Securities which can be sold without
having an adverse effect on such offering, including the price at
which such securities can be sold or, if in a non-underwritten
offering, IBC determines, in its reasonable discretion, to limit
the number of securities to be sold, (in either case, the
"Marketable Number"), IBC will include in such Registration
Statement (i) first, all of the IBC Securities IBC or the Person
referred to in the first sentence of Section 5.3(a)(i) proposes
to sell for its own account, (ii) second, all of the IBC
Securities requested to be included by holders of IBC Securities
pursuant to Section 3 of the First Registration Rights Agreement,
(iii) third, the IBC Securities requested to be included by
Ralston pursuant to Section 5.3(a) hereof and (iv) fourth, the
securities requested to be included by other Persons (but if the
number of securities to be registered pursuant to clause (iv)
together with the number of securities to be included in such
registration pursuant to clauses (i), (ii) and (iii) of this
Section 5.3(b) exceeds the Marketable Number, the number of
securities of Persons to be registered pursuant to clause (iv)
shall be allocated pro rata among such Persons on the basis of
the relative number of IBC Securities each such Person has
requested to be included in such registration).
Section 5.4 Delay of Incidental Registration.
Notwithstanding anything to the contrary in this Article V, in
the event that IBC determines in its reasonable judgment that it
may be advisable to delay filing a Registration Statement
described in Section 5.3 hereof or, to withdraw such Registration
Statement if such Registration Statement has already been filed,
IBC may delay filing such, or withdraw such previously filed,
Registration Statement in accordance with the provisions of
Section 5.3(a)(i) hereof.
Section 5.5 Third Party Registration Rights. The
provisions of this Article V are in all cases subject to the
contractual registration rights granted by that certain
Registration Rights Agreement dated July 23, 1991 (the "First
Registration Rights Agreement") by and among IBC, Mezzanine
Investment Limited Partnership-8, 1987 Merchant Investment
Partnership, Merchant LBO Inc. and GKB IX, L.P. IBC hereby
represents and warrants that the First Registration Rights
Agreement is the only agreement entered into by IBC or any of its
Associates or Affiliates governing the registration of shares of
IBC Securities. IBC will not extend, amend or waive any
provisions of the First Registration Rights Agreement and will
not grant any additional registration rights to any other Person
which could limit or restrict the registration rights granted
Ralston pursuant to this Agreement.
ARTICLE VI REGISTRATION EXPENSES
Section 6.1 Registration Expenses.
(a) Subject to Section 5.1(b) of this Agreement,
all expenses incident to IBC's performance of or compliance
with Articles V and VII of this Agreement to effect five (5)
Demand Registrations will be borne by IBC, including,
without limitation:
(i) all federal registration and filing
fees;
(ii) subject to Section 7.4, fees and
expenses of compliance with securities or blue sky
laws; provided, however, that IBC will in no event be
obligated to pay the fees and disbursements of counsel
for the underwriters or Ralston in connection with blue
sky qualifications of the IBC Equity under the laws of
such jurisdictions as the managing underwriter(s) may
designate;
(iii) printing, messenger, telephone and
delivery expenses;
(iv) fees and disbursements of legal counsel
for IBC;
(v) fees and disbursements of all
independent certified public accountants of IBC;
(vi) NASD fees and disbursements of the
underwriters; provided, however, that in all cases
Ralston will pay all costs of discounts, commissions,
spreads or fees of underwriters, selling brokers,
dealer managers or similar securities industry
professionals relating to the distribution of the IBC
Equity being sold by Ralston;
(vii) fees and expenses of other Persons
retained by IBC; and
(viii) listing or quotation fees and
expenses required to be made pursuant to Section 7.6
hereof in connection with the Registration Statement.
(b) Each of IBC and Ralston will pay its own
internal expenses (including, without limitation, all
salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of its
annual audit, rating agency fees and fees and expenses of
any Person, including special experts retained by IBC or
Ralston, respectively.
ARTICLE VIIREGISTRATION PROCEDURE
Section 7.1 Ralston Information. Ralston will
provide IBC with such information about Ralston and the intended
manner of distribution of IBC Equity and otherwise cooperate with
IBC and the underwriter(s) as may be necessary in the reasonable
opinion of IBC to satisfy any obligation of IBC under this
Agreement to register the IBC Equity under federal or state
securities laws and otherwise take actions related thereto. In
the event of the failure of Ralston to comply with the
requirements of the preceding sentence IBC may delay filing such,
and withdraw such previously filed, Registration Statement. IBC
will file or refile, as the case may be, such Registration
Statement promptly following compliance with such requirements by
Ralston; provided, however, that Ralston will be responsible for
any reasonable out of pocket costs which arise out of such non-
compliance. Ralston will immediately notify IBC upon discovery
that any information provided by Ralston which is included in the
prospectus that is included in a Registration Statement, as then
in effect, is untrue in any material respect, or omits to state
any material fact required to be stated therein or to make the
information stated therein not misleading in the light of the
circumstances under which it is presented.
Section 7.2 Compliance. Each of Ralston and IBC
will comply with all rules and regulations of the SEC and
applicable state securities or blue sky laws governing the manner
of sale of securities in connection with its Transfer of any of
the IBC Equity pursuant to any Registration Statement.
Section 7.3 Provision of Prospectuses.
(a) IBC will furnish to Ralston such number of
copies of a summary prospectus or other prospectus,
including a prospectus subject to completion in conformity
with the requirements of the Securities Act, and such other
documents as Ralston may reasonably request in writing, in
order to facilitate the public sale or other disposition of
the IBC Equity included in a Registration Statement.
(b) At any time when a sale or other disposition
of IBC Equity pursuant to a Registration Statement is
subject to a prospectus delivery requirement, IBC will
notify Ralston of the occurrence of any event that causes
the prospectus included in such Registration Statement, as
then in effect, to include an untrue statement of a material
fact or to omit to state a material fact required to be
stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then
existing and IBC will use its best efforts, as expeditiously
as possible, to either amend the prospectus or otherwise
take any actions so that use of the previous prospectus may
be legally resumed. Upon receipt of such a notice, Ralston
will immediately discontinue all sales or other dispositions
of IBC Equity pursuant to the Registration Statement.
Ralston may resume such sales or dispositions only upon
receipt of an amended prospectus or after Ralston is advised
by IBC that the use of the previous prospectus may be
legally resumed.
Section 7.4 Blue Sky Compliance. IBC will use its
best efforts to (a) register or qualify the IBC Equity included
in a Registration Statement under the securities or blue sky laws
of such jurisdictions within the United States as Ralston
reasonably requests and (b) do any and all other acts that may be
reasonably necessary or advisable to enable Ralston to consummate
the public sale or disposition of such securities in such
jurisdictions; provided, however, that IBC is not required to
consent to, or take any action that would subject it to, general
service of process or taxation in any jurisdiction where it is
not then so subject, nor qualify to do business in any
jurisdiction where it is not then so qualified.
Section 7.5 Maintenance of Effectiveness. IBC will
use its best efforts to prepare and file promptly with the SEC
such amendments and supplements to any Registration Statement,
and the prospectus used in connection therewith, as may be
necessary to keep such Registration Statement continuously
effective and in compliance with the Securities Act until the one
hundred twentieth (120th) day following the date on which such
Registration Statement becomes effective, or until all IBC Equity
included in such Registration Statement has been sold, whichever
is earlier; provided, however, that IBC will have no obligation
under this Section 7.5 to keep effective any Registration
Statement during the period following any date on which IBC would
be required to file audited financial statements other than the
date by which IBC is required to file its next annual report on
Form 10-K containing such required audited financial statements.
Section 7.6 Listing of IBC Equity. IBC will use its
best efforts to cause the IBC Equity when issued to be listed on
all securities exchanges on which any securities issued by IBC
are then listed, or quoted on all automated quotation systems on
which any such securities of IBC are then quoted, including,
without limitation, entering into appropriate customary
agreements (including a listing application and indemnification
agreement in customary form).
Section 7.7 Stop-Orders. IBC will promptly notify
Ralston of (a) the receipt by IBC of any notification with
respect to the issuance by the SEC of any stop-order or order
suspending the effectiveness of any Registration Statement
covering any IBC Equity or the initiation of any proceedings for
that purpose, or (b) the receipt by IBC of any notification with
respect to the limitation, restriction or suspension of the offer
or sale of IBC Equity in any jurisdiction in which the IBC Equity
was qualified to be sold, or the initiation of any proceedings
for such purpose. In the event that IBC notifies Ralston of any
such event, Ralston will immediately discontinue all sales or
other dispositions of IBC Equity pursuant to the Registration
Statement until such time that IBC notifies Ralston of the
lifting of such stop-order or similar order; provided, however,
that such a stop-order or similar order issued by a state
securities or blue sky administrator will apply only to offers
and sales in such state, unless Ralston is advised otherwise by
IBC. IBC, with the cooperation of Ralston, will use its best
efforts to contest any such proceedings and to obtain the
withdrawal of any such order at the earliest possible date.
ARTICLE VIIIINDEMNIFICATION AND CONTRIBUTION
Section 8.1 Indemnification.
(a) Indemnification by Ralston.
(i) Ralston agrees to indemnify and
hold harmless IBC, its Affiliates and Associates (each
such Person being hereinafter referred to as an "IBC
Indemnified Party") from and against all losses,
claims, damages, liabilities and expenses (including
reasonable costs of investigation and legal expenses)
(each a "Loss") arising out of or based upon any untrue
statement or alleged untrue statement of a material
fact contained in any Registration Statement or
preliminary, final or summary prospectus covering any
IBC Equity, or in any amendment or supplement thereto,
or in any document incorporated by reference into any
of the foregoing or arising out of or based upon any
omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, but only if, and only to the extent, such
statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity
with written information furnished to IBC or its
representatives by or on behalf of Ralston for use in
the preparation of such Registration Statement,
preliminary, final or summary prospectus or such
amendment or supplement thereto, or such document
incorporated by reference. This indemnity will be in
addition to any liability which Ralston may otherwise
have. Ralston will also indemnify the underwriter(s),
selling broker(s), dealer manager(s) and similar
securities industry professionals participating in the
distribution, their officers and directors and each
Person who Controls such Persons, to the same extent as
provided above with respect to the indemnification of
the IBC Indemnified Party.
(ii) Ralston also agrees to indemnify
and hold harmless any IBC Indemnified Party from and
against all Losses arising out of any action or
proceeding brought against any IBC Indemnified Party in
connection with the distribution or proposed
distribution of IBC Equity to the holders of RAL Stock;
provided, however, that this Section 8.1(a)(ii) shall
not apply to any Losses for which IBC is responsible as
provided in Section 8.1(b) of this Agreement.
(iii) If any action or proceeding
(including any governmental investigation or inquiry)
is brought or asserted against an IBC Indemnified Party
in respect of which indemnity may be sought from
Ralston, such IBC Indemnified Party will promptly
notify Ralston in writing of the commencement of such
action and Ralston shall assume the defense thereof and
have primary control over any related suit or
proceeding, including the employment of legal counsel
and the payment of all expenses in connection
therewith; provided, however, that the failure of any
IBC Indemnified Party to give notice as provided herein
shall not relieve Ralston of its obligations under this
Section 8.1(a) except to the extent that Ralston is
actually materially prejudiced by such failure to give
notice. An IBC Indemnified Party shall have the right
to participate in and jointly with Ralston, to the
extent that it may wish, and employ separate counsel
reasonably satisfactory to such IBC Indemnified Party,
provided, however, that Ralston will not be liable to
such IBC Indemnified Party for any legal or other
expenses subsequently incurred by such IBC Indemnified
Party in connection therewith, unless such IBC
Indemnified Party shall have been advised by counsel
that a conflict of interest between such IBC
Indemnified Party and Ralston is likely to exist in
respect of such claim.
(b) Indemnification by IBC.
(i) IBC agrees to indemnify and hold
harmless Ralston and its Affiliates and Associates
(each such person being hereinafter referred to as a
"Ralston Indemnified Party") from and against all
Losses arising out of or based upon any untrue
statement or alleged untrue statement of a material
fact contained in any Registration Statement,
preliminary, final or summary prospectus covering any
IBC Equity, or in any amendment or supplement thereto,
or in any document incorporated by reference into any
of the foregoing or arising out of or based upon any
omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statement therein not misleading,
except insofar as such Losses arise out of or are based
solely upon any such untrue statement or omission or
allegation thereof based upon written information
provided by or on behalf of Ralston for inclusion in
such Registration Statement, preliminary, final or
summary prospectus, or such amendment or supplement
thereto, or such document incorporated by reference;
provided, however, that IBC will not be liable in any
such case to the extent that any such Loss arises out
of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made
in any preliminary prospectus if (A) Ralston failed to
send or deliver a copy of the final prospectus with or
prior to the delivery of written confirmation of the
sale of the IBC Equity covered by the Registration
Statement to the Person asserting such Loss, and
(B) the final prospectus would have corrected such
untrue statement or omission and provided, further,
that IBC will not be liable in any such case to the
extent that any such Loss arises out of or is based
upon an untrue statement or omission in the final
prospectus, if such untrue statement or omission is
corrected in an amendment or supplement to the final
prospectus and if, having previously been furnished by
or on behalf of IBC with copies of the final prospectus
as so amended or supplemented, Ralston thereafter fails
to deliver such prospectus as so amended or
supplemented, prior to or concurrently with the sale of
the IBC Equity to the Person asserting such Loss who
purchased such IBC Equity which is the subject thereof.
This indemnity will be in addition to any liability
which IBC may otherwise have. IBC will also indemnify
the underwriter(s), selling broker(s), dealer
manager(s) and similar securities industry
professionals participating in the distribution, their
officers and directors and each Person who Controls
such Persons, to the same extent as provided above with
respect to the indemnification of the Ralston
Indemnified Party.
(ii) If any action or proceeding is
brought against a Ralston Indemnified Party in respect
of which indemnity may be sought against such Ralston
Indemnified Party, Ralston will promptly notify IBC in
writing of the commencement of such action and IBC will
assume the defense thereof and have primary control
over any related suit or proceeding, including the
employment of legal counsel and the payment of all
expenses in connection therewith; provided, however,
that the failure of any Ralston Indemnified Party to
give notice as provided herein shall not relieve IBC of
its obligations under this Section 8.1(b) except to the
extent that IBC is actually materially prejudiced by
such failure to give notice. A Ralston Indemnified
Party shall have the right to participate in and
jointly with IBC, to the extent that it may wish, and
employ separate counsel reasonably satisfactory to such
Ralston Indemnified Party, provided, however, that IBC
will not be liable to such Ralston Indemnified Party
for any legal or other expenses subsequently incurred
by such Ralston Indemnified Party in connection
therewith, unless such Ralston Indemnified Party shall
have been advised by counsel that a conflict of
interest between such Ralston Indemnified and IBC is
likely to exist in respect of such claim.
Section 8.2 Contribution.
(a) If the indemnification provided for in
Section 8.1 hereof is unavailable to an IBC Indemnified
Party or Ralston Indemnified Party under Section 8.1(a) or
Section 8.1(b) hereof (other than by reason of the
exceptions provided in Sections 8.1(a) and 8.1(b)) in
respect of any Losses referred to therein, then such
indemnifying party, in lieu of indemnifying such indemnified
party, will contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault
of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses, as
well as any other relevant equitable considerations. The
relative fault of the indemnifying party, on the one hand,
and the indemnified party, on the other hand, shall be
determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material
fact or the omission or alleged omission to state a material
fact relates to information supplied by such indemnified
party and each parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by each
party as a result of the Losses referred to above will be
deemed to include, subject to the limitations set forth in
Section 8.1(b) hereof, any legal or other fees or expenses
reasonably incurred by such party in connection with
investigating or defending any action or claim.
(b) Notwithstanding the provisions of Section
8.2(a) hereof, no Person found to be guilty of fraudulent
misrepresentation shall be entitled to contribution from any
Person who is not found to be guilty of such fraudulent
misrepresentation.
ARTICLE IXCALL RIGHTS
Section 9.1 IBC Call.
(a) At any time during the one-year period
commencing on the fifth anniversary date of this Agreement,
IBC shall have the right to acquire all, but not less than
all of the IBC Equity then owned by Ralston at a purchase
price equal to one-hundred and ten percent (110%) of the IBC
Market Price of the IBC Equity then owned by Ralston (such
right to acquire the IBC Equity is referred to as the "IBC
Call"). IBC will notify Ralston of its election to exercise
the IBC Call (a "Call Notice"), which Call Notice will
contain IBC's notice of election to purchase such shares
subject to the IBC Call, the purchase price of the shares
subject to the IBC Call calculated in accordance with this
Section 9.1(a), and the date estimated for consummation of
the purchase and sale (not more than thirty (30) days after
the date of the Call Notice). The consummation of the
purchase and sale pursuant to this Section 9.1(a) will take
place no later than thirty (30) days after the date
specified in the Call Notice, subject to the provisions of
Section 9.1(b) hereof and subject to any and all waiting
periods required under any applicable laws or regulations.
IBC may assign the right to purchase such shares subject to
the IBC Call to any Person. Any rights to IBC Equity
arising pursuant to an IBC Call shall continue in effect
during the term hereof unless extinguished by IBC pursuant
to a written notice to Ralston affirmatively relinquishing
such rights. IBC shall be permitted to relinquish rights to
acquire all of the IBC Equity subject to an IBC Call.
(b) Upon the consummation of a purchase and sale
pursuant to Section 9.1(a) hereof:
(i) Ralston will transfer and deliver
to IBC, all of its right, title and interest in and to
the IBC Equity then owned by Ralston, free and clear of
all liens and encumbrances and will deliver to IBC a
certificate(s) evidencing the shares sold duly
endorsed, or accompanied by written instruments of
transfer in form satisfactory to IBC, duly executed,
with evidence of payment of any applicable stock
transfer taxes.
(ii) IBC or its assignee will deliver to
Ralston an amount in cash equal to the purchase price
of the IBC Equity then owned by Ralston as set forth in
the IBC Call.
(c) The IBC Call shall be exercised within one
(1) year following the expiration of the fifth anniversary
date of this Agreement, and shall expire if not exercised by
such date.
ARTICLE XADDITIONAL COVENANTS
Section 10.1 Maintain Listing or Quotation. IBC
hereby covenants and agrees that it shall use its best efforts to
maintain its listing of IBC Securities on any securities
exchanges on which its IBC Securities are currently listed or on
which they are listed in the future pursuant to Section 7.6
hereof and to maintain its quotation of IBC Securities on an any
automated quotation systems on which its IBC Securities are
currently quoted or on which they are quoted in the future
pursuant to Section 7.6 hereto.
Section 10.2 Board of Directors. IBC hereby
covenants and agrees that (a) effective as of the Closing, IBC
shall nominate and appoint William P. Stiritz and Mr. James R.
Elsesser to the board of directors of IBC, one to hold office
until the 1996 annual meeting of IBC shareholders and one to hold
office until the 1997 annual meeting of IBC shareholders, and (b)
the nominee chosen by Ralston to serve in the 1996 class shall be
nominated and elected to an additional term of not less than two
years at the 1996 annual meeting of IBC shareholders. There will
be no obligation of IBC under the terms of this Agreement to
nominate any Ralston representatives after such terms expire.
Section 10.3 No Inconsistent Agreements. IBC hereby
covenants and agrees that it shall not enter into any agreements
governing the transfer or registration of shares of IBC
Securities which would adversely effect Ralston's rights under
this Agreement, without Ralston's prior written consent.
Section 10.4 Preferred Stock. IBC hereby covenants
and agrees that during the term of this Agreement, so long as
Ralston owns at least 15% of the IBC Securities, IBC shall not
issue to any Person any shares of preferred stock of IBC which
possess voting rights which are greater than the equity interest
represented by such shares of preferred stock of IBC.
Section 10.5 Rule 144 and 144A. IBC hereby covenants
and agrees that it will use its reasonable best efforts to file
any reports required to be filed by it under the Securities Act
and Exchange Act and that it will take such further action as
Ralston may reasonably request, all to the extent required from
time to time to enable Ralston to sell its IBC Equity (subject to
the terms hereof) without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144
or 144A under the Securities Act, as such Rules may be amended
from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission.
Section 10.6 Maximum Allowed Ownership of IBC
Securities. Ralston hereby covenants and agrees that on the
fifth anniversary of the date of this Agreement its ownership of
IBC Securities shall be no more than 14.9% of the total
outstanding IBC Securities.
ARTICLE XI MISCELLANEOUS
Section 11.1 Entire Agreement. This Agreement,
constitutes the entire agreement between the parties hereto
relative to the subject matter hereof, and supersedes all prior
written or oral understandings, agreements, conditions or
representations.
Section 11.2 Headings and Captions. All headings and
captions used in this Agreement are for convenience only, and
will not be construed to either limit or broaden the language of
this Agreement or any particular section.
Section 11.3 Choice of Law. This Agreement will be
governed by and construed under and in accordance with the laws
of the State of Missouri, without giving effect to the conflict
of laws provisions thereof, except that all matters relating to
the internal affairs of IBC shall be governed by and construed
under and in accordance with the General Corporation Law of
Delaware.
Section 11.4 Venue. Any action or legal proceedings
to enforce this Agreement or any of its terms, or for
indemnification and the recovery of losses as provided for in
this Agreement by a party, may be brought and prosecuted in such
court or courts located in the Eastern or Western District of
Missouri as provided by law, and the parties to this Agreement
consent to the jurisdiction of said court or courts and to
service of process by registered mail, return receipt requested,
or by any other manner provided by Missouri law.
Section 11.5 Notices. Any notice or other
communication required or permitted hereunder is deemed delivered
when delivered in person, when transmitted by telecopier (which
will also be sent concurrently by certified or registered mail),
on the next Business Day when sent by Federal Express or a
similar overnight delivery service, or on the third Business Day
when sent by registered or certified U.S. mail service as
follows:
If to Ralston or VCS: Office of the Chief Executive
Officer
Ralston Purina Company
Checkerboard Square
St. Louis, MO 63164
With a Copy to: Office of the General Counsel
Ralston Purina Company
Checkerboard Square
St. Louis, MO 63164
Attn: James M. Neville, Esq.
If to IBC: Office of the Chief Executive
Officer
Interstate Bakeries Company
12 East Armour Boulevard
Kansas City, MO 64111
With Copies to: Office of the General Counsel
Interstate Bakeries Company
12 East Armour Boulevard
Kansas City, MO 64111
Attn: Ray Sandy Sutton, Esq.
Shook, Hardy & Bacon P.C.
One Kansas City Place
1200 Main Street, Suite 3100
Kansas City, MO 64105
Attn: Jennings J. Newcom,
Esq.
The parties to this Agreement will promptly notify each other in
the manner provided in this Section 11.5 of any change in their
respective addresses. A notice of change of address will not be
deemed to have been given until received by the addressee.
Section 11.6 Amendments. No changes, modifications,
amendments or additions will be valid unless such be made in
writing and signed by or on behalf of each party.
Section 11.7 Extended Meanings. Words importing the
singular number include the plural and vice versa, and words
importing the masculine gender include the feminine and neuter
genders.
Section 11.8 Assignments. In addition to the
specific assignment rights set forth herein, IBC has the right to
assign any and all of its rights or obligations under this
Agreement to the surviving entity in a merger, consolidation,
combination or other corporate transaction involving IBC which
agrees in writing with Ralston to be bound by the terms hereof.
Except as otherwise provided herein, Ralston may not assign any
of its rights or obligations hereunder to any Person.
Section 11.9 Severability. The invalidity or
unenforceability of any provision hereof in any jurisdiction will
not affect the validity or enforceability of this Agreement,
including that provision, in any other jurisdiction. To the
extent permitted by applicable law, each party waives any
provision of law that renders any provision hereof prohibited or
unenforceable in any respect. If any term, provision, covenant
or restriction in this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the parties
hereto will use their best efforts to find and employ an
alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or
restriction and the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and
effect, in order to achieve the intent of the parties to the
extent possible.
Section 11.10 Counterparts. This Agreement may be
executed simultaneously in two or more counterparts, each of
which is deemed an original, but all of which together
constitutes a single agreement, and it is not necessary in making
proof of this Agreement to produce or account for more than one
such counterpart.
Section 11.11 Remedies Cumulative. Except as
otherwise expressly limited herein, the remedies given to any
party by this Agreement are in addition to all remedies under any
statute or rule of law. Any forbearance or failure or delay in
exercising any remedy hereunder is not deemed to be a waiver of
any other remedy a party may have under this Agreement.
Section 11.12 Binding Agreement. This Agreement will
be deemed effective and legally binding upon the parties when it
has been executed and delivered by all parties hereto. This
Agreement will inure to the benefit of the parties hereto and
their permitted successors and assignees.
Section 11.13 Recapitalizations, Exchanges, Etc.,
Affecting IBC Securities. The provisions of this Agreement apply
to the full extent set forth herein with respect to the IBC
Equity, to any and all shares of capital stock of IBC or any
successor or assign of IBC (whether by merger, consolidation,
sale of assets, or otherwise) which may be issued in respect of,
in exchange for, or in substitution of, IBC Equity and will be
appropriately adjusted for any stock dividends, splits, reverse
splits, combinations, recapitalizations and the like occurring
after the date hereof.
Section 11.14 Other Agreements. Nothing contained in
this Agreement will be deemed to be a waiver of, or release from,
any obligations any party hereto may have under any other
agreement, including, without limitation, the Purchase Agreement.
Section 11.15 Term; Effectiveness. The term of this
Agreement will begin (and this Agreement will become effective)
upon the date hereof and will continue until the date which is
five (5) years from the date hereof; provided, however, that
Article IX and Section 2.1 shall survive until the date which is
six (6) years from the date hereof. The provisions of Articles
VI and VIII hereof shall survive the termination of this
Agreement.
Section 11.16 Enforcement. Each of IBC and Ralston
agrees that any breach of the provisions contained in this
Agreement by IBC and/or Ralston would cause irreparable harm to
the other and its Affiliates and, therefore, notwithstanding any
right of IBC and/or Ralston to recover monetary damages with
respect to any such breach as set forth in (a) this Agreement or
(b) at law, IBC and Ralston will each be entitled to equitable
relief to enjoin any threatened or continuing breach of the other
hereof and, in the event of any action for specific performance,
each party shall waive the defense that a remedy at law would be
adequate. If the scope of any restriction contained in this
Agreement is too broad to permit enforcement to its full extent,
then such restriction will be enforced to the maximum extent
permitted by law in the manner provided in Section 11.9 hereof.
Nothing herein stated will be construed as prohibiting any party
from pursuing any other remedies available to that party for a
breach hereunder, including recovery of damages.
Section 11.17 Confidentiality. Each of Ralston and
IBC acknowledges that the other would be irreparably damaged if
confidential knowledge of its business and affairs were disclosed
or utilized on behalf of any Person. Each of IBC and Ralston
covenants and agrees not to disclose or use any such confidential
information of the other unless such information has been made
available to the public generally (other than in violation of
this Section 11.17) or IBC and/or Ralston is required to disclose
such information by a governmental body or regulatory agency or
by law in connection with a transaction that is not otherwise
prohibited hereby. Performance by IBC and Ralston of their
respective obligations under this Section 11.17 shall be in
accordance with the provisions set forth on Exhibit A attached
hereto, which Exhibit is incorporated herein and made a part
hereof.
Section 11.18 Fiduciary Accounts. IBC and Ralston
each acknowledge and agree that this Agreement shall apply only
to the IBC Securities owned by Ralston for its own account and
does not apply to any IBC Securities which may be deemed to be
beneficially owned or controlled by Ralston or its Affiliates and
which shares are held in fiduciary accounts in connection with
any pension plans, profit sharing plans or other employee benefit
plans or held in any other fiduciary accounts.
IN WITNESS WHEREOF, the parties have executed this
Agreement by an officer thereunto duly authorized, all as of the
day and year first above written.
ATTEST: INTERSTATE BAKERIES
CORPORATION
By: R. S. Sutton By: P. E. Yarick
------------------------------------------ ----------
- -------------------------------
Its Secretary Its Vice President
ATTEST: RALSTON PURINA COMPANY, on its
behalf and on behalf of its Affiliates
By: N. E. Hamilton By: J. M. Neville
-------------------------------------------- ----------
- ----------------------------------
Its Assistant Secretary Its Vice President
ATTEST: VCS HOLDING COMPANY
By: N. E. Hamilton By: T. L. Grosch
-------------------------------------------- ----------
- ----------------------------------
Its Assistant Secretary Its Secretary
EXHIBIT A
For purposes of Section 11.17 of the Shareholder Agreement
by and among Interstate Bakeries Corporation, Ralston Purina
Company and VCS Holding Company, the following provisions shall
apply:
1. "Confidential Information" shall include all
information provided heretofore or hereafter by either Ralston or
IBC (individually, a "Company" and collectively, the "Companies")
or their representatives, Affiliates, advisors, officers,
directors, employees or agents ("Representatives"), to the other.
The term "Confidential Information" also will include any
analyses, studies or other documents prepared by Representatives
of a Company containing or based in whole or in part on any
information furnished to the other. Confidential Information
shall not include information which (i) becomes generally
available to the public other than as a result of a disclosure in
violation hereof by a Company or its Representatives, (ii) was in
the possession of a Company on a non-confidential basis prior to
its disclosure or (iii) becomes available to a Company on a non-
confidential basis from a source other than the other Company,
which source is entitled to make the disclosure without violation
of any obligation of confidentiality to a Company or other party.
2. Each Company recognizes and acknowledges the
competitive value and the confidential and proprietary nature of
the Confidential Information and the damage that could result to
the other Company if information contained therein is disclosed
to any third party. Each Company agrees that it will not use the
Confidential Information in any manner that is competitive with
or detrimental to the business or operations of the other
Company. Each Company further agrees that it will not disclose
any of the Confidential Information to any person or entity
without the prior written consent of the other Company; provided,
however, that there may be a disclosure of such information to
such of its Representatives that need to know such information in
connection with any transactions between the Companies or for
valid business reasons which do not otherwise violate the
provisions of this agreement. Each Company acknowledges that its
Representatives are bound hereto to the same extent as each
Company as if there were parties hereto, and each Company shall
be responsible for any breach hereof by any of its
Representatives.
3. Each Company agrees that a breach of the provisions
hereof may give rise to irreparable injury to the other Company
that cannot be compensated for adequately by monetary damages.
Consequently, each Company shall be entitled from the other
Company, in addition to all other remedies available, to
injunctive and other equitable relief to prevent a breach hereof
and to secure the enforcement hereof in any court of competent
jurisdiction in the United States or any state thereof.
4. Each Company hereby acknowledges that it is aware, and
will advise its Representatives and financing sources who are
informed as to the matters which are the subject hereof, that the
federal and state securities law prohibit any person who has
received material, non-public information concerning the matters
that are related hereto from purchasing or selling securities of
the Companies or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable
that such person is likely to purchase or sell such securities.
5. If either Company is requested or becomes legally
compelled to disclose any of the Confidential Information, such
Company agrees that it will provide the other Company with prompt
written notice of such request so that the other Company may seek
a protective order. In the event that such protective order or
other remedy is not obtained, the Company agrees to furnish only
that portion of the Confidential Information and other
information that it is legally obligated to disclose.
6. At either Company's request, the other agrees to
promptly return or, at such Company's option, to destroy the
Confidential Information and all copies thereof. All copies,
extracts or other reproductions in whole or in part thereof shall
be destroyed and not retained by the other Company or its
representatives in any form or for any reason, and such
destruction shall be certified in writing to the requesting
Company by an authorized officer supervising such destruction.
All documents, pleadings, court filings, memoranda, notes and
other writings whatsoever prepared by the other Company or its
representatives based on the Confidential Information (except, in
the case of pleadings and court filings, to the extent reasonably
required for proper record keeping purposes) shall be destroyed,
and such destruction shall be certified in writing to the
requesting Company by an authorized officer supervising such
destruction.
7. If any provision hereof or the application of any such
provision to any person or circumstance is held invalid, illegal
or unenforceable for any reason whatsoever, the remaining
provisions and the application of such provision to other persons
or circumstances shall not be affected thereby. To the fullest
extent possible the court finding such provision invalid, illegal
or unenforceable shall modify and construe the provisions as to
render it valid and enforceable as against all persons or
entities and to give the maximum possible protection to each of
the Companies and their Representatives within the bounds of
validity, legality and enforceability.
8. The provisions hereof shall continue in effect
throughout the term of the Shareholder Agreement.
SUPPLEMENT TO SHAREHOLDER AGREEMENT
-----------------------------------
July 25, 1995
In conjunction with the execution of the Shareholder Agreement by and among
Interstate Bakeries Corporation (`IBC''), Ralston Purina Company and VCS
Holding Company of even date herewith (the `Shareholder Agreement''), subject
to the restriction in the following paragraphs, it is agreed by the parties
hereto that officers, directors and employees of Ralston who are or would be
deemed to be Affiliates of Ralston under the Shareholder Agreement will be
allowed to acquire IBC Securities during the term of the Shareholder Agreement
without Ralston violating Sections 2.1(a) or 2.1(b) of the Shareholder
Agreement.
The preceding paragraph is subject to the restriction that under no
circumstances during the term of the Shareholder Agreement shall IBC Securities
acquired in reliance hereof by such officers, directors or employees who are or
would be deemed to be Affiliates result in such individuals owning in the
aggregate, at any time during the term of the Shareholder Agreement, more than
2% of the total outstanding shares of the IBC Securities. In addition, any
acquisitions of IBC Securities by such officers, directors and employees in
reliance hereof shall not be made at the discretion of or in concert with
Ralston.
Ralston shall be under no obligation to attempt to prevent such individuals
from independently acquiring IBC Securities unless Ralston becomes aware by any
means, including notification by IBC, that a proposed purchase would result in
the 2% threshold being exceeded. In the event that Ralston becomes aware or is
notified by IBC that the 2% threshold has been exceeded at any time during the
term of the Shareholder Agreement, then Ralston will use its reasonable best
efforts to cause the individual or individuals who last purchased IBC Securities
which resulted in the 2% threshold being exceeded to divest a sufficient number
of shares of IBC Securities so as to decrease the aggregate ownership of all of
Supplement to Shareholder Agreement
Page 2
such officers, directors and employees below the 2% threshold. Ralston shall
further request such officers, directors and employees to refrain from
purchasing such IBC Securities until such time that IBC has notified Ralston
that the risk of exceeding the 2% threshold has sufficiently diminished.
If the Chief Executive Officer of IBC notifies RPC that the number of
shares of IBC Securities owned by such officers, directors and employees who are
or would be deemed to be Affiliates of Ralston continues to exceed the 2%
threshold, whether on a continuous or recurrent basis, then Ralston shall
immediately take such action necessary (including the delivery of one of its
Demand Notices) to divest at least that number of shares of IBC Securities equal
to the greatest number of shares owned by such officers, directors and employees
who would be deemed to be Affiliates in excess of the 2% threshold in the prior
60 days.
Nothing herein shall be deemed a modification or amendment of any of the
definitions of the Shareholder Agreement. Except for the consent of IBC to the
purchase of IBC Securities by Persons who are or would be deemed to be
Affiliates of Ralston, none of the other terms or provisions of the Shareholder
Agreement are amended or modified hereby. Nothing herein shall be deemed to be
a pre-approval by IBC or its Board of Directors of any purchases of IBC
Securities by such officers, directors or employees for purposes of Section 203
of the Delaware General Corporation Law or Article NINTH of the Certificate of
Incorporation of IBC, as amended.
INTERSTATE BAKERIES CORPORATION
Supplement to Shareholder Agreement
Page 2
By: P. E. Yarick
------------------------------------------------
Its Vice President
RALSTON PURINA COMPANY
By: J. M. Neville
--------------------------------------------------
Its General Counsel, Vice President
and Secretary
VCS HOLDING COMPANY
By: T. L. Grosch
--------------------------------------------------
Its Secretary
Supplement to Shareholder Agreement
Page 2
