AMENDMENT #2 TO THE SHAREHOLDER AGREEMENT AND AMENDMENT TO THE SUPPLEMENT TO
SHAREHOLDER AGREEMENT
This Amendment #2 to the Shareholder Agreement and Amendment to the Supplement
to Shareholder Agreement, dated as of July 24, 2000, ("July 2000 Amendment"),
is made by and among Interstate Bakeries Corporation, a Delaware corporation
("IBC"), Ralston Purina Company, a Missouri corporation ("Ralston"), and Tower
Holding Company, Inc., a Delaware corporation ("Tower Holding"), a wholly owned
subsidiary of Ralston and the transferee of all shares of IBC common stock
formerly held by VCS Holding Company ("VCS").
This July 2000 Amendment amends and supplements the Shareholder Agreement by and
among IBC, Ralston and VCS, dated July 22, 1995 (the "Shareholder Agreement"),
as supplemented and amended by the Supplement to Shareholder Agreement by and
among IBC, Ralston and VCS, dated July 25, 1995 (the "Supplemental Agreement"),
which Supplemental Agreement is itself amended by this July 2000 Amendment; and
as further supplemented and amended by a Letter Agreement by and among IBC and
Ralston, dated July 3, 1997 (the "Letter Agreement"), and as further
supplemented and amended by the Amendment to Shareholder Agreement by and among
IBC, Ralston and Tower Holding, dated March 30, 2000 (the "March 2000
Amendment").
Defined terms used herein without definition shall have the meanings ascribed to
them in the Shareholder Agreement or the March 2000 Amendment.
WITNESSETH
WHEREAS, IBC, Ralston and VCS entered into the Shareholder Agreement to provide
certain rights and restrictions with respect to the IBC Equity owned by Ralston;
and
WHEREAS, the parties have agreed to enter this July 2000 Amendment to make
certain amendments to the Shareholder Agreement, the Supplemental Agreement and
the March 2000 Amendment; and
WHEREAS, the parties agree that by entering this July 2000 Amendment, they
acknowledge and confirm that they will continue to be bound by the terms of the
Shareholder Agreement, as previously supplemented and amended by the
Supplemental Agreement, the Letter Agreement and the March 2000 Amendment, all
as amended by this July 2000 Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and obligations set
forth herein, the parties agree as follows:
1. Section 4.1(a) of the Shareholder Agreement, as amended by Section 9 of
the March 2000 Amendment, is hereby deleted in its entirety and replaced with
the following:
"(a) Except for Transfers permitted by Section 3.2(a) and (b) and Section
10.6(a), and Transfers to a Person making a tender offer for outstanding IBC
Equity which is recommended to shareholders of IBC by the board of directors of
IBC, during the term of this Agreement, Ralston and its Affiliates 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); provided, however, that
if Ralston or any of its Affiliates propose to sell a specified number of shares
of IBC Equity pursuant to a Transfer permitted by Section 3.2(f) and the First
Offer shall have been rejected by IBC, the proposed Transfer by Ralston or its
Affiliates may proceed at any time thereafter under Rule 144 without regard to
the 20 day period referenced in Section 4.1(d)."
2. Section 10.6 of the Shareholder Agreement, as amended by Section 15 of
the March 2000 Amendment, is hereby deleted in its entirety and replaced with
the following:
"Section 10.6 - Maximum Allowed Ownership of IBC Securities.
"(a) Ralston and Tower Holding agree to sell, and IBC agrees to purchase,
15,498,000 shares of IBC Stock on such date or dates, and in accordance with
such terms and conditions, as are set forth in a Share Purchase Agreement
entered into by Ralston, Tower Holding and IBC contemporaneously with the
execution of this July 2000 Amendment.
"(b) Ralston covenants and agrees that by August 1, 2004, the ownership of IBC
Securities by Ralston and its Affiliates shall be not more than 15% of the then
total outstanding IBC Securities.
"(c) Ralston covenants and agrees that by August 1, 2005, the ownership of IBC
Securities by Ralston and its Affiliates shall be not more than 10% of the then
total outstanding IBC Securities.
"(d) In the event that Ralston and its Affiliates do not attain the levels of
ownership of IBC Equity provided for in paragraphs (b) and (c) above by the
prescribed dates, IBC shall thereafter be entitled to purchase at one time or
from time to time, all or any portion of the IBC Equity then owned by Ralston
and its Affiliates which would have otherwise been required to have been sold,
at a purchase price equal to the IBC Market Price of the IBC Equity."
3. Paragraph 4 of the Supplemental Agreement is deleted in its entirety and
a new Paragraph 4 inserted as follows:
"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 exceeds the greater of the 2% threshold or
the aggregate number of shares (adjusted for any stock split, reverse stock
split, stock dividend or any similar event) owned by such officers, directors
and employees as of August 1, 2000 (collectively, the "Permitted Affiliate
Holdings"), 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 number of shares owned by such officers,
directors and employees in excess of the Permitted Affiliate Holdings; provided,
that neither (a) options to purchase IBC Securities held by James R. Elsesser as
of August 1, 2000 or granted to him on any succeeding date by IBC, nor (b) James
R. Elsesser's beneficial ownership of IBC Securities acquired upon the exercise
of such IBC stock options shall be included for purposes of calculating the
Permitted Affiliate Holdings, but shares issued by IBC in connection with the
exercise of any such options shall be included in any calculation of outstanding
shares of the IBC Securities."
4. In all respects, the parties hereby agree that the Shareholder Agreement,
the Supplemental Agreement, the Letter Agreement and the March 2000 Amendment,
as amended by this July 2000 Amendment, remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment #2 to the
Shareholder Agreement and Amendment to the Supplement to Shareholder Agreement
as of the 24th day of July, 2000.
INTERSTATE BAKERIES CORPORATION
By: /s/ Ray Sandy Sutton
-----------------------------
Ray Sandy Sutton
Vice President & General Counsel
RALSTON PURINA COMPANY TOWER HOLDING COMPANY, INC.
By: /s/ James M. Neville By: /s/ Nancy E. Hamilton
------------------------ ---------------------------
James M. Neville Nancy E. Hamilton
Vice President & Senior Vice President & Secretary
Counsel, Law
