EXHIBIT 10.2
FORM OF PURCHASE AGREEMENT
$__________ AGGREGATE PRINCIPAL AMOUNT
INTERSTATE BAKERIES CORPORATION
6% SENIOR SUBORDINATED CONVERTIBLE NOTES DUE 2014
PURCHASE AGREEMENT
August 11, 2004
[NAME]
[ADDRESS]
[CITY, STATE ZIP]
Ladies and Gentlemen:
Interstate Bakeries Corporation, a Delaware corporation (the
"COMPANY"), has authorized the issuance and sale of up to $120,000,000 principal
amount of its 6% Senior Subordinated Convertible Notes due 2014 (the "NOTES").
The Company proposes, subject to the terms and conditions stated herein, to
issue and sell on the Closing Date (as defined in Section 1 below) $__________
principal amount of the Notes (the "FIRM SECURITIES") to ________ (the
"PURCHASER"). The Company also proposes to issue and sell to the Purchaser up to
an additional $__________ principal amount of the Notes (the "ADDITIONAL
SECURITIES" and, together with the Firm Securities, the "SECURITIES") if and to
the extent that the Purchaser shall have determined to exercise the right to
purchase such Additional Securities granted to the Purchaser in Section 1
hereof. The Notes will be issued pursuant to an indenture (the "INDENTURE")
dated as of the Closing Date (as defined below) among the Company, the Guarantor
parties thereto and U.S. Bank National Association, as Trustee (the "TRUSTEE").
The Notes will be convertible into shares (the "UNDERLYING SECURITIES") of
common stock of the Company, par value $.01 per share (the "COMMON STOCK") on
the terms, and subject to the conditions, set forth in the Indenture.
Concurrently with the issuance and sale of Securities contemplated by this
Agreement, the Company intends to issue and sell to certain other purchasers
(the "ADDITIONAL PURCHASERS"), on terms and conditions that are identical to
those applicable to the sale of the Firm Securities herein, an additional
$_______ aggregate principal amount of the Notes. In connection with such sales,
the Company will grant to each such Additional Purchaser the right to purchase,
on terms and conditions that are identical to those applicable to the sale of
the Additional Securities herein, up to an aggregate principal amount of Notes
equal to 20% of the aggregate principal amount of the Notes initially purchased
by such Additional Purchaser.
The Company's obligations under the Notes, other than its obligations
in respect of conversion of the Notes and the issuance of the Underlying
Securities thereupon, will be guaranteed (the "PAYMENT GUARANTEES") by each of
the Company's subsidiaries listed on Schedule I hereto and any future domestic
guarantors party to the Indenture (each, a "GUARANTOR" and, collectively, the
"GUARANTORS").
The Notes, the Payment Guarantees and the Underlying Securities will be
offered without being registered under the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the "SECURITIES
ACT"), in reliance on an exemption therefrom.
The Purchaser will be entitled to the benefits of a Registration Rights
Agreement covering the Underlying Securities dated as of the Closing Date among
the Company, the Purchaser and the Additional Purchasers (the "REGISTRATION
RIGHTS AGREEMENT").
This Agreement, the Indenture, the Notes, the Payment Guarantees and
the Registration Rights Agreement are referred to herein collectively as the
"TRANSACTION DOCUMENTS".
The Company hereby agrees with the Purchaser as follows:
1. Agreements to Sell and Purchase. The Company agrees to issue
and sell the Firm Securities to the Purchaser as hereinafter provided, and the
Purchaser, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to purchase
from the Company the Firm Securities at a purchase price of 100% of the
principal amount thereof (the "PURCHASE PRICE").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Purchaser the Additional Securities, and the Purchaser shall have the
right to purchase in whole, and not in part, the Additional Securities at the
Purchase Price plus accrued interest, if any, from the Closing Date to the date
of payment and delivery (the "OPTION"). If the Purchaser exercises the Option,
the Purchaser shall so notify the Company in writing (the "OPTION EXERCISE
NOTICE") not later than the end of the Exercise Period (as hereinafter defined),
which Option Exercise Notice shall specify the date on which the Additional
Securities are to be purchased. Such date may be the same as the Closing Date
but not earlier than the Closing Date nor later than five business days after
the date of such Option Exercise Notice. For purposes of this paragraph, the
"EXERCISE PERIOD" means the period beginning on the date hereof and ending on
October 10, 2004 (the "INITIAL EXPIRATION DATE"), as extended pursuant to the
next succeeding sentence. If (x) at the time that the Holder delivers the Option
Exercise Notice, if such Option Exercise Notice is delivered prior to October 5,
2004, (the "THRESHOLD DATE"), or (y) from and after the Threshold Date and prior
to the Initial Expiration
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Date, a pending corporate development occurs or exists with respect to the
Company that would cause the Company to deliver a Suspension Notice (as defined
in the Registration Rights Agreement) pursuant to the terms of the Registration
Rights Agreement if the Registration Statement (as defined in the Registration
Rights Agreement) were effective at such time, then the Company shall deliver to
the Purchaser (i) a written notice indicating that the Exercise Period is
suspended, that the Option Exercise Notice, if any, is void as if never
delivered by the Purchaser and that the Purchaser shall not be entitled to
exercise the Option until the Company has delivered the notice set forth in the
following clause (ii) and (ii) upon termination of such suspension, a written
notice indicating that the Exercise Period has been resumed and the new
termination date of the Exercise Period, which shall coincide with the number of
days the Exercise Period was suspended plus one business day.
The Company hereby agrees that, without the prior written consent of
the Holders of more than 50% of the aggregate principal amount of the Securities
at the time outstanding (the "MAJORITY HOLDERS"), it will not, (x) during the
period ending 90 days after the date of this Agreement, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, and (y) during the period ending on the later of 90 days after
the date of this Agreement and the date the registration statement required
under the Registration Rights Agreement is declared effective, file with the
Securities and Exchange Commission (the "COMMISSION") a registration statement
under the Securities Act relating to any additional shares of its Common Stock
or securities convertible into, or exchangeable for, any shares of its Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the sale of the
Securities under this Agreement or the issuance of the Underlying Securities,
(B) the grant by the Company of employee, director or consultant stock options,
(C) the grant or issuance by the Company of Common Stock options or warrants to
as full or partial payment of a customary advisory fee payable to a nationally
recognized financial institution in connection with a strategic transaction or
financing, (D) the grant of warrants exercisable solely for cash at a premium to
the then current market price of the Common Stock, which warrants are not a
principal component of an asset based financing with a national recognized
commercial banking institution making asset based loans in the ordinary course
of its business, (E) the issuance by the Company of any shares of Common Stock
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof (provided that the terms of such options or
warrants are not amended or modified in any manner after the date hereof) or an
option or warrant issued or granted in compliance with this paragraph, and (F)
the
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filing of any registration statement in respect of the Underlying Securities
(the "EXCLUSIONS").
In addition, the Company agrees to use its best efforts to prevent its
executive officers and directors, in the aggregate, from taking any of the
actions set forth in clauses (i) and (ii) in the immediately preceding paragraph
with respect to in excess of 250,000 shares of Common Stock without the prior
written consent of the Majority Holders.
2. Closing. Payment for the Firm Securities shall be made by the
Purchaser to the Company to an account specified in writing by the Company to
the Purchaser in Federal or other funds immediately available in New York City
against delivery to the Purchaser of such Firm Securities in the form specified
by the Purchaser at 10:00 a.m., New York City time, on August 12, 2004, or at
such other time on the same or such other date, as shall be mutually agreed upon
by the Company and the Purchaser. The time and date of such payment and delivery
are hereinafter referred to as the "CLOSING DATE."
Payments for the Additional Securities purchased pursuant to the option
granted to the Purchaser in Section 1 above shall be made by the Purchaser to
the Company to an account specified in writing by the Company to the Purchaser
in Federal or other funds immediately available in New York City against
delivery of such Additional Securities in the form specified by the Purchaser to
the Purchaser at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 1 or at such other time on the same or on such other
date, in any event not later than October 12, 2004, as shall be mutually agreed
upon by the Company and the Purchaser. The time and date of each such payment
and delivery are hereinafter referred to as an "OPTION CLOSING DATE."
3. Representations and Warranties. The Company and each
Guarantor, jointly and severally, represents and warrants to the Purchaser that:
(a) the documents filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder
(collectively, the "EXCHANGE ACT") since May 31, 2003, when such
documents (as amended or supplemented from time to time prior to the
date hereof, including the exhibits thereto, the "EXCHANGE ACT
DOCUMENTS") were filed with the Commission, (i) conformed in all
material respects to the requirements of the Exchange Act and (ii) did
not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; except,
in each case, for the effect, if any, of the matters discussed or
referenced in the Company's Current Reports on Form 8-K filed with the
Commission on June 3, 2004, July 9, 2004, July 29, 2004, August 10,
2004 and the 8-K related solely to the press
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release issued by the Company at 7:30 a.m. on August 11, 2004 (the
"LATEST 8-KS");
(b) (i) the financial statements included in the Exchange
Act Documents present fairly, in all material respects, the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates indicated and the results of their
operations and the changes in their consolidated cash flows for the
periods specified, (ii) said financial statements have been prepared in
conformity with generally accepted accounting principles and practices
("GAAP") applied on a consistent basis; (iii) the supporting schedules,
if any, in the Exchange Act Documents present fairly the information
required to be stated therein, (iv) the other financial and statistical
information and any other financial data set forth in the Exchange Act
Documents present fairly, in all material respects, the information
purported to be shown thereby at the respective dates or for the
respective periods to which they apply and (v) to the extent that such
information is set forth in or has been derived from the financial
statements and accounting books and records of the Company, have been
prepared on a basis consistent with such financial statements and the
books and records of the Company; except, in each case, for the effect,
if any, of the matters discussed or referenced in the Latest 8-Ks;
(c) since the Company's Quarterly Report on Form 10-Q
filed with the Commission on April 19, 2004 (the "LATEST 10-Q"), there
has not been any Material Adverse Change affecting the Company or the
Significant Subsidiaries which has not been publicly disclosed by the
Company;
(i) as used in this agreement, "MATERIAL ADVERSE
CHANGE" or "MATERIAL ADVERSE EFFECT" means any change or effect that
would be materially adverse to the business, properties, financial
condition or results of operations of the Company and its subsidiaries
which are "significant subsidiaries" within the meaning of Regulation
S-X promulgated under the Securities Act (each, a "SIGNIFICANT
SUBSIDIARY" and collectively, the "SIGNIFICANT SUBSIDIARIES"), taken as
a whole, or to the ability of the Company or any Guarantor to
consummate the transactions contemplated hereby and by the other
Transaction Documents; provided, that none of the following shall be
deemed to constitute, and none of the following shall be taken into
account in determining whether there has been, a Material Adverse
Effect or Material Adverse Change: any adverse change, event,
development, or effect arising from or relating directly or indirectly
to (1) any of the matters discussed or referenced in the Latest 8-Ks,
(2) the second, third and fourth and fifth amendments (collectively,
the "BANK AMENDMENTS") of the Company's Amended and Restated Credit
Agreement, dated as of April 25, 2002 (as amended, supplemented or
otherwise modified from time to
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time, the "CREDIT AGREEMENT"), true, correct and complete copies of
which will be provided to the Purchaser, or (3) any downgrade in the
Company's general credit rating or the rating of any indebtedness of
the Company or any change in outlook in respect of any such
indebtedness by either Standard & Poor's Rating Services or ▇▇▇▇▇'▇
Investors Service, or by any other national or regional rating agency
(the matters set forth in (2) and (3) above, collectively, the
"CREDIT-RELATED EVENTS").
(d) since the Latest 10-Q, there has not been any (i)
change in the capital stock or long-term debt of the Company or any
Guarantor, (ii) issuance of any options, warrants, convertible
securities or rights to purchase capital stock of the Company or any
Guarantor, except for changes occurring in the ordinary course of
business, changes in outstanding Common Stock resulting from
transactions relating to employee benefit plans or dividend
reinvestment, stock option, stock award and stock purchase plans and
for any other changes any of the foregoing of which do not,
individually or in the aggregate, constitute a Material Adverse Change;
(e) since the Latest 10-Q, neither the Company nor any
Guarantor has entered into any transaction or agreement that has or
would be reasonably likely to have a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole;
(f) since the Latest 10-Q, the Company has not declared
or paid any dividends or made any distribution of any kind with respect
to its capital stock;
(g) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to
own or lease its properties and conduct its business as described in
the Exchange Act Documents, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts its business in a manner or to an extent that
would require such qualification, other than such failures to be so
qualified or in good standing as, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect;
(h) each of the Guarantors has been duly incorporated or
formed and is validly existing as a corporation or limited liability
company under the laws of its jurisdiction of incorporation or
formation, with corporate or limited liability company power and
authority to own or lease its properties and conduct its business as
described in the Exchange Act Documents, and has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each
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jurisdiction in which it owns or leases properties or conducts its
business in a manner or to an extent that would require such
qualification, other than such failures to be so qualified or in good
standing as, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect; and all the outstanding
shares of capital stock or limited liability company interests of each
Guarantor have been duly authorized and validly issued, are fully-paid
and non-assessable, and, except as set forth in the Exchange Act
Documents, are owned by the Company, directly or indirectly, free and
clear of all claims, liens, encumbrances, security interests,
restrictions upon voting or transfer and adverse interests and no
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of, or ownership
interests in, any such Guarantor are outstanding;
(i) the Company and each Guarantor has full corporate or
limited liability company power and authority to enter into the
Transaction Documents to which it is a party and to perform and
discharge its obligations thereunder; each Transaction Document to
which it is a party has been duly authorized, executed and delivered by
the Company and each Guarantor and constitutes the legal, valid and
binding obligations of the Company and each Guarantor, enforceable
against each of them in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity);
(j) immediately prior to the transactions contemplated
hereby, the authorized, issued and outstanding capital stock of the
Company is as set forth in the Latest 10-Q except for changes occurring
in the ordinary course of business, changes in outstanding Common Stock
resulting from transactions relating to employee benefit plans or
dividend reinvestment, stock option, stock award and stock purchase
plans and for any other changes any of the foregoing of which do not,
individually or in the aggregate, constitute a Material Adverse Change;
except for this Agreement and the Registration Rights Agreement or
stock purchase plans, there are no contracts, commitments, agreements,
arrangements, understandings or undertakings of any kind to which the
Company is a party, or by which it is bound, granting to any person the
right to require the Company to file a registration statement under the
Securities Act with respect to the Common Stock or requiring the
Company to include any Common Stock with the Underlying Securities
registered pursuant to any registration statement;
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(k) the shares of Common Stock outstanding on the date
hereof have been duly authorized and are validly issued, fully paid and
non-assessable;
(l) the Securities have been duly authorized by the
Company, and when duly executed, authenticated, issued and delivered as
provided in the Indenture (assuming due authentication of the
Securities by the Trustee) and paid for as provided herein will
constitute the legal, valid and binding obligations of the Company,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity);
(m) the Indenture has been duly authorized by the Company
and each Guarantor, and when executed and delivered by the Company and
each Guarantor (assuming the authorization, execution and delivery by
the Trustee) will be a legal, valid and binding instrument of the
Company and each Guarantor, enforceable against each of them in
accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at
law or in equity);
(n) upon issuance and delivery of the Securities in
accordance with the Agreement and the Indenture, the Securities will be
convertible at the option of the holder thereof into shares of the
Underlying Securities in accordance the terms of the Indenture; the
Underlying Securities reserved for issuance upon conversion of the
Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the
Indenture, will be validly issued, fully paid and non-assessable, and
the issuance of the Underlying Securities will not be subject to any
preemptive or similar rights;
(o) the Registration Rights Agreement has been duly
authorized by the Company and when executed and delivered by the
Company (assuming the due authorization, execution and delivery thereof
by the Purchaser and the Additional Purchasers) shall constitute the
legal, valid and binding obligation of the Company, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and
subject, as to
8
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity)
and except that rights to indemnification and contribution thereunder
may be limited by federal or state securities laws or public policy
relating thereto;
(p) the Guarantors constitute all of the Subsidiaries of
the Company that are guarantors under the Credit Agreement; and the
Guarantees of each of the Guarantors have been duly authorized by all
necessary corporate or limited liability company action, as applicable,
of each of the Guarantors and, when executed and delivered in
accordance with the terms of the Indenture (assuming the due execution,
issuance and authentication of the Securities in accordance with the
terms of the Indenture and delivery and payment therefor by the
Purchaser in accordance with the terms of this Agreement), the Payment
Guarantees will be the legally valid and binding obligations of each of
the foregoing Guarantors, enforceable against each of them in
accordance with their terms;
(q) upon consummation of the transactions contemplated by
this Agreement and the Bank Amendments, neither the Company nor any
Guarantor is, or with the giving of notice or lapse of time or both
will be, in violation of or in default under (i) its Certificate of
Incorporation, Bylaws or other organizational documents, (ii) under any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any Guarantor is a party or by
which it or any of them or any of their respective properties is bound,
or (iii) any statute, law, rule, regulation, ordinance, judgment, order
or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company, its subsidiaries or any of their respective
properties or assets, as applicable, except, with respect to clauses
(ii) and (iii), for violations and defaults which, individually or in
the aggregate, have not or would not reasonably be expected to result
in a Material Adverse Effect.
(r) the issue and sale of the Securities and the issuance
by the Company of the Underlying Securities upon conversion of the
Securities, the Guaranty of the Securities by the Guarantors in
accordance with the terms of the Indenture, the performance by the
Company and the Guarantors of all their respective obligations under
the Transaction Documents to which they are party, and the consummation
of the transactions herein and therein contemplated, will not (i)
conflict with or result in a breach of any of the terms or provisions
of, constitute a default (with or without the giving of notice or the
passage of time or otherwise) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any
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Guarantor under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any Guarantor
is a party or by which the Company or any Guarantor is bound or to
which any of the property or assets of the Company or any Guarantor is
subject, except, in each case, for such conflicts, breaches, defaults,
liens, charges or encumbrances which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect,
(ii) result in any violation of the provisions of the Certificate of
Incorporation or the Bylaws of the Company or any Guarantor that is a
corporation or the certificate of formation or limited liability
agreement of any Guarantor that is a limited liability company, (iii)
result in any violation of any applicable law or statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company, the Guarantors or any of their
respective properties, except for violations which would not,
individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect; and no consent, approval,
authorization, order, license, registration or qualification of or with
any such court or governmental agency or body is required for the issue
and sale of the Securities or the consummation by the Company and the
Guarantors of the transactions contemplated by any of the Transaction
Documents, except such consents, approvals, authorizations, orders,
licenses, registrations or qualifications (A) as may be required under
state securities or Blue Sky Laws in connection with the purchase of
and any distribution of the Securities, Payment Guarantees or
Underlying Securities by the Purchaser or under the Securities Act with
respect to the registration of the Securities, Payment Guarantees and
the Underlying Securities pursuant to the terms of the Registration
Rights Agreement and (B) the absence of or failure by the Company or
any Subsidiary to receive would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect;
(s) except as set forth in the Legal Proceedings section
of the Company's Annual Report on Form 10-K for the year ended May 31,
2003 and the Company's Quarterly Report on Form 10-Q for the quarter
ended March 6, 2004, and the Company's Current Report on Form 8-K filed
with the Commission on July 29, 2004, there are no legal or
governmental investigations, actions, suits or proceedings pending or,
to the knowledge of the Company, threatened against or affecting the
Company or any Guarantor or any of their respective properties or to
which the Company or any Guarantor is or may be a party or to which any
property of the Company or any Guarantor is or may be the subject
which, if determined adversely to the Company or any such Guarantor,
would, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect;
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(t) neither the Company, nor any affiliate (as defined in
Rule 501(b) of Regulation D) of the Company or any person acting on its
or their behalf, has directly, or through any agent, sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) which is or will be
integrated with the sale of the Securities in a manner that would
require (i) the registration under the Securities Act of the issuance
of any of the Securities contemplated hereby or (ii) the approval of
the stockholders of the Company in accordance with the rules and
regulations of the New York Stock Exchange, Inc. (the "NYSE");
(u) none of the Company, any affiliate of the Company or
any person acting on its or their behalf has offered or sold any of the
Securities by means of any general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act;
(v) assuming the accuracy of the representations of the
Purchaser contained in Section 4 hereof and the Purchaser's compliance
with the agreements set forth therein, it is not necessary in
connection with the offer, sale and delivery of the Securities in the
manner contemplated by this Agreement and the other Transaction
Documents to register any of the Securities, Payment Guarantees or
Underlying Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended;
(w) neither the Company, nor any of its subsidiaries nor
any of their officers or directors or any of their affiliates has taken
or will take, directly or indirectly, any action designed or intended
to stabilize or manipulate the price of any security of the Company, or
which caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the
price of any security of the Company;
(x) the Common Stock is registered pursuant to Section
12(b) of the Exchange Act and is listed on the NYSE, and the Company
has not taken any action designed to or reasonably likely to result in
the termination of the registration of the Common Stock under the
Exchange Act or delisting of the Common Stock from the NYSE; except for
any actions directly or indirectly relating to matters discussed in the
Latest 8-Ks;
(y) the Notes satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act;
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(z) Deloitte & Touche LLP, who have certified the
consolidated financial statements of the Company as of May 31, 2003,
are independent public accountants within the meaning of the Securities
Act;
(aa) other than as disclosed in, and during the period
covered by, the Exchange Act Documents, the Company and the Guarantors
have filed all federal, state, local and foreign tax returns which, to
the Company's knowledge, the Company and the Guarantors have been
required to file and have paid all taxes shown on the returns filed by
them and all assessments received by them or any of them to the extent
that such taxes have become due and are not being contested in good
faith and for which adequate reserves have been provided, except where
the failure to do so would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and except
for potential excise taxes in connection with multi-employer pension
plans, there is no tax deficiency which has been or, to the Company's
knowledge, might reasonably be expected to be asserted or threatened
against the Company or any Guarantor that would reasonably be expected
to have a Material Adverse Effect;
(bb) no labor disputes exist with employees of the Company
or of the Guarantors except for such disputes as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect;
(cc) except as set forth in the Legal Proceedings section
of the Company's Annual Report on Form 10-K for the year ended May 31,
2003 and the Company's Quarterly Report on Form 10-Q for the quarter
ended March 6, 2004, and the Company's Current Report on Form 8-K filed
with the Commission on July 29, 2004, there are no legal or
governmental proceedings pending or, to the Company's knowledge,
threatened to which the Company or any of the Guarantors is subject
other than proceedings which, individually or in the aggregate, would
be reasonably likely to have a Material Adverse Effect;
(dd) except as set forth in the Governmental Regulation;
Environmental Matters section of the Company's Annual Report on Form
10-K for the year ended May 31, 2003 and the Company's Quarterly Report
on Form 10-Q for the quarter ended March 6, 2004, to the Company's
knowledge, each of the Company and the Guarantors is in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health or the
environment or imposing liability or standards of conduct concerning
any Hazardous Material (collectively, "ENVIRONMENTAL LAWS"), except
where such non-compliance with Environmental Laws would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The term "HAZARDOUS MATERIAL" means (1) any
"HAZARDOUS
12
SUBSTANCE" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (2) any "HAZARDOUS
WASTE" as defined by the Resource Conservation and Recovery Act, as
amended, (3) any petroleum or petroleum product, (4) any
polychlorinated biphenyl, and (5) any pollutant or contaminant or
hazardous, dangerous, or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law;
(ee) (i) the Company or its Subsidiaries own or possess
the right to use the patents, patent licenses, trademarks, service
marks, trade names, copyrights and know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) (collectively, the "INTELLECTUAL
PROPERTY") reasonably necessary to carry on the business conducted by
the Company and the Guarantors, taken as a whole, as conducted on the
date hereof, except to the extent that the failure to own or possess
the right to use such Intellectual Property would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect, (ii) all of such patents, registered trademarks and registered
copyrights owned by the Company or its subsidiaries have been duly
registered in, filed in or issued by the United States Patent and
Trademark Office, the United States Registrar of Copyrights or the
corresponding offices of other jurisdictions, except where the failure
to do so would not reasonably be expected to have a Material Adverse
Effect, (iii) all material licenses or other material agreements under
which (1) the Company or any of its subsidiaries is granted rights in
Intellectual Property, other than Intellectual Property generally
available on commercial terms from other sources, and (2) the Company
or any of its subsidiaries has granted rights to others in Intellectual
Property owned or licensed by the Company, are in full force and effect
and, to the knowledge of the Company, there is no material default by
the Company or its subsidiaries or the other parties thereto, except
for such failures to be in full force and effect and such defaults as
would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect (iv) neither the Company nor any
Guarantor has received any notice of infringement of or conflict with
asserted rights of others with respect to any Intellectual Property,
except for notices the content of which if accurate would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect and (v) the Company and its subsidiaries do not
have and, to the knowledge of the Company, none of its and their
employees have any agreements or arrangements with any persons other
than the Company or its subsidiaries related to confidential
information or trade secrets of such persons other than such agreements
that would not restrict the Company and its subsidiaries from
conducting their business as currently conducted to an extent that
would reasonably be expected to result in a Material Adverse Effect;
13
(ff) the Company and its Subsidiaries, taken together,
have such licenses, franchises, permits, authorizations, approvals and
orders of and from governmental and regulatory officials and bodies as
are, to the Company's knowledge, reasonably necessary to own or lease
and operate the properties and conduct the business of the Company and
the Guarantors, taken as a whole, on the date hereof;
(gg) (i) the Company and the Guarantors have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such
as do not interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries or would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect; and (ii) any real property and buildings held under lease by
the Company and the Guarantors are held by them under valid, subsisting
and enforceable leases with such exceptions as do not interfere with
the use made and proposed to be made of such property and buildings by
the Company and the Guarantors or as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;
and each of the Company and its subsidiaries owns or leases all such
properties as are necessary to its business or operations as now
conducted;
(hh) (i) the Company is in compliance with all presently
applicable provisions of the Employee Retirement Income Security Act of
1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"), except where the failure to be in
such compliance would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect; (ii) no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension
plan" (as defined in ERISA) for which the Company is required to
provide notice under Section 4043 of ERISA and would have any
liability, except where such liability would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect; (iii) except for matters that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect,
(a) with respect to any "pension plan" (other than a "multiemployer
plan" (as defined in ERISA)), the Company has not incurred and does not
expect to incur liability under Title IV of ERISA with respect to
14
termination of, or withdrawal from, such "pension plan," or under
Section 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder
("Code"), and (b) with respect to any "pension plan" that is a
"multiemployer plan," the Company has not received notice that the
Company has incurred liability under Title IV of ERISA with respect to
termination of, or withdrawal from, such "pension plan," or under
Section 412 or 4971 of the Code; (iv) except where the failure to be in
such compliance would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, each "pension plan"
(other than a "multiemployer plan") for which the Company and each of
the Guarantors would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which would reasonably be expected cause the loss of
such qualification; and (v) except where the failure to be in such
compliance would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, no non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
Code) or "accumulated funding deficiency" (as defined in section 302 of
ERISA) has occurred with respect to any "pension plan" (other than a
"multiemployer plan") for which the Company and each of the Guarantors
would have any liability;
(ii) (i) the Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management's general
or specific authorization; (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability
for assets; (C) access to assets is permitted only in accordance with
management's general or specific authorization; and (D) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences, and (ii) the Company maintains a system of "disclosure
controls and procedures" (as such term is defined in Rule 13a-14(c)
under the Exchange Act), except, in each case, for any failures of or
weaknesses in the Company's systems of internal accounting controls or
"disclosure controls and procedures" that, directly or indirectly,
arise from, are related to or are implied by (A) any of the matters
discussed or referenced in the Latest 8-Ks or (B) any Credit-Related
Event;
(jj) the Company is in substantial compliance with the
applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 that are
effective;
(kk) immediately after the consummation of the
transactions contemplated by this Agreement, the fair value and present
fair saleable value of the assets of the Company will exceed the sum of
its stated liabilities and identified contingent liabilities; the
Company is not, nor will the Company be, after giving effect to the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, (a) left with
unreasonably small capital with which to carry on its business as it is
proposed to be conducted, (b) unable to pay
15
its debts (contingent or otherwise) as they mature or (c) otherwise
insolvent;
(ll) neither the Company nor any of its affiliates nor any
person acting on its or their behalf has offered or sold the Securities
by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D, including (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or
radio, or (ii) any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising in the United
States;
(mm) except for its engagement letter with ▇.▇. ▇▇▇▇▇▇
Securities Inc. dated July 16, 2004, neither the Company nor its
Subsidiaries is a party to any contract, agreement or understanding
with any person that would give rise to a valid claim against the
Company or the Purchaser for a brokerage commission, finder's fee or
like payment in connection with the offering and sale of the
Securities;
(nn) other than as disclosed in the Exchange Act
Documents, to the Company's knowledge, each of the Company and the
Guarantors is in compliance with any and all applicable Occupational
Safety and Health Administration standards and requirements (the "OSHA
LAWS"), except where such non-compliance with OSHA Laws would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect;
(oo) the Company has not granted or agreed to grant to any
Person any rights (including "piggy-back" registration rights) to have
any securities of the Company registered with the Commission or any
other governmental authority that have not been satisfied other than
this Agreement, the Registration Rights Agreement or stock purchase
plans; and
(pp) the Company is not and, after giving effect to the
offering and sale of the Notes and the application of the proceeds
thereof, will not be required to register as an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended.
The Purchaser acknowledges and agrees that the Company has not made and
does not make any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set
forth in this Section 3.
4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company that:
16
(a) the Purchaser is knowledgeable, sophisticated and
experienced in business and financial matters and qualifies as an
"accredited investor" as defined in Rule 501(a) of Regulation D;
(b) the Purchaser has been afforded access to information
about the Company and the Guarantors and the financial condition,
results of operations, business, property, management and prospects of
the Company and the Guarantors sufficient to enable it to evaluate its
investment in the Securities; the Purchaser and its advisors, if any,
have been afforded the opportunity to ask questions of the Company and
the Guarantors; the Purchaser has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities;
(c) the Purchaser understands that its investment in the
Securities involves a high degree of risk. The Purchaser is able to
bear the economic risk of its investment in the Securities and is
presently able to afford the complete loss of such investment;
(d) the Purchaser is acquiring the Securities in the
ordinary course of business solely for its own account and not as a
nominee or agent for any other person and not with a view to any
distribution thereof that violates the Securities Act or the securities
laws of any State of the United States or any applicable jurisdiction;
provided, however, that by making the representations herein, the
Purchaser does not agree to hold any of the Securities for any minimum
or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act; the Purchaser does
not presently have any intention, or any agreement or understanding,
directly or indirectly, with any person, to distribute any of the
Securities;
(e) the Purchaser has been duly organized or formed and
is a validly existing organization in good standing under the laws of
its jurisdiction of organization, with power and authority to execute
and deliver this Agreement and the Registration Rights Agreement and
perform its obligations hereunder and thereunder; and this Agreement
and the Registration Rights Agreement and the transactions contemplated
hereby and thereby have been duly authorized by the Purchaser; assuming
due authorization, execution and delivery by the Company and, as to the
Registration Rights Agreement, the Additional Purchasers, each of this
Agreement and the Registration Rights Agreement constitutes a legally
valid and binding agreement of the Purchaser, enforceable against the
Purchaser in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and
17
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at
law or in equity);
(f) the Purchaser is a resident of that jurisdiction
specified in its address for notices set forth below the signature of
the Purchaser where it appears on the signature page of this Agreement;
(g) the Purchaser is not acquiring the Securities with
assets of any "employee benefit plan" (within the meaning of Section
3(3) of ERISA) that is subject to Title I of ERISA or Section 4975 of
the Code;
(h) assuming the capitalization of the Company set forth
in its most recent Exchange Act Document, the Purchaser, together with
its "affiliates" (as defined in Rule 13d-3 promulgated under the
Securities Act), is the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act) of not more than 4.9% of the
outstanding shares of Common Stock immediately after the purchase of
the Securities hereunder;
(i) the Purchaser is not a registered broker-dealer under
Section 15 of the Exchange Act; and
(j) the Purchaser has independently evaluated the merits
of its decision to purchase the Securities pursuant to the Transaction
Documents, and the Purchaser confirms that it has not relied on the
advice of any Additional Purchaser's business and/or legal counsel in
making such decision.
The Company acknowledges and agrees that the Purchaser has made or
makes any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set
forth in this Section 4.
5. Covenants of the Company. The Company covenants and agrees
with the Purchaser as follows:
(a) to file a supplemental listing application and use
its best efforts to have the Underlying Securities approved for listing
by the NYSE in accordance with its rules and regulations;
(b) to qualify the Securities for offering and sale under
the applicable securities laws of such states as the Purchaser may
designate and will continue such qualifications in effect so long as
required for the resale of the Securities; provided that the Company
will not be required to
18
qualify as a foreign corporation or file a general consent to service
of process in any such state;
(c) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all fees, costs and expenses incident to the
performance of its obligations hereunder, including without limiting
the generality of the foregoing, all fees, costs and expenses (i)
incident to the preparation, issuance, execution, authentication and
delivery of the Securities, including any expenses of the Trustee, (ii)
payable to rating agencies in connection with the rating of the
Securities, (iii) incurred in connection with the qualification of the
Securities for sale under state securities laws, (iv) in connection
with the approval of the Underlying Securities for listing on the NYSE
and (v) in connection with the admission for trading of the Securities
in the Private Offerings, Resales and Trading through Automatic
Linkages ("PORTAL") system of the National Association of Securities
Dealers, Inc. ("NASD"). In addition to the foregoing (and without
duplication), the Company agrees to pay the Purchaser its actual
out-of-pocket expenses incurred in connection with the negotiation, due
diligence and documentation of the Transaction Documents and the
transactions contemplated thereby ("TRANSACTION EXPENSES"); provided,
that the maximum amount of Transaction Expenses that the Company shall
be obligated to pay to the Purchaser, together with all other
Transaction Expenses paid in the aggregate to the Additional
Purchasers, shall not exceed $150,000 in the aggregate (the
"TRANSACTION EXPENSE CAP"); provided, further, that if the aggregate
Transaction Expenses incurred by the Purchaser and the Additional
Purchasers exceeds the Transaction Expense Cap, the Company shall be
obligated to pay the Purchaser only a pro rata portion of the
Transaction Expense Cap, such pro rata portion to be based upon the
principal amount of the Securities purchased by the Purchaser relative
to the principal amount of all the Notes purchased by the Purchaser and
the Additional Purchasers in the aggregate. Except as expressly set
forth in this Section 5(c) and in Sections 8 and 11, the Company shall
have no obligation to pay any costs and expenses of the Purchaser
(except as set forth in the Registration Rights Agreement);
(d) for so long as the Securities remain outstanding and
are "restricted securities" within the meaning of Rule 144(a)(3) under
the Securities Act, the Company will, during any period in which it is
not subject to Section 13 or 15(d) under the Exchange Act, make
available to the Purchaser and any holder of Securities in connection
with any sale thereof and any prospective purchaser of Securities and
securities analysts, in each case upon request, the information
specified in, and meeting the requirements of, Rule 144A(d)(4) under
the Securities Act (or any successor thereto);
19
(e) the Company will not take any action prohibited by
Regulation M under the Exchange Act, in connection with the issuance of
the Securities contemplated hereby;
(f) none of the Company, any of its affiliates (as
defined in Rule 501(b) under the Securities Act) or any person acting
on behalf of the Company or such affiliate will solicit any offer to
buy or offer or sell the Securities by means of any form of general
solicitation or general advertising within the meaning of Regulation D,
including: (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar medium or
broadcast over television or radio; and (ii) any seminar or meeting
whose attendees have been invited by any general solicitation or
general advertising;
(g) none of the Company, any of its affiliates (as
defined in Rule 501(b) under the Securities Act) or any person acting
on behalf of the Company or such affiliate will sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) which will be integrated with the
sale of the Securities or the Underlying Securities in a manner which
would require the registration under the Securities Act of the
Securities or require stockholder approval under the rules and
regulations of the NYSE and the Company will take all action that is
appropriate or necessary to assure that its offerings of other
securities will not be integrated for purposes of the Securities Act or
the rules and regulations of the NYSE with the issuance of Securities
contemplated hereby;
(h) to use its best efforts to cause the Securities to be
accepted for clearance and settlement through the facilities of the
Depository Trust Company and eligible for trading on PORTAL;
(i) to reserve and keep available at all times, free of
pre-emptive rights, shares of Common Stock for the purpose of enabling
the Company to satisfy all obligations to issue the Underlying
Securities upon conversion of the Securities;
(j) the Company will use the proceeds from the sale of
the Securities for the amortization of its senior credit facilities
over the next four calendar quarters and for working capital purposes,
including the repayment of any outstanding indebtedness of the Company
or any of its Subsidiaries;
(k) the Company shall have made the following filings
(collectively, the "8-K FILINGS"): on or before 8:30 a.m., New York
City time, (i) on August 12, 2004, a Current Report on Form 8-K, in the
form
20
required by the Exchange Act, relating to the Bank Amendments and
attaching copies of the Bank Amendments; and (ii) on August 12, 2004, a
Current Report on Form 8-K, in the form required by the Exchange Act,
relating to the transactions contemplated by the Transaction Documents
(the "FINAL 8-K") and attaching the material Transaction Documents, or
forms thereof, as exhibits to such filing. The parties understand that
upon the filing of the Final 8-K, that certain Mutual Confidential
Disclosure Agreement between the parties shall terminate pursuant to
its terms;
(l) other than as set forth in the 8-K Filings, the
Company covenants and agrees that neither it nor any other person or
entity acting on its behalf has provided or will provide the Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto the
Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands
and confirms that the Purchaser shall be relying on the foregoing
representations in effecting transactions in securities of the Company;
and
(m) the Company agrees, (i) if the Company applies to
have the Common Stock traded on any other Trading Market, it will
include in such application the Underlying Securities, and will take
such other action as is necessary or desirable to cause the Underlying
Securities to be listed on such other Trading Market as promptly as
possible, and (ii) it will take all action reasonably necessary to
continue the listing and trading of its Common Stock on a Trading
Market and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of
the Trading Market.
6. Conditions to the Purchaser's Obligations. The obligation of
the Purchaser hereunder to purchase the Firm Securities on the Closing Date is
subject to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) the representations and warranties of the Company and
each contained herein are true and correct in all material respects on
and as of the Closing Date as if made on and as of the Closing Date
except for those representations and warranties already qualified by
materiality and the Company shall have complied in all material
respects with all agreements and all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date;
(b) the Purchaser shall have received on and as of the
Closing Date a certificate of an executive officer of the Company and
each of the Guarantors, with specific knowledge about the Company's
financial matters, satisfactory to the Purchaser, to the effect set
forth in Section 6(a)
21
and to the further effect that there has not occurred any Material
Adverse Change since the date of the Latest 10-Q;
(c) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special counsel for the Company
and the Guarantors, shall have furnished to the Purchaser their written
opinion, dated the Closing Date, in the form attached hereto as Exhibit
A;
(d) Purchaser shall have received on and as of the
Closing Date an opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President, General
Counsel and Corporate Secretary of the Company, in the form attached
hereto as Exhibit B;
(e) subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, there shall not have occurred
any downgrading, nor shall any public notice have been given of (i) any
intended downgrading or (ii) any review or possible change that does
not indicate an improvement in the rating accorded any securities of or
guaranteed by the Company by any "nationally recognized statistical
rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act;
(f) subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, any suspension or material
limitation of trading in the Common Stock on the NYSE;
(g) the Securities shall have been approved for trading
on PORTAL, subject only to notice of issuance at or prior to the time
of purchase;
(h) the Company shall have duly executed each of the
other Transaction Documents;
(i) the Company shall have entered into purchase
agreements, including this Agreement, obligating the Company to issue
on the Closing Date to the Purchaser and the Additional Purchasers, in
the aggregate, at least $100 million principal amount of Notes;
(j) the Purchaser shall have received on and as of the
Closing Date a certificate of the secretary of the Company and each of
the Guarantors;
(k) the Company and each Guarantor shall have delivered
to the Purchaser a certificate evidencing the incorporation or
organization and good standing of the Company or Guarantor in its state
of incorporation or organization issued by the Secretary of State of
such state
22
of incorporation or organization as of a date within 10 days of the
Closing Date;
(l) the Company and each Guarantor shall have delivered
to the Purchaser a certified copy of the Certificate of Incorporation
or other organizational document as certified by the Secretary of State
of its state of incorporation or organization as of a date within ten
(10) days of the Closing Date; and
(m) the Company shall have delivered to the Purchaser
such other documents relating to the transactions contemplated by this
Agreement as the Purchaser or its counsel may reasonably request.
The obligation of the Purchaser to purchase Additional Securities
hereunder on the Option Closing Date are subject to the same conditions as are
set forth above in clauses (a)-(h) with respect to the Firm Securities, provided
that each reference to the Closing Date in this Section 6 shall, with respect to
the closing of the sale of any Additional Securities, be deemed to be a
reference to the Option Closing Date; and further provided that the
representations and warranties by the Company shall be qualified by any
disclosures contained in documents filed by the Company between the Closing Date
and the Option Closing Date with the Commission pursuant to the Exchange Act.
7. Conditions to the Company's Obligations. The obligations of
the Company hereunder to issue and sell the Firm Securities on the Closing Date,
or the Additional Securities on the Option Closing Date, as applicable, are
subject to the performance by the Purchaser of all of its obligations hereunder,
the accuracy in all material respects of the representations and warranties of
the Purchaser contained herein on and as of the Closing Date, or the Option
Closing Date, as applicable, as if made on and as of the Closing Date, or the
Option Closing Date, as applicable and the due execution by the Purchaser of all
other Transaction Documents to which it is a party.
8. Indemnity and Contribution. The Company and each of the
Guarantors agree to indemnify and hold harmless the Purchaser and its directors,
officers, employees, members, representatives and agents and each person, if
any, who controls the Purchaser within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities, including without limitation the
reasonable legal fees and other reasonable expenses incurred in connection with
any suit, action or proceeding or any claim asserted (collectively,
"LIABILITIES") caused by any breach of any representation, warranty, covenant or
agreement made by it in this Agreement.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in
23
respect of which indemnity may be sought pursuant to the preceding paragraph,
such person (the "INDEMNIFIED PERSON") shall promptly notify the person against
whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing, and
the Indemnifying Person, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding; provided, however, that failure to so notify the Indemnifying Person
shall not relieve such Indemnifying Person from any liability hereunder to the
extent it is not materially prejudiced as a result thereof. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and the
Indemnified Person, the Indemnifying Person proposes to have the same counsel
represent it and the Indemnified Person, and representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Person shall not,
in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses actually incurred shall be promptly reimbursed upon
delivery to the Indemnifying Person of reasonable documentation therefor setting
forth such expenses in reasonable detail. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Party shall have requested the Indemnifying Party to reimburse the Indemnified
Party as contemplated by this paragraph, the Indemnifying Party agrees that it
shall be liable for any settlement of any proceeding effected without its
consent if (i) such settlement is entered into more than 60 business days after
receipt by the Indemnifying Party of the aforesaid request, (ii) such
indemnifying party shall not have reimbursed the Indemnified Party in accordance
with such request prior to the date of such settlement and (iii) such
Indemnified Party shall have given such Indemnifying Party at least 30 days'
prior notice of its intention to settle. No Indemnifying Person shall, without
the prior written consent of the Indemnified Person, effect any settlement of
any pending or threatened proceeding in respect of which any Indemnified Person
is a party, unless such settlement includes an unconditional release of such
Indemnified Person from all liability on claims that are the subject matter of
such proceeding.
24
The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
Indemnified Person at law or in equity.
In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 8 is unavailable to, or insufficient to
hold harmless, an Indemnified Party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each Indemnifying Party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof), including legal or other
expenses incurred, in such proportion as is appropriate to reflect (i) the
relative benefits received by the Indemnifying Party on the one hand and the
Indemnified Party on the other from the offering of the Notes or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, not only such relative benefits but also the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the other in
connection with the breach that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative fault of the parties
shall be determined by reference to, among other things, any equitable
considerations appropriate in the circumstances. The Company and the Purchaser
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph. For purposes of this paragraph, each
person, if any, who controls the Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Purchaser. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The indemnity agreements and contribution provisions contained in this
Section 8 and the representations and warranties of the Company, the Guarantors
and the Purchaser set forth in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Purchaser or any person controlling
any Purchaser or by or on behalf of the Company, its officers or directors or
any other person controlling the Company and (iii) acceptance of and payment for
any of the Securities.
9. Purchaser Participation Right. In the event that, within one
year from the date of this Agreement, the Company proposes to issue equity
securities or equity-linked securities in a private placement (other than
pursuant to an Exclusion), the Company shall offer the Purchaser in writing the
opportunity to purchase, on terms and conditions satisfactory to the Company, a
portion of such securities that is equal to the percentage of the Common Stock
owned by the
25
Purchaser immediately prior to such transaction, counting as Common Stock (on an
as-converted-to-Common Stock basis without giving effect to any limitations on
conversions) for the purposes of determining such percentage all issued and
outstanding securities of the Company that are exchangeable or exercisable for,
or convertible into, Common Stock. If the Purchaser advises the Company in
writing that it desires to proceed with the opportunity, the Company and the
Purchaser shall in good faith proceed to negotiate definitive documentation. If
the Company and the Purchaser have not entered into binding definitive
documentation for the purchase of any portion or all of such offered equity or
equity-linked securities within 10 business days of such initial offer from the
Company to the Purchaser, or such other time period as the Company and the
Purchaser shall mutually agree, the Company's obligations under this Section 9
shall terminate as to such offer as of the close of business on such 10th
business day; provided that the Company shall issue all such equity or
equity-linked securities as to which such offer relates within 45 business days
after making the offer to the Purchaser only upon terms and conditions
(including, without limitation, unit prices and interest rates) that in all
material respects and are not more favorable to the acquiring person or persons
or less favorable to the Company than those set forth in the offer notice,
subject to the following exceptions: (i) if the subject security is Common
Stock, the purchase price may be up to 10% lower than the purchase price
proposed to the Purchaser, (ii) if the subject security is convertible into, or
exercisable or exchangeable for Common Stock, the conversion, exercise or
exchange price may be up to 5% lower than the conversion, exercise or exchange
price proposed to the Purchaser and (iii) if there is any interest or dividend
payable in connection with the subject security, such interest rate or dividend
rate may not be more than 0.5% higher than the interest rate or dividend rate
proposed to the Purchaser.
10. Termination. The Purchaser may terminate this Agreement by
notice given to the Company, if prior to the Closing Date (i) in the reasonable
judgment of Purchaser a Material Adverse Effect shall have occurred between the
date hereof and the Closing Date, (ii) trading in any securities of or
guaranteed by the Company or securities generally on the NYSE, American Stock
Exchange or the Nasdaq National Market shall have been suspended or materially
limited or (iii) the failure of the Company to satisfy the conditions set forth
in Section 6 of this Agreement.
11. Effectiveness. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
12. Reimbursement. If this Agreement shall be terminated by the
Purchaser because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the Purchaser's obligations cannot be fulfilled,
the Company agrees to reimburse the Purchaser for all out-of-pocket expenses
26
(including the reasonable fees and expenses of its counsel) incurred by the
Purchaser in connection with this Agreement or the issuance of Securities
contemplated hereunder.
13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Company, the Guarantors and the Purchaser, any controlling
persons referred to herein and their respective successors and, with respect to
the Purchaser, its Permitted Assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of Securities
from the Purchaser shall be deemed to be a successor by reason merely of such
purchase, and rights under this Agreement may be assigned by the Purchaser only
to Permitted Assigns. For purposes of this Section 13, "Permitted Assigns" shall
mean: (i) an "affiliate" (as defined in Rule 501(b) of Regulation D) of the
Purchaser to whom Securities are assigned and (ii) a pledgee (or a transferee of
such pledgee) that succeeds to the Securities in connection with a bona fide
margin account or other loan or financing arrangement secured by the Securities.
14. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed by
registered or certified mail, postage prepaid, return receipt requested, or
otherwise delivered by hand or by messenger. Notices to the Purchaser shall be
given to it:
-----------
-----------
-----------
Telephone:
Facsimile:
Attention:
Copy to: (for informational purposes only)
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Notices to the Company or the Guarantors shall be given to the Company at ▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; Attention: General Counsel
(telefax: (▇▇▇) ▇▇▇-▇▇▇▇).
Copy to: (for informational purposes only) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; Attention: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
27
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. To the fullest
extent permitted by applicable law, the Company hereby irrevocably submit to the
non-exclusive jurisdiction of any New York State court or Federal court sitting
in the County of New York in respect of any suit, action or proceeding arising
out of or relating to the provisions of this Agreement and irrevocably agrees
that all claims in respect of any such suit, action or proceeding may be heard
and determined in any such court. The parties hereto hereby waive, to the
fullest extent permitted by applicable law, any objection that they may now or
hereafter have to the laying of venue of any such suit, action or proceeding
brought in any such court, and any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
16. Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original and all of which together shall constitute
one and the same instrument.
17. Severability. If any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable, or
void, portions of such provision, or such provision in its entirety, to the
extent necessary, shall be severed from this Agreement and the balance of this
Agreement shall be enforceable in accordance with its terms.
18. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
19. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of each of the parties hereto.
20. Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement among the parties with regard to the subjects
hereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge, or
termination is sought.
21. Survival. The respective representations, warranties,
covenants and agreements of the Company and the Purchaser set forth in or made
pursuant to
28
this Agreement will remain in full force and effect and will survive delivery of
and payment for the Securities sold hereunder and any termination of this
Agreement.
22. Independence of Purchaser and Additional Purchasers. The
obligations of the Purchaser under any Transaction Document are several and not
joint with the obligations of any Additional Purchaser, and the Purchaser shall
be responsible in any way for the performance of the obligations of any
Additional Purchaser under any Transaction Document. Nothing contained herein or
in any other Transaction Document, and no action taken by the Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchaser and the
Additional Purchasers as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Purchaser and the
Additional Purchasers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by the Transaction
Documents. The Purchaser confirms that it has independently participated in the
negotiation of the transaction contemplated hereby. The Purchaser shall be
entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any Additional
Purchaser to be joined as an additional party in any proceeding for such
purpose.
29
FORM OF PURCHASE AGREEMENT
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
INTERSTATE BAKERIES
CORPORATION
By:
-------------------------------
Name:
Title:
▇▇▇▇▇'▇ INN QUALITY BAKED GOODS, LLC
By:
-------------------------------
Name:
Title:
IBC SALES CORPORATION
By:
-------------------------------
Name:
Title:
IBC SERVICES, LLC
By:
-------------------------------
Name:
Title:
INTERSTATE BRANDS CORPORATION
By:
-------------------------------
Name:
Title:
IBC TRUCKING, LLC
By:
-------------------------------
Name:
Title:
The foregoing Purchase Agreement is hereby confirmed and accepted as of the date
first above written:
PURCHASER
By:
-----------------------------
Name:
Title:
Jurisdiction:
----------------------
SCHEDULE I
EXISTING GUARANTORS
1) Interstate Brands Corporation, a Delaware corporation.
2) IBC Sales Corporation, a Delaware corporation.
3) IBC Trucking, LLC, a Delaware limited liability company.
4) IBC Services, LLC, a Missouri limited liability company.
5) ▇▇▇▇▇'▇ Inn Quality Baked Goods, LLC, a Delaware limited
liability company.
FORM OF PURCHASE AGREEMENT
EXHIBIT A
FORM OF OPINION OF ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
EXHIBIT B
FORM OF OPINION OF ▇▇▇▇ ▇. ▇▇▇▇▇▇
