UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): March 19, 2015
The J. M. Smucker Company
(Exact Name of Registrant as Specified in Its Charter)
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| Ohio |
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001-05111 |
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34-0538550 |
(State or Other Jurisdiction
of Incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
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| One Strawberry Lane, Orrville, Ohio |
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44667-0280 |
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(Zip Code) |
Registrant’s Telephone Number, Including Area Code: (330) 682-3000
Not Applicable
Former
Name or Former Address, if Changed Since Last Report
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01. |
Entry into a Material Definitive Agreement. |
Indentures and the Notes
On March 20, 2015, The J. M. Smucker Company, an Ohio corporation (the “Company”), completed an offering of (i) $500.0
million aggregate principal amount of its 1.75% unsecured, unsubordinated notes due 2018 (the “2018 notes”), (ii) $500.0 million aggregate principal amount of its 2.50% unsecured, unsubordinated notes due 2020 (the “2020
notes”), (iii) $400.0 million aggregate principal amount of its 3.00% unsecured, unsubordinated notes due 2022 (the “2022 notes”), (iv) $1,000.0 million aggregate principal amount of its 3.50% unsecured, unsubordinated notes
due 2025 (the “2025 notes”), (v) $650.0 million aggregate principal amount of its 4.25% unsecured, unsubordinated notes due 2035 (the “2035 notes”) and (vi) $600.0 million aggregate principal amount of its 4.375%
unsecured, unsubordinated notes due 2045 (the “2045 notes”, and together with the 2018 notes, the 2020 notes, the 2022 notes, the 2025 notes and the 2035 notes, the “notes”). The notes were offered only to qualified institutional
buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. investors pursuant to Regulation S under the Securities Act. The notes have not been registered
under the Securities Act or any state securities law and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from the registration requirements or a transaction not subject to the
registration requirements of the Securities Act or any state securities laws.
The Company used the proceeds of the notes to finance, in
part, (i) the cash consideration payable in its completed acquisition of Blue Acquisition Group, Inc. (“BAG”), (ii) the refinancing of (x) certain indebtedness of Big Heart Pet Brands, a wholly-owned subsidiary of BAG
(“BHPB”), and (y) the Company’s private placement notes and (iii) the payment of fees and expenses in connection with the transactions. The notes are unsecured, unsubordinated obligations of the Company and are guaranteed on
an unsecured, unsubordinated basis by J.M. Smucker LLC and The Folgers Coffee Company, each of which is a wholly-owned subsidiary of the Company (collectively, the “Guarantors”).
The notes were issued pursuant to an indenture, dated as of March 20, 2015, between the Company and U.S. Bank National Association, as
trustee (the “Notes Trustee”), as supplemented by a supplemental indenture, dated as of March 20, 2015, between the Company, the Guarantors and the Notes Trustee (together, the “indentures”).
The Company will pay interest on the notes semiannually on March 15 and September 15 of each year, commencing on September 15,
2015.
The Company may redeem some or all of the notes at any time and from time to time at a price equal to 100% of the principal amount
of the notes to be redeemed plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The indentures contain covenants that will limit the ability of the Company and its subsidiaries to, among other things and subject to certain
significant exceptions: (i) incur debt for borrowed money secured by liens on certain assets, (ii) engage in certain sale and leaseback
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transactions and (iii) sell all or substantially all of the Company’s or any Guarantor’s assets or merge or consolidate with or into other companies. The indentures also provide
for certain events of default, which, if any of them occurs, would permit or require the principal amount and accrued and unpaid interest on all the then outstanding notes of a particular series to be declared immediately due and payable.
The foregoing description of the indentures does not purport to be complete and is qualified in its entirety by reference to the indentures,
copies of which are attached hereto as Exhibits 4.1 and 4.2, and incorporated herein by reference.
Registration Rights Agreement
In connection with the issuance of the notes, on March 20, 2015, the Company entered into a registration rights agreement (the
“Registration Rights Agreement”) between the Company, the Guarantors, J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated. Pursuant to the Registration Rights Agreement, the Company and the Guarantors
have agreed to use their commercially reasonable efforts to (i) file a registration statement on an appropriate registration form with respect to a registered offer to exchange the notes for new notes (the “exchange notes”) with terms
substantially identical in all material respects to the notes, except that the exchange notes will not contain terms with respect to transfer restrictions or any increase in annual interest rate for failure to comply with the Registration Rights
Agreement, (ii) cause the exchange offer registration statement to be declared effective under the Securities Act and (iii) complete the exchange offer within 60 days of the effectiveness of the exchange offer registration statement. The
exchange offer will remain open for at least 20 business days (or longer if required by applicable law) after the date the Company mails notice of the exchange offer to holders of the notes.
If the Company determines that a registered exchange offer is not available or may not be completed as soon as practicable after the last date
for acceptance of the notes for exchange because it would violate any applicable law or applicable interpretations of the staff of the Securities and Exchange Commission (the “SEC”) or if for any reason the exchange offer is not completed
within 365 days after the issuance of the notes, or, if in certain circumstances any initial purchaser of the notes so requests in writing in connection with any offer or sale of notes, representing that it holds notes that were ineligible to be
exchanged in the exchange offer, the Company and the Guarantors will use commercially reasonable efforts to file and to have become effective a shelf registration statement relating to resales of such notes and to keep that shelf registration
continuously effective for a period that will terminate when all such notes cease to be Registrable Securities (as defined in the Registration Rights Agreement).
If a Registration Default (as defined in the Registration Rights Agreement) occurs with respect to notes of a particular series that are
Registrable Securities, then additional interest shall accrue on the principal amount of the notes of such series that are Registrable Securities at a rate of 0.25% per annum for the first 90-day period beginning on the day immediately
following such Registration Default (which rate will be increased by an additional 0.25% per annum for each subsequent 90-day period that such additional interest continues to accrue, provided that the rate at which such additional interest
accrues may in no event exceed 1.00% per annum).
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The foregoing description of the Registration Rights Agreement does not purport to be complete
and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is attached hereto as Exhibit 4.3 and is incorporated herein by reference.
| Item 1.02. |
Termination of a Material Definitive Agreement. |
Prepayment of Company Private Placement Notes
On March 20, 2015, the Company prepaid all of its outstanding private placement notes, which included those certain
(i) $24.0 million of 6.12% senior notes due November 2015, (ii) $376.0 million of 6.63% senior notes due November 2018, (iii) $300.0 million of 5.55% senior notes due April 2022 and (iv) $400.0 million of 4.50% senior notes due
June 2025. The optional prepayment of the private placement notes resulted in the Company incurring approximately $163.3 million in the aggregate of related prepayment premium and additional interest.
Termination of Bridge Credit Agreement
On March 20, 2015, in connection with the issuance of the notes, the Company terminated its Bridge Term Loan Credit Agreement (“Bridge
Facility”), dated as of March 2, 2015, among the Company, the Guarantors, the lenders party thereto from time to time and Bank of America, N.A., as administrative agent. The Bridge Facility had no amounts borrowed under it at termination
and no prepayment premium resulted from the termination.
| Item 2.01. |
Completion of Acquisition or Disposition of Assets. |
On March 23, 2015, the Company
completed its acquisition of BAG pursuant to that certain Agreement and Plan of Merger, dated as of February 3, 2015 (the “Merger Agreement”), by and among the Company, BAG, a Delaware corporation and the parent of BHPB, SPF Holdings
I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub One”), SPF Holdings II, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Merger Sub Two”), and for
the limited purposes set forth in the Merger Agreement, Blue Holdings I, L.P., the controlling stockholder of BAG (“Blue Holdings”). Pursuant to the terms of the Merger Agreement, the acquisition of BAG was effected by the way of two
mergers (the “Mergers”) as a result of which the assets and liabilities of BAG are now held by a direct wholly owned subsidiary of the Company.
The aggregate consideration paid by the Company in respect of all shares of common stock, par value $0.01 per share, of BAG (“BAG Common
Stock”), and outstanding equity awards of BAG consisted of approximately $1.42 billion in cash, which is subject to a potential post-closing adjustment, and approximately 17.9 million common shares of the Company’s common stock
(“Company Shares”).
At the effective time of the initial merger (the “Effective Time”), each share of outstanding BAG
Common Stock (other than any shares held by BAG as treasury stock, which were cancelled) was converted into the right to receive approximately $4.30 in cash, subject to a potential post-closing adjustment, and approximately 0.05 Company Shares. At
the Effective Time, each outstanding BAG restricted stock award became fully vested and was cancelled and
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converted into the right to receive the per share merger consideration on the same basis as outstanding shares of BAG Common Stock, less any applicable tax withholding. Subject to specified
exceptions, each outstanding BAG option that had an exercise price less than the Per Share Common Stock Merger Consideration Cash Value (as defined in the Merger Agreement) was cancelled and converted into the right to receive the per share merger
consideration (in the case of certain options, on an all-cash basis) in respect of each net share of BAG Common Stock (after adjusting for the exercise price) subject to the respective option, less any applicable tax withholding. Each outstanding
BAG option that had an exercise price equal to or greater than the Per Share Common Stock Merger Consideration Cash Value was cancelled for no consideration.
In connection with the consummation of the Mergers, Simon Brown, Kevin Mundt, and David Hooper were designated as observers on the
Company’s board of directors pursuant to the Shareholders Agreement, dated as of February 3, 2015 (the “Shareholders Agreement”), by and among the Company, BAG, Kohlberg Kravis Roberts & Co. L.P., Vestar Capital
Partners, Centerview Capital Management LLC, AlpInvest Partners US Holdings, LLC and certain of their affiliated investment funds. The Shareholders Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
The foregoing description of the transactions contemplated by the Merger Agreement does not purport to be complete and is qualified in its
entirety by reference to the full text of Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
| Item 2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
On March 23, 2015, the Company borrowed $1,750.0 million under its Term Loan Credit Agreement (“Term Facility”), dated as of
March 2, 2015, among the Company, the Guarantors, the lenders party thereto from time to time and Bank of America, N.A., as administrative agent. The proceeds of the borrowings were used to finance, in part, (i) the cash consideration
payable in the Company’s completed acquisition of BAG, (ii) the refinancing of certain indebtedness of BHPB and (iii) the payment of fees and expenses in connection with the transactions.
The information set forth in Item 1.01 of this Current Report on Form 8-K with respect to the issuance of the notes is incorporated by
reference into this Item 2.03.
| Item 3.02. |
Unregistered Sale of Securities. |
The issuance of Company Shares pursuant to the Merger
Agreement in connection with the transactions described in Item 2.01 above was not registered under the Securities Act in reliance on the exemption from registration provided by Section 4(2) of the Securities Act and rules and regulations
of the SEC promulgated thereunder. The Company Shares issued pursuant to the Merger Agreement were issued to Blue Holdings, a small number of other stockholders of BAG, all of whom are accredited investors, and a small number of holders of BAG
options, all of whom are accredited investors. The disclosure regarding the Merger Agreement under Item 2.01 above is incorporated in this Item 3.02 by reference.
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| Item 5.02. |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Grant of Performance-Based Stock Options
On March 19, 2015, the Company granted performance-based nonstatutory stock options to certain eligible participants, including the
Company’s named executive officers. The options have an exercise price equal to $111.86, the fair market value of the Company’s common stock on the grant date. The material terms and conditions of the grants are summarized below.
The one-year performance-based options will fully vest on the first anniversary of the grant date if (i) the Company achieves certain
“synergy realization” and EBITDA performance criteria (each, as defined in the applicable award agreement(s)), and (ii) the participant is employed by the Company on the applicable vesting date.
The three-year performance-based options will vest ratably on each of the first three anniversaries of the grant date if (i) the Company
achieves certain “synergy realization” and EBITDA performance criteria (each, as defined in the applicable award agreement(s)) and (ii) the participant is employed by the Company on the applicable vesting date. The terms of the
three-year performance-based options also provide for catch-up vesting, such that if an option tranche fails to vest for a particular year due to the non-achievement of the performance criteria, such tranche will be eligible to vest if a specified
cumulative performance goal is achieved with respect to the next applicable vesting date.
The foregoing descriptions of the
performance-based options does not purport to be complete and is qualified in its entirety by reference to the full text of the applicable award agreements, which are attached hereto as Exhibit 10.2 and Exhibit 10.3 and incorporated herein by
reference.
Appointment of Director
Effective upon the consummation of the Mergers, David J. West was appointed as a member of the Company’s board of directors. There are no
arrangements or understandings between Mr. West and any other person pursuant to which Mr. West was selected as a director and, except as described below, since the beginning of the last fiscal year there have been no related party
transactions between the Company and Mr. West that would be reportable under Item 404(a) of Regulation S-K.
Employment Agreement between the
Company and David J. West
Concurrently with the execution and delivery of the Merger Agreement, the Company entered into an employment
agreement (the “Employment Agreement”) with David J. West. The Employment Agreement is dated February 3, 2015, became effective as of the Effective Time, and will continue until April 30, 2016, unless it is terminated earlier
pursuant to the terms of the Employment Agreement.
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Compensation & Benefits
Mr. West’s base salary will be $750,000, subject to annual review by the Executive Compensation Committee of the Company’s Board
of Directors (the “Compensation Committee”). Under the Employment Agreement, he is eligible to receive $1.1 million, representing the accrued amount under the BHPB Annual Incentive Plan, plus $100,000, representing a pro-rata portion
of his 2014 target bonus under his prior employment agreement. Effective May 2015, Mr. West is eligible to earn an annual bonus under the Company’s Management Incentive Plan (the “MIP Bonus”), targeted at 100% of base salary,
with a maximum opportunity equal to 200% of base salary. The MIP Bonus is not guaranteed and is subject to the performance of the Company and Mr. West’s individual achievements.
The Employment Agreement also provides for a lump-sum deferred compensation payment in the amount of $4.8 million, payable 60 days after
Mr. West’s employment termination date (the “Deferred Payment”). In addition, as an incentive to remain employed by the Company, Mr. West is eligible to receive $1.2 million in the event he remains employed through
April 30, 2016 (the “Retention Award”). The Retention Award will be paid within ten business days after April 30, 2016.
Stock
Options
Under the Employment Agreement, Mr. West is entitled to receive a one-time grant of 125,000 options with an exercise
price equal to the fair market value of the Company’s common stock on the grant date. The options will be subject to service- and performance-based vesting. If Mr. West’s employment is terminated without “cause” or for
“good reason” (each, as defined in the Employment Agreement), the next tranche of options that would have vested at the time of Mr. West’s termination of employment will no longer be subject to the service-based vesting
requirement and any vested options will remain exercisable until the third anniversary of the termination date (but in no event later than the expiration date); however, the options will continue to be subject to the achievement of the applicable
financial performance criteria. If Mr. West’s employment is terminated for any other reason, Mr. West’s unvested options will be cancelled without consideration therefore as of the date of the termination of his employment. The
foregoing description of Mr. West’s stock options does not purport to be complete and is qualified in its entirety by reference to the full text of the form of option award agreement, which is attached hereto as Exhibit 10.4 and
incorporated herein by reference.
Long-Term Incentive Award
Pursuant to the terms of the Employment Agreement, Mr. West is eligible to earn a discretionary annual grant of restricted common shares
in an amount equal to 150% of his annual base salary (the “LTIP Bonus”), conditioned on the achievement of performance objectives established by the Compensation Committee. Once granted, the restricted common shares will be subject to
service-based vesting over four years on each of the first four anniversaries of the grant date.
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Severance upon Termination of Employment
In the event that Mr. West’s employment is terminated by the Company without cause, or if Mr. West resigns for good reason, he
will be eligible to receive certain severance benefits, including: (i) a lump sum payment equal to his base salary through the end of the fiscal year in which termination occurs (the “Base Salary Payment”); (ii) a pro-rata
portion of his actual bonus for the year of termination and any bonus earned but unpaid with respect to the fiscal year prior to termination; (iii) the Retention Award, if not already paid; (iv) the Deferred Payment; (v) the accrued
amount of Mr. West’s supplemental employee retirement plan balance, payable in a lump sum on the 60th day following the termination date; (vi) company-paid continuation of group medical, life and disability insurance plans for him,
his spouse and his dependents, for three months (the “Welfare Continuation Benefit”); (vii) the stock option vesting and continued exercisability as described above; and (viii) accelerated vesting of the tranche of the LTIP Bonus
that would have vested in the year of termination.
In the event that Mr. West’s employment is terminated due to
Mr. West’s death or “disability” (as defined in the Employment Agreement), Mr. West is entitled to the same severance benefits as described in the paragraph above, with the exception of the Base Salary Payment and the
Welfare Continuation Benefit.
In addition, if Mr. West’s employment is terminated for cause, or if Mr. West resigns
without good reason, Mr. West is entitled to (i) the Deferred Payment, (ii) the accrued amount of Mr. West’s supplemental retirement plan balance, and (iii) only if Mr. West resigns without good reason between
April 30, 2016 and the vesting date of the first tranche of the LTIP Bonus made in respect of the 2015 fiscal year, but continues to be a member of the Company’s Board of Directors, Mr. West will be entitled to continued vesting of
such tranche of the LTIP Bonus.
In order to receive certain of the above benefits, Mr. West is required to a sign a release of
claims in favor of the Company.
Pursuant to the Employment Agreement, Mr. West has agreed to certain restrictive covenants,
including a perpetual confidentiality covenant and one-year post-termination non-competition and non-solicitation covenants.
Change in Control
Severance Agreements with Key Employees
In connection with the Company’s ongoing efforts to align its compensation program with
competitive market practices, the Compensation Committee, with the advice of its independent compensation consultant, authorized the Company to enter into Change in Control Severance Agreements (the “Severance Agreement”) with several of
its key employees, including David J. West and all of the Company’s named executive officers.
The term of the Severance Agreement is
two years, with automatic one-year renewals on each one-year anniversary of the effective date. Subject to limited exceptions, the Company’s Board of Directors may terminate the Severance Agreement at its discretion.
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Generally, the Severance Agreement only entitles key employees to severance benefits upon a
termination without “cause” or for “good reason” in connection with a “change in control” (each as defined in the Severance Agreement). Under those limited circumstances, an eligible employee will receive severance
benefits of: (i) two times the sum of annual base salary and the target annual bonus; (ii) pro-rata target bonus for the year of termination; (iii) a lump sum amount equal to COBRA premiums for 18 months; and (iv) outplacement
services not to exceed $25,000. In order to receive severance payments, the employee must execute a general release of claims in favor of the Company.
In the event that any payment or benefit due to an employee would be subject to the excise tax under Section 4999 of the Internal Revenue
Code (the “Code”), based on such payments being classified as “excess parachute payments” under Section 280G of the Code, then the amounts payable to such employee will be reduced to the maximum amount that does not trigger
the excise tax, unless the applicable employee would be better off (on an after-tax basis) receiving all such payments and benefits and paying all applicable income and excise tax thereon.
The Severance Agreement includes an 18-month post-termination non-competition covenant.
The foregoing description of the Severance Agreement does not purport to be complete and is qualified in its entirety by reference to the full
text of the Severance Agreement, which is attached hereto as Exhibit 10.5 and incorporated herein by reference.
On March 23, 2015, the Company issued a press release announcing the
completion of the Mergers. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
| Item 9.01. |
Financial Statements and Exhibits. |
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(a) |
Financial Statements of Businesses Acquired. |
The audited consolidated financial
statements of BAG as of April 27, 2014 and April 28, 2013 and for the fiscal years ended April 27, 2014, April 28, 2013, and April 29, 2012 are filed as Exhibit 99.2 hereto and are incorporated herein by reference.
The unaudited consolidated financial statements of BAG as of January 25, 2015 and April 27, 2014 and for the nine months ended
January 25, 2015 and January 26, 2014 are filed as Exhibit 99.3 hereto and are incorporated herein by reference.
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(b) |
Pro Forma Financial Information. |
The unaudited pro forma condensed combined balance
sheet as of January 31, 2015 and the unaudited pro forma condensed combined income statements for the fiscal year ended April 30, 2014 and for the nine months ended January 31, 2015 (the “Pro Forma Financial
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Statements”) are filed as Exhibit 99.4 hereto and are incorporated herein by reference. The Pro Forma Financial Statements give effect to the Mergers and the consummation of the
Company’s completed financing transactions related to the Mergers, and are based on the historical consolidated financial statements of the Company and BAG. The Pro Forma Financial Statements update the unaudited pro forma condensed combined
financial information previously furnished as Exhibit 99.1 to the Current Report on Form 8-K filed by the Company on March 9, 2015, which were based on the historical consolidated financial statements of the Company and BHPB.
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(c) |
Shell Company Transactions. |
Not applicable.
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(d) |
Exhibits. The following exhibits are provided as part of this Form 8-K: |
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| Exhibit
Number |
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Description |
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| 2.1 |
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Agreement and Plan of Merger, dated as of February 3, 2015, by and among Blue Acquisition Group, Inc., The J. M. Smucker Company, SPF Holdings I, Inc., SPF Holdings II, LLC and, for the limited purposes set forth therein, Blue
Holdings I, L.P. (filed as exhibit 2.1 to the Current Report on Form 8-K filed by the Company on February 4, 2015 and incorporated herein by reference). |
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| 4.1 |
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Indenture, dated as of March 20, 2015, between The J. M. Smucker Company and U.S. Bank National Association, as trustee. |
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| 4.2 |
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First Supplemental Indenture, dated as of March 20, 2015, by and among The J. M. Smucker Company, the guarantors party thereto and U.S. Bank National Association, as trustee. |
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| 4.3 |
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Registration Rights Agreement, dated as of March 20, 2015, by and among The J. M. Smucker Company, the initial guarantors set forth therein, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as representatives of the several initial purchasers. |
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| 10.1 |
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Shareholders Agreement, dated as of February 3, 2015, by and among The J. M. Smucker Company, Blue Holdings I, L.P., Kohlberg Kravis Roberts & Co. L.P., Vestar Capital Partners, Centerview Capital Management LLC, AlpInvest
Partners US Holdings, LLC, and the shareholders named therein (filed as exhibit 10.1 to the Current Report on Form 8-K filed by the Company on February 4, 2015 and incorporated herein by
reference). |
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| 10.2 |
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Form of Nonstatutory Stock Option Agreement between The J. M. Smucker Company and the Optionee (one-year vesting). |
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| 10.3 |
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Form of Nonstatutory Stock Option Agreement between The J. M. Smucker Company and the Optionee (three-year vesting). |
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| 10.4 |
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Form of Nonstatutory Stock Option Agreement between The J. M. Smucker Company and David J. West. |
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| 10.5 |
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Form of Change in Control Severance Agreement by and between The J. M. Smucker Company and the Executive party thereto. |
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| 23.1 |
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Consent of KPMG LLP. |
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| 99.1 |
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Press Release issued by The J. M. Smucker Company on March 23, 2015. |
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| 99.2 |
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Audited Consolidated Financial Statements of Blue Acquisition Group, Inc. as of April 27, 2014 and April 28, 2013 and for the fiscal years ended April 27, 2014, April 28, 2013, and April 29, 2012. |
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| 99.3 |
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Unaudited Consolidated Financial Statements of Blue Acquisition Group, Inc. as of January 25, 2015 and April 27, 2014 and for the nine months ended January 25, 2015 and January 26, 2014. |
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| 99.4 |
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Unaudited Pro Forma Condensed Combined Balance Sheet as of January 31, 2015 and Unaudited Pro Forma Condensed Combined Income Statements for the fiscal year ended April 30, 2014 and for the nine months ended January 31,
2015. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
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THE J. M. SMUCKER COMPANY |
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| Date: March 23, 2015 |
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By: |
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/s/ Jeannette L. Knudsen |
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Name: |
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Jeannette L. Knudsen |
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Title: |
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Vice President, General Counsel,
and Corporate Secretary |
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EXHIBIT INDEX
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| Exhibit
Number |
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Description |
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| 2.1 |
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Agreement and Plan of Merger, dated as of February 3, 2015, by and among Blue Acquisition Group, Inc., The J. M. Smucker Company, SPF Holdings I, Inc., SPF Holdings II, LLC and, for the limited purposes set forth therein, Blue
Holdings I, L.P. (filed as exhibit 2.1 to the Current Report on Form 8-K filed by the Company on February 4, 2015 and incorporated herein by reference). |
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| 4.1 |
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Indenture, dated as of March 20, 2015, between The J. M. Smucker Company and U.S. Bank National Association, as trustee. |
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| 4.2 |
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First Supplemental Indenture, dated as of March 20, 2015, by and among The J. M. Smucker Company, the guarantors party thereto and U.S. Bank National Association, as trustee. |
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| 4.3 |
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Registration Rights Agreement, dated as of March 20, 2015, by and among The J. M. Smucker Company, the initial guarantors set forth therein, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as representatives of the several initial purchasers. |
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| 10.1 |
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Shareholders Agreement, dated as of February 3, 2015, by and among The J. M. Smucker Company, Blue Holdings I, L.P., Kohlberg Kravis Roberts & Co. L.P., Vestar Capital Partners, Centerview Capital Management LLC, AlpInvest
Partners US Holdings, LLC, and the shareholders named therein (filed as exhibit 10.1 to the Current Report on Form 8-K filed by the Company on February 4, 2015 and incorporated herein by
reference). |
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| 10.2 |
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Form of Nonstatutory Stock Option Agreement between The J. M. Smucker Company and the Optionee (one-year vesting). |
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| 10.3 |
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Form of Nonstatutory Stock Option Agreement between The J. M. Smucker Company and the Optionee (three-year vesting). |
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| 10.4 |
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Form of Nonstatutory Stock Option Agreement between The J. M. Smucker Company and David J. West. |
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| 10.5 |
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Form of Change in Control Severance Agreement by and between The J. M. Smucker Company and the Executive party thereto. |
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| 23.1 |
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Consent of KPMG LLP. |
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| 99.1 |
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Press Release issued by The J. M. Smucker Company on March 23, 2015. |
13
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| 99.2 |
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Audited Consolidated Financial Statements of Blue Acquisition Group, Inc. as of April 27, 2014 and April 28, 2013 and for the fiscal years ended April 27, 2014, April 28, 2013, and April 29,
2012. |
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| 99.3 |
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Unaudited Consolidated Financial Statements of Blue Acquisition Group, Inc. as of January 25, 2015 and April 27, 2014 and for the nine months ended January 25, 2015 and January 26, 2014. |
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| 99.4 |
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Unaudited Pro Forma Condensed Combined Balance Sheet as of January 31, 2015 and Unaudited Pro Forma Condensed Combined Income Statements for the fiscal year ended April 30, 2014 and for the nine months ended January 31,
2015. |
14
Exhibit 4.1
EXECUTION VERSION
THE J.
M. SMUCKER COMPANY
and
U.S. BANK NATIONAL ASSOCIATION, as Trustee
Indenture
Dated as of
March 20, 2015
Providing for Issuance of Debt Securities
TABLE OF CONTENTS
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PAGE |
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| ARTICLE 1 |
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| DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION |
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| Section 1.01. |
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Definitions |
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1 |
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| Section 1.02. |
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Officers’ Certificates and Opinions |
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9 |
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| Section 1.03. |
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Form of Documents Delivered to Trustee |
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9 |
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| Section 1.04. |
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Acts of Securityholders |
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10 |
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| Section 1.05. |
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Notices, etc., to Trustee and Company |
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11 |
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| Section 1.06. |
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Notice To Securityholders; Waiver |
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11 |
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| Section 1.07. |
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Conflict with Trust Indenture Act |
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12 |
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| Section 1.08. |
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Effect of Headings and Table of Contents |
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12 |
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| Section 1.09. |
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Successors and Assigns |
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12 |
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| Section 1.10. |
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Separability Clause |
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12 |
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| Section 1.11. |
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Benefits of Indenture |
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12 |
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| Section 1.12. |
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Governing Law |
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12 |
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| Section 1.13. |
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Counterparts |
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12 |
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| Section 1.14. |
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Judgment Currency |
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13 |
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| Section 1.15. |
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Legal Holidays |
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13 |
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| Section 1.16. |
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Exemption from Individual Liability |
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13 |
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| ARTICLE 2 |
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| SECURITY FORMS |
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| Section 2.01. |
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Forms Generally |
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14 |
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| Section 2.02. |
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Forms of Securities |
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14 |
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| Section 2.03. |
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Securities in Global Form |
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15 |
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| Section 2.04. |
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Form of Trustee’s Certificate of Authentication |
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15 |
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| ARTICLE 3 |
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| THE SECURITIES |
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| Section 3.01. |
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General Title; General Limitations; Issuable in Series; Terms of Particular Series |
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15 |
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| Section 3.02. |
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Denominations and Currency |
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19 |
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| Section 3.03. |
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Execution, Authentication and Delivery, and Dating |
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19 |
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| Section 3.04. |
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Temporary Securities |
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21 |
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| Section 3.05. |
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Registration, Transfer and Exchange |
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22 |
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| Section 3.06. |
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Mutilated, Destroyed, Lost and Stolen Securities |
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25 |
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| Section 3.07. |
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Payment of Interest; Interest Rights Preserved |
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25 |
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| Section 3.08. |
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Persons Deemed Owners |
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27 |
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| Section 3.09. |
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Cancellation |
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27 |
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| Section 3.10. |
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Computation of Interest |
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27 |
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| ARTICLE 4 |
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| SATISFACTION AND DISCHARGE |
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| Section 4.01. |
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Satisfaction and Discharge of Indenture |
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28 |
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| Section 4.02. |
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Discharge and Defeasance |
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29 |
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| Section 4.03. |
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Covenant Defeasance |
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30 |
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| Section 4.04. |
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Conditions To Defeasance Or Covenant Defeasance |
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31 |
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| Section 4.05. |
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Application of Trust Money; Excess Funds |
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32 |
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| Section 4.06. |
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Paying Agent to Repay Moneys Held |
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33 |
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| Section 4.07. |
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Return of Unclaimed Amounts |
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33 |
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| ARTICLE 5 |
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| REMEDIES |
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| Section 5.01. |
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Events of Default |
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34 |
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| Section 5.02. |
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Acceleration of Maturity; Rescission, and Annulment |
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35 |
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| Section 5.03. |
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Collection of Indebtedness and Suits for Enforcement by Trustee |
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36 |
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| Section 5.04. |
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Trustee May File Proofs of Claim |
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37 |
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| Section 5.05. |
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Trustee May Enforce Claims Without Possession of Securities |
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38 |
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| Section 5.06. |
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Application of Money Collected |
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38 |
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| Section 5.07. |
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Limitation on Suits |
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39 |
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| Section 5.08. |
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Unconditional Right of Securityholders to Receive Principal, Premium, and Interest |
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39 |
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| Section 5.09. |
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Restoration of Rights and Remedies |
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40 |
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| Section 5.10. |
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Rights and Remedies Cumulative |
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40 |
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| Section 5.11. |
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Delay or Omission Not Waiver |
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40 |
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| Section 5.12. |
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Control by Securityholders |
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40 |
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| Section 5.13. |
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Waiver of Past Defaults |
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40 |
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| Section 5.14. |
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Undertaking for Costs |
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41 |
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| Section 5.15. |
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Waiver of Stay or Extension Laws |
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41 |
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| ARTICLE 6 |
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| THE TRUSTEE |
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| Section 6.01. |
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Certain Duties and Responsibilities of Trustee |
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42 |
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| Section 6.02. |
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Notice of Defaults |
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43 |
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| Section 6.03. |
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Certain Rights of Trustee |
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43 |
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| Section 6.04. |
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Not Responsible for Recitals or Issuance of Securities |
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45 |
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| Section 6.05. |
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May Hold Securities |
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45 |
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| Section 6.06. |
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Money Held in Trust |
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45 |
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| Section 6.07. |
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Compensation and Reimbursement |
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45 |
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| Section 6.08. |
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Disqualification; Conflicting Interests |
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46 |
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| Section 6.09. |
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Corporate Trustee Required; Eligibility |
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46 |
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| Section 6.10. |
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Resignation and Removal; Appointment of Successor |
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46 |
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| Section 6.11. |
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Acceptance of Appointment by Successor |
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48 |
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| Section 6.12. |
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Merger, Conversion, Consolidation or Succession to Business |
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49 |
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| Section 6.13. |
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Preferential Collection of Claims Against Company |
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49 |
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| Section 6.14. |
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Appointment of Authenticating Agent |
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50 |
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| ARTICLE 7 |
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| SECURITYHOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY |
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| Section 7.01. |
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Company to Furnish Trustee Names and Addresses of Securityholders |
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51 |
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| Section 7.02. |
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Preservation of Information; Communications to Securityholders |
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51 |
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| Section 7.03. |
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Reports by Trustee |
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53 |
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| Section 7.04. |
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Reports by Company |
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53 |
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| ARTICLE 8 |
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| CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER |
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| Section 8.01. |
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Company May Consolidate, etc., Only on Certain Terms |
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54 |
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| Section 8.02. |
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Successor Person Substituted |
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54 |
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| ARTICLE 9 |
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| SUPPLEMENTAL INDENTURES |
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| Section 9.01. |
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Supplemental Indentures Without Consent of Securityholders |
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55 |
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| Section 9.02. |
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Supplemental Indentures With Consent of Securityholders |
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56 |
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| Section 9.03. |
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Execution of Supplemental Indentures |
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58 |
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| Section 9.04. |
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Effect of Supplemental Indentures |
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58 |
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| Section 9.05. |
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Conformity With Trust Indenture Act |
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58 |
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| Section 9.06. |
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Reference in Securities to Supplemental Indentures |
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58 |
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| ARTICLE 10 |
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| COVENANTS |
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| Section 10.01. |
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Payment of Principal, Premium and Interest |
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59 |
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| Section 10.02. |
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Maintenance of Office or Agency |
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|
59 |
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| Section 10.03. |
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Money or Security Payments to Be Held in Trust |
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59 |
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| Section 10.04. |
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Certificate to Trustee |
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|
60 |
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| Section 10.05. |
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Corporate Existence |
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|
60 |
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| Section 10.06. |
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Limitation on Liens |
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|
60 |
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| Section 10.07. |
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Limitation on Sale and Lease-Back |
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|
63 |
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| Section 10.08. |
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Waiver of Certain Covenants |
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|
63 |
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|
| ARTICLE 11 |
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| REDEMPTION OF SECURITIES |
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|
|
|
| Section 11.01. |
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Applicability of Article |
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|
64 |
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| Section 11.02. |
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Election to Redeem; Notice to Trustee |
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|
64 |
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| Section 11.03. |
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Selection by Trustee of Securities to be Redeemed |
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|
64 |
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iii
|
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| Section 11.04. |
|
Notice of Redemption |
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|
65 |
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| Section 11.05. |
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Deposit of Redemption Price |
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|
66 |
|
| Section 11.06. |
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Securities Payable on Redemption Date |
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66 |
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| Section 11.07. |
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Securities Redeemed in Part |
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66 |
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| Section 11.08. |
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Provisions with Respect to any Sinking Funds |
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|
66 |
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| ARTICLE 12 |
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| REPAYMENT AT OPTION OF HOLDERS |
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|
|
|
| Section 12.01. |
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Applicability of Article |
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|
68 |
|
| Section 12.02. |
|
Repayment of Securities |
|
|
68 |
|
| Section 12.03. |
|
Exercise of Option |
|
|
68 |
|
| Section 12.04. |
|
When Securities Presented for Repayment Become Due and Payable |
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|
69 |
|
| Section 12.05. |
|
Securities Repaid in Part |
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|
69 |
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iv
THIS INDENTURE, between The J. M. Smucker Company, an Ohio corporation (hereinafter called the
“Company”) having its principal office at One Strawberry Lane, Orrville, Ohio 44667, and U.S. Bank National Association, a national banking association, as trustee (hereinafter called the “Trustee”), is made and
entered into as of this 20th day of March, 2015.
Recitals of the Company
The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured debentures, notes,
bonds, and other evidences of indebtedness, to be issued in one or more fully registered series.
All things necessary to make this
Indenture a valid agreement of the Company, in accordance with its terms, have been done.
Agreements of the Parties
To set forth or to provide for the establishment of the terms and conditions upon which the Securities (as hereinafter defined) are and are to
be authenticated, issued, and delivered, and in consideration of the premises thereof, and the purchase of Securities by the Holders (as hereinafter defined) thereof, it is mutually covenanted and agreed as follows, for the equal and proportionate
benefit of all Holders from time to time of the Securities or of any series thereof, as the case may be:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION
Section 1.01. Definitions. For all purposes of this Indenture and of any indenture supplemental
hereto, except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are
defined in the Trust Indenture Act (as hereinafter defined), either directly or by reference therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term “generally accepted accounting principles” with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally
accepted in the United States of America at the date of such computation; and
1
(d) all references in this instrument to designated “Articles”,
“Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this instrument as originally executed. The words “herein”, “hereof”, and “hereunder” and other words
of similar import refer to this Indenture as a whole and not to any particular Article, Section, or other subdivision.
“Act”, when used with respect to any Securityholder (as hereinafter defined), has the meaning specified in Section 1.04.
“Affiliate” of any specified Person (as hereinafter defined) means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Attributable Debt” means the present value (discounted at the inherent interest rate as determined by the Company in good
faith, compounded semi-annually) of the obligation of a lessee for rental payments during the remaining term of any lease (including any period for which such lease has been extended). Any determination of any actual percentage rate inherent in any
such arrangement made in good faith by the Company shall be binding and conclusive, and the Trustee shall have no duty with respect to any determination made under Section 10.06.
“Authenticating Agent” means any Person authorized by the Trustee to authenticate Securities of one or more series under
Section 6.14.
“Authentication Order” has the meaning specified in Section 3.03.
“Board of Directors” means (i) the board of directors of the Company, (ii) any duly authorized committee of that
board, or (iii) any officer, director, or authorized representative of the Company, in each case duly authorized by such board to act hereunder.
“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have
been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.
“Business Day” means (except, with respect to any particular series of Securities, as may be otherwise provided in the form
of such Securities) each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the Place of Payment are authorized or obligated by law or executive order to close.
2
“Chairman” means the Company’s Chairman of the Board of Directors.
“Commission” means the Securities and Exchange Commission, as from time to time constituted, created under the Securities
Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.
“Company” means The J. M. Smucker Company, unless and until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.
“Company
Request”, “Company Order”, and “Company Consent” mean, respectively, a written request, order, or consent signed in the name of the Company by its Chairman, Vice Chairman, Chief Executive Officer, Chief
Financial Officer, Senior Vice President, or any Vice President (as hereinafter defined), or by any other officer or officers of the Company pursuant to an applicable Board Resolution, and delivered to the Trustee.
“Consolidated Net Tangible Assets” means the total assets appearing on the Company’s latest consolidated balance sheet
contained in its most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, filed with the Commission, excluding the sum of (1) all current liabilities and (2) all goodwill, patents, copyrights, trademarks
and other like intangibles.
“Corporate Trust Office” means the office of the Trustee at which at any particular time its
corporate trust business shall be principally administered, which office at the date hereof is located at US Bank National Association, 1350 Euclid Avenue, Cleveland, Ohio 44115, Attention: Corporate Trust Services.
“Corporation” means a corporation, association, company, joint-stock company, limited liability company or business trust.
“Covenant Defeasance” has the meaning specified in Section 4.03.
“Debt” has the meaning specified in Section 10.06(a).
“Defaulted Interest” has the meaning specified in Section 3.07.
“Defeasance” has the meaning specified in Section 4.02.
“Depositary” means with respect to the Securities of any series issuable or issued in whole or in part in global form, the
Person designated as Depositary by the Company pursuant to Section 3.01, unless and until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Depositary” shall mean or
include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, “Depositary” as used with respect to the Securities of any such series shall mean the “Depositary” with respect to the
Securities of that series.
3
“Equivalent Government Securities” means, in relation to Securities denominated
in a currency other than U.S. dollars, securities of the government that issued the currency in which such Securities are denominated or securities of government agencies backed by the full faith and credit of such government.
“Event of Default” has the meaning specified in Section 5.01.
“guarantor” means, with respect to Securities of any Series, each Person that becomes a guarantor of the Securities of such
series, unless and until such time as such Person is released from its obligations under its guarantee in accordance with the terms of such series of Securities.
“Holder”, “Securityholder” and “Holder of Securities” means a Person in whose name a
Security is registered in the Security Register (as hereinafter defined).
“Indenture” or “this
Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the
terms of any particular series of Securities established as contemplated by Section 3.01.
“Intercreditor Agreement”
means the Third Amended and Restated Intercreditor Agreement, dated as of June 11, 2010, by and among the Bank of Montreal, in its capacity as administrative agent under the credit agreement dated as of September 6, 2013, U.S. Bank
National Association, in its capacity as trustee of the Company’s 3.50% Senior Notes due October 15, 2021, and the lenders, agents, trustees and holders party thereto from time to time (as may be amended, modified or otherwise supplemented
after the date hereof).
“Interest Payment Date”, when used with respect to any series of Securities, means any date on
which an installment of interest on those Securities is scheduled to be paid.
“Judgment Currency” has the meaning set
forth in Section 1.14.
“Maturity”, when used with respect to any Security, means the date on which the principal amount
outstanding under such Security or an installment of principal amount outstanding under such Security becomes due and payable, as therein or herein provided, whether on the Scheduled Maturity Date (as hereinafter defined), by declaration of
acceleration, call for redemption, or otherwise.
“Officers’ Certificate” means a certificate signed by any two of
the Chairman, Vice Chairman, Chief Executive Officer, Chief Financial Officer, Senior Vice President, any Vice President, the Treasurer, and any Assistant Treasurer of the Company, or by any other officer or officers of the Company pursuant to an
applicable Board Resolution, and delivered to the Trustee.
4
“Opinion of Counsel” means a written opinion of counsel to the Company, which
counsel may be an employee of the Company or other counsel who shall be reasonably acceptable to the Trustee.
“Original Issue
Discount Security” means any Security which is initially sold at a discount from the principal amount thereof and the terms of which provide that upon redemption or acceleration of the Maturity thereof, an amount less than the principal
amount thereof would become due and payable.
“Outstanding”, when used with respect to any particular Securities or to
the Securities of any particular series means, as of the date of determination, all such Securities theretofore authenticated and delivered under this Indenture, except:
(i) such Securities theretofore canceled by the Trustee or delivered by the Company to the Trustee for cancellation;
(ii) such Securities, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited in
trust with the Trustee or with any Paying Agent (as hereinafter defined) other than the Company, or, if the Company shall act as its own Paying Agent, has been set aside and segregated in trust by the Company; provided, in any case, that if
such Securities are to be redeemed prior to their Scheduled Maturity Date, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and
(iii) such Securities in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture,
or which shall have been paid, in each case, pursuant to the terms of Section 3.06 (except with respect to any such Security as to which proof satisfactory to the Trustee is presented that such Security is held by a Person in whose hands such
Security is a legal, valid, and binding obligation of the Company).
In determining whether the Holders of the requisite principal amount of such
Securities Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of any Original Issue Discount Security that shall be deemed to be Outstanding shall be the amount of the
principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof. In determining whether the Holders of the requisite principal amount of such Securities Outstanding have
given a direction concerning the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or concerning the exercise of any trust or power conferred upon the Trustee under this Indenture, or concerning a consent
on behalf of the Holders of any series of Securities to the
5
waiver of any past default and its consequences, Securities owned by the Company, any other obligor upon the Securities, or any Affiliate of the Company or such other obligor shall be disregarded
and deemed not to be Outstanding. In determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, or waiver, only Securities which a Responsible Officer assigned to the
corporate trust department of the Trustee knows to be owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be so disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to act as owner with respect to such Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor.
“Paying Agent” means, with respect to any Securities,
any Person appointed by the Company to distribute amounts payable by the Company on such Securities. If at any time there shall be more than one such Person, “Paying Agent” as used with respect to the Securities of any particular series
shall mean the Paying Agent with respect to Securities of that series. As of the date of this Indenture, the Company has appointed the Trustee as Paying Agent with respect to all Securities issuable hereunder.
“Person” means any individual, corporation, partnership, limited liability company, business trust, association, joint-stock
company, joint venture, trust, incorporated or unincorporated organization or other entity, or government or any agency or political subdivision thereof.
“Place of Payment” means with respect to any series of Securities issued hereunder the city or political subdivision so
designated with respect to the series of Securities in question in accordance with clause (5) of Section 3.01.
“Predecessor Securities” of any particular Security means every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.06 in lieu of a lost, destroyed, mutilated, or stolen Security shall be deemed to evidence
the same debt as the lost, destroyed, mutilated, or stolen Security.
“Principal Property” means any manufacturing or
processing plant or facility, warehouse, office facility or distribution center that is located within the continental United States, having a net book value which, on the date the determination as to whether a property is a Principal Property is
being made, is in excess of 2% of the Consolidated Net Tangible Assets of the Company. The Company’s Board of Directors (or any duly authorized committee of the Company’s Board of Directors) by resolution may create an exception by
declaring that a plant or facility is not of material importance to the total business conducted by the Company and the Subsidiaries of the Company as an entirety.
6
“Record Date” means any date as of which the Holder of a Security will be
determined for any purpose described herein, such determination to be made as of the close of business on such date by reference to the Security Register.
“Redemption Date”, when used with respect to any Security to be redeemed, means the date fixed for such redemption by or
pursuant to this Indenture.
“Redemption Price”, when used with respect to any Security to be redeemed, means the price
specified in the Security at which it is to be redeemed pursuant to this Indenture.
“Repayment Date”, when used with
respect to any Security to be repaid, means the date fixed for such repayment pursuant to such Security.
“Repayment
Price”, when used with respect to any Security to be repaid, means the price at which it is to be repaid pursuant to such Security.
“Required Currency” has the meaning set forth in Section 1.14.
“Responsible Officer”, when used with respect to the Trustee, means an officer of the Trustee in the Corporate Trust Office,
having direct responsibility for the administration of this Indenture, and also, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with
the particular subject.
“Restricted Subsidiary” means any guarantor of such series and any Subsidiary
(i) substantially all the property of which is located within the continental United States, (ii) which owns a Principal Property, and (iii) in which the Company’s investment, direct or indirect and whether in the form of equity,
debt or advances, as shown on the consolidating balance sheet used in the preparation of the latest quarterly consolidated financial statements of the Company preceding the date of determination, is in excess of 5% of the total consolidated assets
of the Company as shown on such quarterly consolidated financial statements; provided, however, that the term “Restricted Subsidiary” shall not include any Subsidiary which is principally engaged in leasing or which is
principally engaged in financing the Company’s operations.
“Scheduled Maturity Date”, when used with respect to any
Security, means the date specified in such Security as the date on which all outstanding principal and interest will be due and payable.
“Security” or “Securities” means any note or notes, bond or bonds, debenture or debentures, or any other
evidences of indebtedness, as the case may be, of any series authenticated and delivered from time to time under this Indenture.
“Security Register” has the meaning specified in Section 3.05.
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“Security Registrar” means the Person who maintains the Security Register, which
Person shall be the Trustee unless and until a successor Security Registrar is appointed by the Company.
“Special Record
Date” has the meaning specified in Section 3.07.
“Specified Currency” has the meaning specified in Section
3.01.
“Subsidiary” means any corporation of which at least a majority of the outstanding stock having voting power under
ordinary circumstances to elect a majority of the board of directors of that corporation is at the time owned by the Company or in conjunction with or by one or more of its Subsidiaries, and any other entity of which at least a majority of the
voting interest under ordinary circumstances is at the time owned or controlled solely by the Company or in conjunction with or by one or more of its Subsidiaries.
“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939, as in force as of the date hereof,
except as provided in Section 9.05.
“Trustee” means the party named as such in the preamble until a successor
becomes such pursuant to this Indenture and thereafter means or includes each party who is then a trustee hereunder, and if at any time there is more than one such party, “Trustee” as used with respect to the Securities of any series means
the Trustee with respect to Securities of that series. If Trustees with respect to different series of Securities are trustees under this Indenture, nothing herein shall constitute the Trustees co-trustees of the same trust, and each Trustee shall
be the trustee of a trust separate and apart from any trust administered by any other Trustee with respect to a different series of Securities.
“U.S. Government Obligations” means (i) securities that are direct obligations of the United States of America, the
payment of which is unconditionally guaranteed by the full faith and credit of the United States of America and (ii) securities that are obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the
United States of America, the payment of which is unconditionally guaranteed by the full faith and credit of the United States of America, and also includes depository receipts issued by a bank or trust company as custodian with respect to any of
the securities described in the preceding clauses (i) and (ii), and any payment of interest or principal payable under any of the securities described in the preceding clauses (i) and (ii) that is held by such custodian for the
account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt, or from any amount received by
the custodian in respect of such securities, or from any specific payment of interest or principal payable under the securities evidenced by such depository receipt.
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“Vice President”, when used with respect to the Company or the Trustee, means
any vice president, whether or not designated by a number or a word or words added before or after the title “vice president.”
Section 1.02. Officers’ Certificates and Opinions. Every Officers’ Certificate, Opinion of Counsel, and other
certificate or opinion to be delivered to the Trustee under this Indenture with respect to any action to be taken by the Trustee (except for the Officers’ Certificate required by Section 10.04) shall include the following:
(a) a statement that each individual signing such certificate or opinion has read all covenants and conditions of this Indenture relating to
such proposed action, including the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(c) a statement
that, in the opinion of each such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give
an opinion with respect to some matters and one or more other such Persons as to the other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, legal counsel, unless such officer knows that any such certificate, opinion, or representation is erroneous. Any opinion of counsel for the Company may be based, insofar as it relates to factual matters, upon a certificate
or opinion of, or representations by, an officer or officers of the Company, unless such counsel knows that any such certificate, opinion, or representation is erroneous.
Where any Person is required to make, give, or execute two or more applications, requests, consents, certificates, statements, opinions, or
other instruments under this Indenture, such instruments may, but need not, be consolidated and form a single instrument.
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Section 1.04. Acts of Securityholders. (a) Any request, demand, authorization,
direction, notice, consent, waiver, or other action provided by this Indenture to be given or taken by Securityholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders in
person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and (if expressly required by the applicable
terms of this Indenture) to the Company. If any Securities are denominated in coin or currency other than that of the United States, then for the purposes of determining whether the Holders of the requisite principal amount of Securities have taken
any action as herein described, the principal amount of such Securities shall be deemed to be that amount of United States dollars that could be obtained for such principal amount on the basis of the spot rate of exchange into United States dollars
for the currency in which such Securities are denominated (as evidenced to the Trustee by a certificate provided by a financial institution, selected by the Company, that maintains an active trade in the currency in question, acting as conversion
agent) as of the date the taking of such action by the Holders of such requisite principal amount is evidenced to the Trustee as provided in the immediately preceding sentence. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the “Act” of the Securityholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness to such
execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such
execution is by an officer of a corporation or a member of a partnership, on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution
of any such instrument or writing, or the authority of the person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall for all purposes be determined by reference to the Security Register, as such register shall exist as of
the applicable date.
(d) If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent,
waiver or other action, the Company may, at its option, by Board Resolution, fix in advance a Record Date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, but
the Company shall have no obligation to do so. If such Record Date is fixed, such request, demand, authorization,
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direction, notice, consent, waiver or other action may be given before or after such Record Date, but only the Holders of record at the close of business on such Record Date shall be deemed to be
Holders for the purpose of determining whether Holders of the requisite proportion of Securities Outstanding have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for
that purpose the Securities Outstanding shall be computed as of such Record Date; provided that no such authorization, agreement or consent by the Holders on such Record Date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months after such Record Date.
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other action by the Holder of any Security shall bind each subsequent Holder of such Security, and each Holder of any Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof,
with respect to anything done or suffered to be done by the Trustee or the Company in reliance upon such action, whether or not notation of such action is made upon such Security.
Section 1.05. Notices, etc., to Trustee and Company. Any request, order, authorization, direction, consent, waiver, or other
action to be taken by the Trustee, the Company, or the Securityholders hereunder (including any Authentication Order), and any notice to be given to the Trustee or the Company with respect to any action taken or to be taken by the Trustee, the
Company, or the Securityholders hereunder, shall be sufficient if made in writing and
(a) (if to be furnished or delivered to or filed
with the Trustee by the Company or any Securityholder) delivered to the Trustee (which may be by original or by facsimile) at its Corporate Trust Office, or
(b) (if to be furnished or delivered to the Company by the Trustee or any Securityholder, and except as otherwise provided in
Section 5.01(d) and, in the case of a request for repayment, except as specified in the Security carrying the right to repayment) mailed to the Company, first-class postage prepaid, at its principal office (as specified in the first paragraph
of this instrument), Attention: Treasurer, or at any other address hereafter furnished in writing by the Company to the Trustee.
Section 1.06. Notice To Securityholders; Waiver. Where this Indenture or any Security provides for notice to Securityholders of
any event, such notice shall be sufficiently given (unless otherwise expressly provided herein or in such Security) if in writing and mailed, first-class postage prepaid, to each Securityholder affected by such event, at his or her address as it
appears in the Security Register as of the applicable Record Date, not later than the latest date or earlier than the earliest date prescribed by this Indenture or such Security for the giving of such notice. In any case where notice to
Securityholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular
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Securityholder shall affect the sufficiency of such notice with respect to other Securityholders. Where this Indenture or any Security provides for notice in any manner, such notice may be waived
in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Securityholders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular
mail service as a result of a strike, work stoppage or otherwise, it shall be impractical to mail notice of any event to any Securityholder when such notice is required to be given pursuant to any provision of this Indenture or the applicable
Security, then any method of notification as shall be satisfactory to the Trustee and the Company shall be deemed to be sufficient for the giving of such notice.
Section 1.07. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision
hereof which is required to be included in this Indenture by any of the provisions of the TIA, such required provision shall control.
Section 1.08. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents hereof
are for convenience only and shall not affect the construction of any provision of this Indenture.
Section 1.09. Successors and
Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
Section 1.10. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.11. Benefits of Indenture. Nothing in this Indenture or in any Securities, express or implied, shall give to any Person,
other than the parties hereto, their successors hereunder, the Authenticating Agent, the Security Registrar, any Paying Agent, and the Holders of Securities (or such of them as may be affected thereby), any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 1.12. Governing Law. This Indenture shall be governed by and construed in
accordance with the laws of the State of New York.
Section 1.13. Counterparts. This instrument may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an original, but all of which shall together constitute but one and the same instrument.
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Section 1.14. Judgment Currency. The Company agrees, to the fullest extent that it
may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court with respect to the Securities of any series it is necessary to convert the sum due in respect of the principal, premium, if any, or
interest, if any, payable with respect to such Securities into a currency in which a judgment can be rendered (the “Judgment Currency”), the rate of exchange from the currency in which payments under such Securities is payable (the
“Required Currency”) into the Judgment Currency shall be the highest bid quotation (assuming European-style quotation – i.e., Required Currency per Judgment Currency) received by the Company from three recognized foreign
exchange dealers in the City of New York for the purchase of the aggregate amount of the judgment (as denominated in the Judgment Currency) on the Business Day preceding the date on which a final unappealable judgment is rendered, for settlement on
such payment date, and at which the applicable dealer timely commits to execute a contract, and (b) the Company’s obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by
any tender, or by any recovery pursuant to any judgment (whether or not entered in accordance with the preceding clause (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the
actual receipt by the judgment creditor of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in
the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable, and (iii) shall not be affected by judgment being obtained for any other sum due
under this Indenture.
Section 1.15. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Repayment Date
or Maturity of any Security shall not be a Business Day in the Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal (and premium, if any) need not be made at such Place
of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date, Redemption Date, Repayment Date or at Maturity, provided that no
interest shall accrue for the period from and after such Interest Payment Date, Redemption Date, Repayment Date or Maturity, as the case may be.
Section 1.16. Exemption from Individual Liability. No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of any Security or any coupon, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company (or any guarantor)
or of any successor entity, either directly or through the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and
the obligations
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issued hereunder are solely corporate obligations of the Company (and, to the extent provided in the applicable guarantee, any guarantor), and that no such personal liability whatever shall
attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors, as such, of the Company (or any guarantor) or any successor entity, or any of them, because of the creation of the indebtedness hereby authorized, or
under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or any coupon or implied therefrom; and that any and all such personal liability, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Securities or any coupon or implied, therefrom are hereby expressly waived and released as a condition of and as a consideration for, the execution of this Indenture and the issue
of such Securities
ARTICLE 2
SECURITY FORMS
Section 2.01. Forms Generally. The Securities of each series shall have such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may be required to comply with the rules of any securities
exchange, or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Security.
The definitive Securities, if any, shall be printed, lithographed or engraved
or produced by any combination of these methods on steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange, all as determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
Section 2.02. Forms of Securities. Each Security shall be in one of the forms approved from
time to time by or pursuant to any Board Resolution, Officers’ Certificate or established in one or more indentures supplemental hereto. Prior to the delivery to the Trustee for authentication of any Security in any form approved by or pursuant
to a Board Resolution, the Company shall deliver to the Trustee a copy of such Board Resolution, together with a true and correct copy of the form of Security which has been approved thereby, or, if a Board Resolution authorizes a specific officer
or officers to approve a form of Security, together with a certificate of such officer or officers approving the form of Security attached thereto, provided, however, that with respect to all Securities issued pursuant to the same Board
Resolution, the required copy of such Board Resolution,
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together with the appropriate attachment, need be delivered only once. Any form of Security approved by or pursuant to a Board Resolution must be acceptable as to form to the Trustee, such
acceptance to be evidenced by the Trustee’s authentication of Securities in that form or by a certificate signed by a Responsible Officer of the Trustee and delivered to the Company.
Section 2.03. Securities in Global Form. If Securities of a series are issuable in whole or in part in global form, the global
security representing such Securities may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and may also provide that the aggregate amount of Outstanding Securities represented thereby
may from time to time be reduced to reflect exchanges or increased to reflect the issuance of additional Securities. Any endorsement of a Security in global form to reflect the amount (or any increase or decrease in the amount) of Outstanding
Securities represented thereby shall be made in such manner and by such Person or Persons as shall be specified therein or in the Authentication Order delivered to the Trustee pursuant to Section 3.03 hereof.
Section 2.04. Form of Trustee’s Certificate of Authentication. The form of Trustee’s Certificate of Authentication for
any Security issued pursuant to this Indenture shall be substantially as follows:
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
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| U.S. Bank National Association, as Trustee, |
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| By: |
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Authorized Signatory |
ARTICLE 3
THE SECURITIES
Section 3.01. General Title; General Limitations; Issuable in Series; Terms of Particular Series. The aggregate principal amount
of Securities that may be authenticated, delivered, and Outstanding at any time under this Indenture is not limited.
The Securities may
be issued in one or more series in such aggregate principal amount as may from time to time be authorized by the Board of Directors. All Securities of a series issued under this Indenture shall in all respects be equally and ratably entitled to the
benefits hereof, without preference, priority, or distinction on account of the actual time of the authentication and delivery or Scheduled Maturity Date thereof.
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Each series of Securities shall be created either by or pursuant to one or more Board
Resolutions, Officers’ Certificates or indentures supplemental hereto. Any such Board Resolution, Officers’ Certificate or supplemental indenture (or, in the case of a series of Securities created pursuant to a Board Resolution, any
officer or officers authorized by such Board Resolution) shall establish the terms of any such series of Securities, including the following (as and to such extent as may be applicable):
(1) the title of such series;
(2) the limit, if any, upon the aggregate principal amount or issue price of the Securities of such series;
(3) the issue date or issue dates of the Securities of such series;
(4) the Scheduled Maturity Date of the Securities of such series;
(5) the place or places where the principal, premium, if any, interest, if any, and additional amounts, if any, payable with respect to the
Securities of such series shall be payable;
(6) whether the Securities of such series will be issued at par or at a premium over or a
discount from their face amount;
(7) the rate or rates (which may be fixed or variable) at which the Securities of such series shall bear
interest, if any, and, if applicable, the method by which such rate or rates may be determined;
(8) the date or dates (or the method by
which such date or dates may be determined) from which interest, if any, shall accrue, and the Interest Payment Dates on which such interest shall be payable;
(9) the rights, if any, to defer payments of interest on the Securities by extending the interest payment periods and the duration of such
extension;
(10) the period or periods within which, the Redemption Price(s) or Repayment Price(s) at which, and any other terms and
conditions upon which the Securities of such series may be redeemed or repaid, in whole or in part, by the Company;
(11) the obligation,
if any, of the Company to redeem, repay, or purchase any of the Securities of such series pursuant to any sinking fund, mandatory redemption, purchase obligation, or analogous provision at the option of a Holder thereof, and the period or periods
within which, the Redemption Price(s) or Repayment Price(s) or other price or prices at which, and any other terms and conditions upon which the Securities of such series shall be redeemed, repaid, or purchased, in whole or in part, pursuant to such
obligation;
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(12) whether the Securities of such series are to be issued in whole or in part in global form
and, if so, the identity of the Depositary for such global security and the terms and conditions, if any, upon which interests in the Securities represented by such global security may be exchanged, in whole or in part, for the individual Securities
represented thereby (if other than as provided in Section 3.05);
(13) the denominations in which the Securities of such series will
be issued (which may be any denomination as set forth in the terms of such Securities) if other than U.S.$1,000 or an integral multiple thereof;
(14) whether and under what circumstances additional amounts on the Securities of such series shall be payable in respect of any taxes,
assessments, or other governmental charges withheld or deducted and, if so, whether the Company will have the option to redeem such Securities rather than pay such additional amounts;
(15) the basis upon which interest shall be calculated;
(16) if the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary
Security for a definitive Security of such series) only upon receipt of certain certificates or other documents or upon satisfaction of other conditions, then the form and terms of such certificates, documents, and/or conditions;
(17) the exchange or conversion of the Securities of that series, whether or not at the option of the Holders thereof, for or into new
Securities of a different series or for or into any other securities which may include shares of capital stock of the Company or any Subsidiary of the Company or securities directly or indirectly convertible into or exchangeable for any such shares
or securities of entities unaffiliated with the Company or any Subsidiary of the Company;
(18) if other than U.S. dollars, the foreign or
composite currency or currencies (each such currency a “Specified Currency”) in which the Securities of such series shall be denominated and in which payments of principal, premium, if any, interest, if any, or additional amounts,
if any, payable with respect to such Securities shall or may be payable;
(19) if the principal, premium, if any, interest, if any, or
additional amounts, if any, payable with respect to the Securities of such series are to be payable in any currency other than that in which the Securities are stated to be payable, whether at the election of the Company or of a Holder thereof, the
period or periods within which, and the terms and conditions upon which, such election may be made;
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(20) if the amount of any payment of principal, premium, if any, interest, if any, or other sum
payable with respect to the Securities of such series may be determined by reference to the relative value of one or more Specified Currencies, commodities, securities, or instruments, the level of one or more financial or non-financial indices, or
any other designated factors or formulas, the manner in which such amounts shall be determined;
(21) the exchange of Securities of such
series, at the option of the Holders thereof, for other Securities of the same series of the same aggregate principal amount of a different authorized kind or different authorized denomination or denominations, or both;
(22) the appointment by the Trustee of an Authenticating Agent in one or more places other than the Corporate Trust Office of the Trustee,
with power to act on behalf of the Trustee, and subject to its direction, in the authentication and delivery of the Securities of such series;
(23) any trustees, depositaries, paying agents, transfer agents, exchange agents, conversion agents, registrars, or other agents with respect
to the Securities of such series if other than the Trustee, Paying Agent and Security Registrar named herein;
(24) the portion of the
principal amount of Securities of such series, if other than the principal amount thereof, that shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 5.02 or provable in bankruptcy pursuant to
Section 5.04;
(25) any Event of Default with respect to the Securities of such series, if not set forth herein, or any modification
of any Event of Default set forth herein with respect to such series;
(26) any other covenant or warranty included for the benefit of the
Securities of the series in addition to (and not inconsistent with) those set forth herein for the benefit of Securities of all series, or any other covenant or warranty included for the benefit of Securities of the series in lieu of any covenant or
warranty set forth herein for the benefit of Securities of all series, or any provision that any covenant or warranty set forth herein for the benefit of Securities of all series shall not be for the benefit of Securities of such series, or any
combination of such covenants, warranties or provisions;
(27) the inapplicability of Section 4.02 and Section 4.03 of this
Indenture to the Securities of such series and if Section 4.03 is applicable, the covenants subject to Covenant Defeasance under Section 4.03; and
(28) any other terms not inconsistent with the provisions of this Indenture.
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Except as otherwise permitted by Section 3.03, if all of the Securities of any such series
are not to be issued at one time, the Company shall deliver an Authentication Order with respect to each subsequent issuance of Securities of such series, but such Authentication Orders may be executed by any authorized officer or officers of the
Company, whether or not such officer or officers would have been authorized to establish such series pursuant to the aforementioned Board Resolution or Officers’ Certificate.
Unless otherwise provided by or pursuant to the Board Resolution or Officers’ Certificate or supplemental indenture creating such series
(i) a series may be reopened for issuances of additional Securities of such series, and (ii) all Securities of the same series shall be substantially identical, except for the initial Interest Payment Date, issue price, initial interest
accrual date and the amount of the first interest payment; provided that if the additional Securities are not fungible with the existing Securities for United States federal income tax purposes, the additional Securities will have a separate
CUSIP number.
The form of the Securities of each series shall be established in a supplemental indenture or by or pursuant to the Board
Resolution or Officers’ Certificate creating such series. The Securities of each series shall be distinguished from the Securities of each other series in such manner as the Board of Directors or its authorized representative or representatives
may determine.
Unless otherwise provided with respect to Securities of a particular series, the Securities of any series may only be
issuable in registered form, without coupons.
Section 3.02. Denominations and Currency. The Securities of each series shall
be issuable in such denominations and currency as shall be provided in the provisions of this Indenture or by or pursuant to the Board Resolution, Officers’ Certificate or supplemental indenture creating such series. In the absence of any such
provisions with respect to the Securities of any series, the Securities of that series shall be issuable only in fully registered form in denominations of U.S. $1,000 and any integral multiple thereof.
Section 3.03. Execution, Authentication and Delivery, and Dating. The Securities shall be executed on behalf of the Company by the
Chairman, Vice Chairman, Chief Executive Officer, Chief Financial Officer, Senior Vice President or any Vice President of the Company. The signature of any of these officers on the Securities may be manual or facsimile. Typographical and other minor
errors or defects in any such reproduction of any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee.
Unless otherwise provided in the form of Security for any series, each Security shall be dated the date of its authentication.
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Securities bearing the manual or facsimile signatures of individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such
Securities.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities to
the Trustee for authentication, together with a Company Order for authentication and delivery (such Company Order, an “Authentication Order”) with respect to such Securities, and the Trustee shall, upon receipt of such
Authentication Order, in accordance with procedures acceptable to the Trustee set forth in the Authentication Order, and subject to the provisions hereof, authenticate and deliver such Securities to such recipients as may be specified from time to
time pursuant to such Authentication Order. The material terms of such Securities shall be determinable by reference to such Authentication Order and procedures. If provided for in such procedures, such Authentication Order may authorize
authentication and delivery of such Securities pursuant to oral instructions from the Company or its duly authorized agent, which instructions shall be promptly confirmed in writing. In authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to the provisions of Section 6.01 hereof) shall be fully protected in relying upon:
(1) an executed supplemental indenture, if any;
(2) an Officers’ Certificate, certifying as to the authorized form or forms and terms of such Securities; and
(3) an Opinion of Counsel, stating that:
(a) the form or forms and terms of such Securities have been established by and in conformity with the provisions of this
Indenture; and
(b) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the
manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, moratorium,
reorganization, and other laws of general applicability relating to or affecting the enforcement of creditors’ rights and to general principles of equity.
After the original issuance of the first such Security to be issued, any separate request by the Company that the Trustee authenticate such Securities for
original issuance will be deemed to be a certification by the Company that it is in compliance with all conditions precedent provided for in this Indenture relating to the authentication and delivery of such Securities.
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The Trustee shall not be required to authenticate such Securities if the issue thereof will
adversely affect the Trustee’s own rights, duties, or immunities under the Securities and this Indenture.
If the Company shall
establish pursuant to Section 3.01 that Securities of a series may be issued in whole or in part in global form, then the Company shall execute, and the Trustee shall (in accordance with this Section 3.03 and the Authentication Order with
respect to such series) authenticate and deliver, one or more Securities in global form that, unless otherwise specified in the Board Resolution, Officer’s Certificate or supplemental indenture establishing the terms of such Securities,
(i) shall represent and shall be denominated in an aggregate amount equal to the aggregate principal amount of the Outstanding Securities of such series to be represented by such one or more Securities in global form, (ii) shall be
registered, in the name of the Depositary for such Security or Securities in global form, or in the name of a nominee of such Depositary, (iii) shall be delivered to such Depositary or pursuant to such Depositary’s instruction, and
(iv) shall bear a legend substantially as follows: “Unless and until it is exchanged in whole or in part for Securities in certificated form, this Security may not be transferred except as a whole by the Depositary to a nominee of the
Depositary, or by a nominee of the Depositary to the Depositary or another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.” Each Depositary designated
pursuant to Section 3.01 for a Security in global form must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable
statute or regulation.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless
there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature of an authorized signatory, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and delivered hereunder.
Section 3.04. Temporary
Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and, upon receipt of the documents required by Sections 2.02, 3.01 and 3.03 hereof, together with an Authentication Order, the Trustee shall
authenticate and deliver, temporary Securities of such series that are printed, lithographed, typewritten, mimeographed, or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which
they are issued in registered form, without coupons, and with such appropriate insertions, omissions, substitutions, and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. In
the case of Securities of any series for which a temporary Security may be issued in global form, such temporary global security shall represent all of the Outstanding Securities of such series and tenor.
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Except in the case of temporary Securities in global form, which shall be exchanged in accordance
with the provisions thereof, if temporary Securities of any series are issued, the Company will cause definitive Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary
Securities of such series shall be exchangeable, at the Corporate Trust Office of the Trustee, or at such other office or agency as may be maintained by the Company in a Place of Payment pursuant to Section 10.02 hereof, for definitive
Securities of such series having identical terms and provisions, upon surrender of the temporary Securities of such series, at the Company’s own expense and without charge to the Holder; and upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of such series in authorized denominations containing identical terms
and provisions. Unless otherwise specified as contemplated by Section 3.01 with respect to a temporary Security in global form, until so exchanged, the temporary Securities of such series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series.
Section 3.05. Registration, Transfer and Exchange. With respect
to the Securities of each series, the Trustee shall keep a register (herein sometimes referred to as the “Security Register”) which shall provide for the registration of Securities of such series, and for transfers of Securities of
such series, in accordance with information to be provided to the Trustee by the Company, subject to such reasonable regulations as the Trustee may prescribe. Such register shall be in written form or in any other form capable of being converted
into written form within a reasonable time. At all reasonable times the information contained in such register or registers shall be available for inspection at the Corporate Trust Office of the Trustee or at such other office or agency to be
maintained by the Company pursuant to Section 10.02 hereof.
Upon due presentation for registration of transfer of any Security of
any series at the Corporate Trust Office of the Trustee or at any other office or agency maintained by the Company with respect to that series pursuant to Section 10.02 hereof, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more new Securities of such series of any authorized denominations, of like aggregate principal amount, tenor, terms and Scheduled Maturity Date.
Any other provision of this Section 3.05 notwithstanding, except to the extent otherwise specified in the terms of such Security, unless
and until it is exchanged in whole or in part for the individual Securities represented thereby, in definitive form, a Security in global form representing all or a portion of the Securities of a series may not be transferred except as a whole by
the Depositary for such series to a nominee of such Depositary, or by a nominee of such Depositary to such Depositary or another nominee of such Depositary, or by such Depositary or any such nominee to a successor Depositary for such series or a
nominee of such successor Depositary.
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At the option of the Holder, Securities of any series may be exchanged for other Securities of
such series of any authorized denominations, of like aggregate principal amount, tenor, terms and Scheduled Maturity Date, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Securityholder making the exchange is entitled to receive.
If at any time the Depositary for the Securities of a series represented by one or more Securities in global form notifies the Company that it
is unwilling or unable to continue as Depositary for the Securities of such series, or if at any time the Depositary for the Securities of such series shall no longer be eligible under Section 3.03 hereof, the Company, by Company Order, shall
appoint a successor Depositary with respect to the Securities of such series. If a successor Depositary for the Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company’s election pursuant to Section 3.01 that such Securities be represented by one or more Securities in global form shall no longer be effective with respect to the Securities of such series and the Company will
execute, and the Trustee, upon receipt of an Authentication Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive form, in authorized denominations,
in an aggregate principal amount, and of like terms and tenor, equal to the principal amount of the Security or Securities in global form representing such series, in exchange for such Security or Securities in global form. The Company may at any
time and in its sole discretion and subject to the procedures of the Depositary determine that individual Securities of any series issued in global form shall no longer be represented by such Security or Securities in global form. In such event the
Company will execute, and the Trustee, upon receipt of an Authentication Order for the authentication and delivery of definitive Securities of such series and of the same terms and tenor, will authenticate and deliver Securities of such series in
definitive form, in authorized denominations, and in aggregate principal amount equal to the principal amount of the Security or Securities in global form representing such series in exchange for such Security or Securities in global form.
If and solely to the extent specified by the Company pursuant to Section 3.01 with respect to a series of Securities issued in global
form, the Depositary for such series of Securities may surrender a Security in global form for such series of Securities in exchange in whole or in part for Securities of such series in definitive form and of like terms and tenor on such terms as
are acceptable to the Company and such Depositary. Thereupon, the Company shall execute, and the Trustee upon receipt of an Authentication Order for the authentication and delivery of definitive Securities of such series, shall authenticate and
deliver, without service charge:
(a) to each Person specified by such Depositary, a new definitive Security or Securities of the same
series and of the same tenor and terms, in authorized denominations, in aggregate principal amount equal to and in exchange for such Person’s beneficial interest in the Security in global form; and
(b) to such Depositary, a new Security in global form in a denomination equal to the difference, if any, between the principal amount of the
surrendered Security in global form and the aggregate principal amount of the definitive Securities delivered to Holders pursuant to clause (a) above.
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Upon the exchange of a Security in global form for Securities in definitive form, such Security
in global form shall be canceled by the Trustee or an agent of the Company or the Trustee. Securities issued in definitive form in exchange for a Security in global form pursuant to this Section 3.05 shall be registered in such names and in
such authorized denominations as the Depositary for such Security in global form, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or an agent of the Company or the Trustee in writing. The
Trustee or such agent shall deliver such Securities to or as directed by the Persons in whose names such Securities are so registered or to the Depositary.
Whenever any securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.
Every Security presented or surrendered for registration of transfer, exchange, redemption or payment shall (if so required by the Company or
the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.
Unless otherwise provided in the Security to be transferred or exchanged, no service charge shall be imposed for any registration of transfer
or exchange of Securities, but the Company may (unless otherwise provided in such Security) require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of
Securities, other than exchanges pursuant to Sections 3.04, 3.06, 9.06, 11.06 and 11.07 hereof not involving any transfer.
The Company
shall not be required to (i) issue, register the transfer of, or exchange any Security of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities
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of such series selected for redemption under Section 11.03 and ending at the close of business on the date of such mailing, or (ii) register the transfer of or exchange any Security so
selected for redemption in whole or in part, except in the case of any Security to be redeemed in part, the portion thereof not to be redeemed.
Section 3.06. Mutilated, Destroyed, Lost and Stolen Securities. If (i) any mutilated Security is surrendered to the Trustee,
or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and (ii) there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company may in its discretion execute and upon request of the Company the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Security, a new Security of like tenor, terms, series, Scheduled Maturity Date, and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company
in its discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section,
the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other
Securities of the same series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.07. Payment of Interest; Interest Rights Preserved. Interest on any Security which is payable and is punctually paid or
duly provided for on any Interest Payment Date shall, if so provided in such Security, be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the applicable Record Date,
notwithstanding any transfer or exchange of such Security subsequent to such Record Date and prior to such Interest Payment Date (unless such Interest Payment Date is also the date of Maturity of such Security).
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Any interest on any Security which is payable, but is not punctually paid or duly provided
for, on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered Holder on the applicable Record Date by virtue of his having been such Holder; and, except as hereinafter
provided, such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (a) or clause (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names any such Securities (or their
respective Predecessor Securities) are registered at the close of business on a Special Record Date (herein called “Special Record Date”) for the payment of such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior
to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of
the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to the Holder of each such Security at his or her address as it appears in the
Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the
Persons in whose names such Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Interest on Securities of any series that bear interest may be paid by mailing a check to the address of the
Person entitled thereto at such address as shall appear in the Securities Register for such series or by such other means as may be specified in the form of such Security.
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Subject to the foregoing provisions of this Section 3.07 and the provisions of
Section 3.05 hereof, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by
such other Security.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee, and any agent of the Company or the Trustee may treat the Person in whose name any Security is registered on the applicable Record Date(s) as the owner of such Security for the purpose of receiving payment of
principal, premium, if any, interest, if any (subject to Sections 3.05 and 3.07 hereof), and any additional amounts payable with respect to such Security, and for all other purposes whatsoever, whether or not such Security be overdue, and neither
the Company, the Trustee, nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
None of the
Company, the Trustee, any Authenticating Agent, any Paying Agent, the Security Registrar, or any co-Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial
ownership interests of a Security in global form or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests and each of them may act or refrain from acting without liability on any information relating
to such records provided by the Depositary.
Section 3.09. Cancellation. All Securities surrendered for payment,
redemption, registration of transfer, exchange, or credit against a sinking or analogous fund shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and, if not already canceled, shall be promptly canceled by it. The
Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled
by the Trustee. Acquisition of such Securities by the Company shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation. No Security
shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. The Trustee shall dispose of all canceled Securities in accordance with its customary
procedures and deliver a certificate of such disposition to the Company, unless, by a Company Order, the Company shall direct that the cancelled Securities be returned to it.
Section 3.10. Computation of Interest. Unless otherwise provided as contemplated in Section 3.01, interest on the
Securities shall be calculated on the basis of a 360-day year of twelve 30-day months.
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ARTICLE 4
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect with respect to
any series of Securities (except as to any surviving rights of conversion or transfer or exchange of Securities of such series expressly provided for herein or in the form of Security for such series), and the Trustee, upon Company Request and at
the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture as to such series, when
(a) either
(i)
all Securities of that series theretofore authenticated and delivered (other than (A) Securities of such series which have been destroyed, lost, or stolen and which have been replaced or paid as provided in Section 3.06, and
(B) Securities of such series for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 4.07)
have been canceled or delivered to the Trustee for cancellation; or
(ii) all such Securities of that series not
theretofore canceled or delivered to the Trustee for cancellation
(A) have become due and payable, or
(B) will, in accordance with their Scheduled Maturity Date, become due and payable within one year, or
(C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and, in any of the cases described in subparagraphs (A), (B), or
(C) above, the Company has irrevocably deposited or caused to be deposited with the Trustee, as trust funds in trust for the purpose, (x) an amount in money sufficient, (y) U.S. Government Obligations or Equivalent Government
Securities which through the payment of interest and principal in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money sufficient, or (z) a combination of (x) and
(y) sufficient, in the opinion with respect to (y) and (z) of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire
indebtedness on such Securities with respect to principal, premium, if any, and interest, if any, to the date of such deposit (in the case of Securities which have become due and payable), or to the Scheduled Maturity Date or Redemption Date, as the
case may be; provided, however, that if such U.S.
28
Government Obligations or Equivalent Government Securities are callable or redeemable at the option of the issuer thereof, the amount of such money, U.S. Government Obligations, and Equivalent
Government Securities deposited with the Trustee must be sufficient to pay and discharge the entire indebtedness referred to above if such issuer elects to exercise such call or redemption provisions at any time prior to the Scheduled Maturity Date
or Redemption Date, as the case may be, and provided further that in the case of any discharge relating to any redemption that requires the payment of a premium based on the U.S. treasury rate or other floating rate, the amount deposited
shall be sufficient for purposes of this Indenture to the extent that an amount is deposited with the Trustee equal to the premium calculated as of the date of the notice of redemption; provided that any deficit as of the Redemption Date will be
required to be deposited with the Trustee on or prior to the Redemption Date. The Company, but not the Trustee, shall be responsible for monitoring any such call or redemption provision; and
(b) the Company has paid or caused to be paid all other sums then due and payable hereunder by the Company with respect to the Securities of
such series; and
(c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that
all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to the Securities of such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with respect to any series of Securities, the obligations of the Company
under paragraph (a) of this Section 4.01 and all of the Company’s obligations to make payments to, indemnify or reimburse the Trustee with respect to that series of Securities, including, without limitation, under Section 4.05
and Section 6.07 shall survive, and the obligations of the Trustee under Sections 4.05, 4.07 and 10.03 shall survive.
Section 4.02. Discharge and Defeasance.
The provisions of this Section and Section 4.04 (insofar as relating to this Section) shall apply to the Securities of each series unless
specifically otherwise provided in a Board Resolution, Officers’ Certificate or indenture supplemental hereto provided pursuant to Section 3.01. In addition to discharge of this Indenture pursuant to Section 4.01, the Company shall be
deemed to have paid and discharged the entire indebtedness on all the Securities of a series as provided in this Section on and after the date the conditions set forth in Section 4.04 are satisfied with respect to such series, and the
provisions of this Indenture with respect to the Securities of such series shall no longer be in effect (except as to (i) rights of registration of transfer and exchange of Securities of such series, (ii) substitution of mutilated,
destroyed, lost or stolen Securities of such series, (iii) rights of Holders of Securities of such series to receive, solely from the trust fund described in subparagraph (a) of Section 4.04, payments of principal thereof, premium, if
any, and interest, if any, thereon upon the original stated due dates or upon the Redemption
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Dates therefor (but not upon acceleration), and remaining rights of the Holders of Securities of such series to receive mandatory sinking fund payments, if any, (iv) the rights, obligations,
duties and immunities of the Trustee hereunder, (v) this Section 4.02, Section 4.07, Section 10.02 and Section 10.03 and (vi) the rights of the Holders of Securities of such series as beneficiaries hereof with respect
to the property so deposited with the Trustee payable to all or any of them) (hereinafter called “Defeasance”), and the Trustee at the cost and expense of the Company, shall execute proper instruments acknowledging the same.
Section 4.03. Covenant Defeasance.
The provisions of this Section and Section 4.04 (insofar as relating to this Section) shall apply to the Securities of each series
unless specifically otherwise provided in a Board Resolution, Officers’ Certificate or indenture supplemental hereto provided pursuant to Section 3.01. In the case of any series of Securities, (i) the Company shall be released from
its obligations under any covenants specified in or pursuant to Section 3.01 as being subject to Covenant Defeasance with respect to such series (except as to (a) rights of registration of transfer and exchange of Securities of such series
and rights under Section 4.07, Section 10.02 and Section 10.03, (b) substitution of mutilated, destroyed, lost or stolen Securities of such series, (c) rights of Holders of Securities of such series to receive, from the
Company pursuant to Section 10.01, payments of principal thereof and interest, if any, thereon upon the original stated due dates or upon the Redemption Dates therefor (but not upon acceleration), and remaining rights of the Holders of
Securities of such series to receive mandatory sinking fund payments, if any, (d) the rights, obligations, duties and immunities of the Trustee hereunder and (e) the rights of the Holders of Securities of such series as beneficiaries
hereof with respect to the property so deposited with the Trustee payable to all or any of them), and (ii) the occurrence of any of the events specified in Section 5.01(d) (with respect to any of the covenants specified in or pursuant to
Section 3.01 as being subject to Covenant Defeasance with respect to such series), Section 5.01(f) or Section 5.01(i) shall be deemed not to be or result in a default or an Event of Default, in each case with respect to the
Outstanding Securities of such series as provided in this Section on and after the date the conditions set forth in Section 4.04 are satisfied (hereinafter called “Covenant Defeasance”), and the Trustee at the cost and expense
of the Company, shall execute proper instruments acknowledging the same. For this purpose, such Covenant Defeasance means that the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth
in any such covenant (to the extent so specified in the case of Section 5.01(d)), whether directly or indirectly by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document, but the remainder of this Indenture and the Securities of such series shall be unaffected thereby.
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Section 4.04. Conditions To Defeasance Or Covenant Defeasance.
The following shall be the conditions to application of either Section 4.02 or Section 4.03 to the Outstanding Securities:
(a) with reference to Section 4.02 or Section 4.03, the Company has irrevocably deposited or caused to be irrevocably
deposited with the Trustee as funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of Securities of such series (i) money in an amount, or (ii) U.S. Government Obligations or Equivalent
Government Securities which through the payment of interest and principal in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (iii) a combination of
(i) and (ii), sufficient, in the opinion (with respect to clauses (ii) and (iii)) of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge
each installment of principal (including mandatory sinking fund payments) of, premium, if any, and interest on, the Outstanding Securities of such series on the dates such installments of interest, premium or principal are due, including upon
redemption; provided, however, that if such U.S. Government Obligations and Equivalent Government Securities are callable or redeemable at the option of the issuer thereof, the amount of such money, U.S. Government Obligations, and/or
Equivalent Government Securities deposited with the Trustee must be sufficient to pay and discharge the entire indebtedness referred to above if the issuer of any such U.S. Government Obligations or Equivalent Government Securities elects to
exercise such call or redemption provisions at any time prior to the Scheduled Maturity Date or Redemption Date of such Securities, as the case may be. The Company, but not the Trustee, shall be responsible for monitoring any such call or redemption
provision.
(b) in the case of Defeasance under Section 4.02, the Company has delivered to the Trustee an Opinion of Counsel
based on the fact that (x) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (y) since the date hereof, there has been a change in the applicable United States federal income tax law,
in either case to the effect that, and such opinion shall confirm that, the beneficial owners of the Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit, Defeasance and discharge had not occurred;
(c) in the case of Covenant Defeasance under Section 4.03, the Company has delivered to the Trustee an Opinion of Counsel to the effect
that, and such opinion shall confirm that, the beneficial owners of the Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and Covenant Defeasance and will be subject to
federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit and Covenant Defeasance had not occurred;
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(d) no Event of Default or event which, with notice or lapse of time or both, would become an
Event of Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit, after giving effect to such deposit or, in the case of a Defeasance under Section 4.02, no Event of Default
specified in Section 5.01(g) or Section 5.01(h) shall have occurred, at any time during the period ending on the 91st day after the date of such deposit or if longer, ending on the day following the expiration of the longest preference
period applicable to the Company in respect of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period);
(e) such Defeasance or Covenant Defeasance will not cause the Trustee to have a conflicting interest within the meaning of the TIA, assuming
all Securities of a series were in default within the meaning of the TIA;
(f) such Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any agreement or instrument to which the Company is a party or by which it is bound;
(g) such Defeasance or Covenant Defeasance will not result in the trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940, as amended, unless the trust is registered under such Act or exempt from registration;
(h) If the Securities of such series are to be redeemed prior to their Scheduled Maturity Date (other than from mandatory sinking fund
payments or analogous payments), notice of such redemption shall have been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee shall have been made;
(i) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for herein relating to such Defeasance or Covenant Defeasance, as the case may be, have been complied with; and
(j)
the Company shall have delivered to the Trustee an Officers’ Certificate stating that the deposit made by the Company pursuant to Sections 4.02, 4.03 or 4.04 hereof was not made by the Company with the intent of preferring the Holders
of the Securities over any of its other creditors or with the intent of defeating, hindering, delaying or defrauding any of its other creditors or others.
Section 4.05. Application of Trust Money; Excess Funds. All money and U.S. Government Obligations or Equivalent Government
Securities (including the proceeds thereof) deposited with the Trustee pursuant to Section 4.01 or Section 4.04 hereof shall be held in trust and applied by it, in accordance with the provisions of this Indenture and of the series of
Securities in respect of which it was deposited, to the payment, either directly or through any Paying Agent (including
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the Company acting as its own Paying Agent), as the Trustee may determine, to the Persons entitled thereto, of the principal, premium, if any, and interest, if any, for whose payment such money
has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
The
Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or U.S. Government Obligations or Equivalent Government Securities deposited pursuant to Section 4.01 or Section 4.04
hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders or beneficial owners of the Outstanding Securities.
Anything in this Article 4 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Governmental Obligations or Equivalent Government Securities held by it as provided in Section 4.01 or Section 4.04 which, in the opinion of a nationally recognized investment bank, appraisal firm or firm of a
nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 4.01 or Section 4.04, as applicable) are in excess of the
amount thereof that would then be required to be deposited to effect an equivalent satisfaction and discharge, Covenant Defeasance or Defeasance of the applicable series.
Section 4.06. Paying Agent to Repay Moneys Held. Upon the satisfaction and discharge of this Indenture, all moneys then
held by any Paying Agent of the Securities (other than the Trustee) shall, upon demand of the Company, be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be released from all further liability with respect to such
moneys.
Section 4.07. Return of Unclaimed Amounts. Any amounts deposited with or paid to the Trustee or any Paying
Agent or then held by the Company, in trust for payment of the principal of, premium, if any, or interest, if any, on the Securities and not applied but remaining unclaimed by the Holders of such Securities for two years after the date upon which
the principal of, premium, if any, or interest, if any, on such Securities, as the case may be, shall have become due and payable, shall be repaid to the Company by the Trustee on Company Request or (if then held by the Company) shall be discharged
from such trust; and the Holder of any of such Securities shall thereafter look only to the Company for any payment which such Holder may be entitled to collect (until such time as such unclaimed amounts shall escheat, if at all, to the State of New
York) and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease. Notwithstanding the foregoing, the Trustee or Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to be published once a week for two successive weeks (in each case on any day of the week) in a newspaper printed in the English language and customarily published at least
once a
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day at least five days in each calendar week and of general circulation in the Borough of Manhattan, in the City and State of New York, a notice that said amounts have not been so applied and
that after a date named therein any unclaimed balance of said amounts then remaining will be promptly returned to the Company.
ARTICLE 5
REMEDIES
Section 5.01. Events of Default. “Event of Default”, wherever used herein, means with
respect to any series of Securities any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or governmental body), unless such event is either inapplicable to a particular series or it is specifically deleted or modified in the manner contemplated by Section 3.01:
(a) default in the payment of any interest on any Security of such series when it becomes due and payable, and continuance of such default for
a period of 30 days or more; or
(b) default in the payment of the principal amount of (or premium, if any, on) any Security of such
series as and when the same shall become due, either at Maturity, upon redemption, by declaration, or otherwise; or
(c) default in the
payment of any sinking or purchase fund or analogous obligation when the same becomes due by the terms of the Securities of such series and continuance of such default for a period of 30 days or more; or
(d) default in the performance or breach of any covenant of the Company or any guarantor, if applicable, in this Indenture in respect of the
Securities of such series (other than a covenant in respect of the Securities of such series a default in the performance of which or the breach of which is specified elsewhere in this Section), and continuance of such default or breach for a period
of 90 days or more after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in the principal amount of the Outstanding Securities of such series, a
written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or
(e) default under any agreement or instrument evidencing, or under which the Company or any Restricted Subsidiary has outstanding at the time,
any indebtedness for money borrowed by the Company or any Restricted Subsidiary (including a default with respect to Securities of any series other than such series), whether such indebtedness now exists or shall hereafter be created, and which
results in such indebtedness in an outstanding principal amount in excess of $150.0 million becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable; or
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(f) any guarantee with respect to the Securities of such series ceases for any reason to be, or
the assertion by the Company or the guarantor that such guarantee ceases to be, in full force and effect and enforceable in accordance with its terms, except to the extent contemplated by this Indenture or by such guarantee; or
(g) the entry of an order for relief against the Company under the Federal Bankruptcy Act by a court having jurisdiction in the premises or a
decree or order by a court having jurisdiction in the premises adjudging the Company a bankrupt or insolvent under any other applicable Federal or State law, or the entry of a decree or order approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the Company under the Federal Bankruptcy Code or any other applicable Federal or State law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; or
(h) the consent by the Company to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition
or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable Federal or State law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; or
(i) any other Event
of Default provided for with respect to the Securities of such series in accordance with Section 3.01.
Except as described above, a
default under any indebtedness of the Company other than the Securities will not constitute an Event of Default under this Indenture, and a default under one series of Securities will not constitute a default under any other series of Securities.
Section 5.02. Acceleration of Maturity; Rescission, and Annulment. If any Event of Default described in Section 5.01
above (other than an Event of Default described in Section 5.01(g) and Section 5.01(h)) shall have occurred and be continuing with respect to any series, then and in each and every such case, unless the principal of all the Securities of
such series shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of such series then Outstanding hereunder, by notice
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in writing to the Company (and to the Trustee if given by Holders), may declare the principal amount (or, if the Securities of such series are Original Issue Discount Securities, such portion of
the principal amount as may be specified in the terms of that series) of all the Securities of such series and any and all accrued and unpaid interest thereon to be due and payable immediately, and upon any such declaration the same shall become and
shall be immediately due and payable, any provision of this Indenture or the Securities of such series to the contrary notwithstanding. If an Event of Default specified in Section 5.01(g) or Section 5.01(h) occurs, the entire principal
amount (or, if the Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of the Securities of such series and any and all accrued and unpaid interest
thereon shall automatically become and be due and payable immediately without any declaration or other act on the part of the Trustee or any Holder. No declaration of acceleration by the Trustee with respect to any series of Securities shall
constitute a declaration of acceleration by the Trustee with respect to any other series of Securities, and no declaration of acceleration by the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of any series shall
constitute a declaration of acceleration or other action by any of the Holders of any other series of Securities, in each case whether or not the Event of Default on which such declaration is based shall have occurred and be continuing with respect
to more than one series of Securities, and whether or not any Holders of the Securities of any such affected series shall also be Holders of Securities of any other such affected series.
At any time after such a declaration of acceleration has been made with respect to the Securities of any series and before a judgment or
decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of such series, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its consequences if all Events of Default with respect to such series of Securities, other than the nonpayment of the principal and interest of the Securities of such series
which have become due solely by such acceleration, have been cured or waived as provided in Section 5.13, if such cure or waiver does not conflict with any judgment or decree set forth in Section 5.01(g) and Section 5.01(h) and if all
sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel have been paid.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if:
(a) default is made in the payment of any installment of interest on any Security of any series when such interest becomes due and payable and
such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium, if any, on) any
Security at the Maturity thereof,
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then, with respect to the Securities of such series, the Company will, upon demand of the Trustee, pay to it, for
the benefit of the Holder of any such Security, the whole amount then due and payable on any such Security for principal (and premium, if any) and interest, if any, with interest (to the extent that payment of such interest shall be legally
enforceable) upon the overdue principal (and premium, if any) and upon overdue installments of interest, if any, at such rate or rates as may be prescribed therefor by the terms of any such Security; and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and all other amounts due the Trustee under Section 6.07.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Securities of such series and
collect the money adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.
If an Event of Default with respect to any series of Securities occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
Section 5.04. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition, or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such proceedings or otherwise,
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(a) to file and prove a claim for the whole amount of principal (or, with respect to Original
Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such Securities), premium, if any, and interest, if any, owing and unpaid in respect of the Securities, and to file such other papers or documents as
may be necessary and advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents and counsel, and all other amounts due the Trustee under
Section 6.07) and of the Securityholders allowed in such judicial proceedings, and
(b) to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Securityholder to
make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee and its agent and counsel, and any other amounts due the Trustee under Section 6.07 hereof.
Nothing
herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding.
Section 5.05. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this
Indenture or the Securities of any series may be prosecuted and enforced by the Trustee without the possession of any of the Securities of such series or the production thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel, be for the ratable benefit of the Holders of the Securities, of the series in respect of which such judgment has been recovered.
Section 5.06. Application of Money Collected. Subject to the terms of the Intercreditor Agreement, any money collected by
the Trustee with respect to a series of Securities pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium, if any,
or interest, if any, upon presentation of the Securities of such series and the notation thereon of the payment, if only partially paid, and upon surrender thereof, if fully paid:
First: To the payment of all amounts due the Trustee under Section 6.07 hereof.
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Second: To the payment of the amounts then due and unpaid upon the Securities of that series for
principal, premium, if any, interest, if any, and additional amounts, if any, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind.
Third: The balance, if any, to the Company.
Section 5.07. Limitation on Suits. No Holder of any Security of any series shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to Securities of such series;
(b) the Holders of not less than 25% in principal amount of the Outstanding Securities of such series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders
have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request, and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of such series; it being understood and intended that no one or more Holders of Securities of such series shall have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities of such series, or to obtain or to seek to obtain priority or preference over any other such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and proportionate benefit of all the Holders of all Securities of such series.
Section 5.08. Unconditional Right of Securityholders to Receive Principal, Premium, and Interest. Notwithstanding any other
provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal, premium, if any, and (subject to Section 3.07) interest, if any, (and additional amounts, if
any) on such Security on or after the respective payment dates expressed in such Security (or, in the case of redemption or repayment, on the Redemption Date or Repayment Date, as the case may be) and to institute suit for the enforcement of any
such payment on or after such respective date, and such right shall not be impaired or affected without the consent of such Holder.
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Section 5.09. Restoration of Rights and Remedies. If the Trustee or any
Securityholder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, then and in every such case the Company, the Trustee and the Securityholders
shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Securityholders shall continue as though no such
proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Trustee or to the Securityholders is intended to be exclusive of any other right or remedy, and every right or remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right
or remedy.
Section 5.11. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of
any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Securityholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Securityholders, as the case may be.
Section 5.12. Control by Securityholders. The Holders of a majority in principal amount of the Outstanding Securities of
any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Securities of such series,
provided that
(a) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by
counsel, determines that the action so directed may not lawfully be taken or would conflict with this Indenture or if the Trustee in good faith shall, by a Responsible Officer, determine that the proceedings so directed would involve it in personal
liability or be unjustly prejudicial to the Holders not taking part in such direction, and
(b) the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
Section 5.13. Waiver of Past Defaults. The
Holders of not less than a majority in principal amount of the Outstanding Securities of any series may, on behalf of the Holders of all the Securities of such series, waive any past default hereunder with respect to such series and its
consequences, except a default not theretofore cured:
(a) in the payment of principal, premium, if any, or interest, if any, on
any Security of such series, or in the payment of any sinking or purchase fund or analogous obligation with respect to the Securities of such series, or
(b) in respect of a covenant or provision in this Indenture which, under Article Nine hereof, cannot be modified or amended without the
consent of the Holder of each Outstanding Security of such series.
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Upon any such waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his or her
acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder or
group of Securityholders holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series to which the suit relates, or to any suit instituted by any Securityholder for the enforcement of the payment of
principal, premium, if any, or interest, if any, on any Security on or after the respective payment dates expressed in such Security (or, in the case of redemption or repayment, on or after the Redemption Date or Repayment Date).
Section 5.15. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law (other than any bankruptcy law) wherever enacted, now or at any time hereafter in force, which may affect
the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
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ARTICLE 6
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities of Trustee. (a) Except during the continuance of an Event of Default
with respect to any series of Securities,
(i) the Trustee undertakes to perform such duties and only such duties as
are specifically set forth in this Indenture with respect to the Securities of such series, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may, with respect to Securities of such series, conclusively rely
upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture.
(b)
In case an Event of Default with respect to any series of Securities has occurred and is continuing, the Trustee shall exercise, with respect to the Securities of such series, such of the rights and powers vested in it by this Indenture, and use the
same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that
(i) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment made in good faith
by a Responsible Officer, including any determination to take or refrain from taking any action under the Intercreditor Agreement, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a majority in principal amount of the Outstanding Securities of any series relating to the time, method, and place of conducting any proceeding for any remedy available to the Trustee with respect
to the Securities of such series, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and
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(iv) no provision of this Indenture shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. In addition, every provision of this Article 6 relating to the conduct or
affecting the liability of or affording protection to the Trustee shall apply to any actions or inactions of the Trustee in respect of the Intercreditor Agreement.
(e) In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising
out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of god, and
interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services resulting from such forces; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices
in the banking industry to resume performance as soon as practicable under the circumstances.
Section 6.02. Notice of
Defaults. Within 90 days after receiving notice of the occurrence of any default hereunder with respect to Securities of any series, the Trustee shall transmit by mail to all Securityholders of such series, as their names and addresses appear in
the Security Register, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal, premium, if any, or
interest, if any, on any Security of such series or in the payment of any sinking or purchase fund installment or analogous obligation with respect to Securities of such series, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Securityholders of such
series and; provided, further, that, in the case of any default of the character specified in Section 5.01(d) with respect to Securities of such series, no such notice to Securityholders of such series shall be given until at least 60
days after the occurrence thereof. For the purpose of this Section, the term “default”, with respect to Securities of any series, means any event which is, or after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
Section 6.03. Certain Rights of Trustee. Except as otherwise provided in
Section 6.01 above:
(a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
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(b) any request, direction or order of the Company mentioned herein shall be sufficiently
evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers’ Certificate;
(d) the Trustee may consult with counsel and any Opinion of Counsel shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Securityholders pursuant to this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;
(f) the Trustee
shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney, other than any such books or records containing information as to the affairs of the customer of the Company or any of its subsidiaries;
(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;
(h) the Trustee shall not be deemed to have notice of any default or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a default or Event of Default is received by the Trustee at the Corporate Trust Office, and such notice references the Securities and this Indenture;
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(i) in no event shall the Trustee be responsible or liable for special, indirect, punitive or
consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action; and
(j) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.
Section 6.04. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except
the certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof.
Section 6.05. May Hold Securities. The Trustee or any Paying Agent, Security Registrar, or other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 6.08 and 6.13 hereof, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security
Registrar, or such other agent.
Section 6.06. Money Held in Trust. Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company.
Section 6.07. Compensation and Reimbursement. The Company covenants and agrees:
(a) to pay the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith; and
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(c) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the reasonable costs and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
Without prejudice to any other rights available to the Trustee
under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.01(g) and Section 5.01(h) above, such expenses (including the reasonable charges and expenses of its
counsel) and compensation for such services are intended to constitute expenses of administration under any applicable Federal or State bankruptcy, insolvency, reorganization, or other similar law.
The Trustee shall have a lien prior to the Securities upon all property and funds held or collected by it as such for any amount owing to it
or any predecessor Trustee pursuant to this Section 6.07, except with respect to funds held in trust for the benefit of the Holders of particular Securities.
The provisions of this Section shall survive the satisfaction and discharge of this Indenture.
Section 6.08. Disqualification; Conflicting Interests. If the Trustee has or shall acquire any conflicting interest within the
meaning of the Trust Indenture Act, it shall either eliminate such interest or resign as Trustee with respect to one or more series of Securities, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act
and this Indenture.
Section 6.09. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder
with respect to each series of Securities that shall be a corporation organized and doing business under the laws of the United States of America or of any State or Territory thereof or of the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by Federal or State authority. If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time the Trustee with respect to any series of Securities shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the
effect hereinafter specified in this Article.
Section 6.10. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 6.11.
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(b) The Trustee may resign with respect to any one or more series of Securities at any time by
giving at least 60 days’ written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed with
respect to any series of Securities at any time by Act of the Holders of 66 2⁄3% in principal amount of the Outstanding Securities of that series, delivered to
the Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 6.08 above with respect to any series of Securities after written
request therefor by the Company or by any Securityholder who has been a bona fide Holder of a Security of that series for at least 6 months, or
(ii) the Trustee shall cease to be eligible under Section 6.09 above with respect to any series of Securities and shall
fail to resign after written request therefor by the Company or by any such Securityholder, or
(iii) the Trustee shall
become incapable of acting with respect to any series of Securities, or
(iv) the Trustee shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case (A) the Company may remove the Trustee, with respect to the series or, in the case of clause (iv), with respect to
all series, or (B) subject to Section 5.14, any Securityholder who has been a bona fide Holder of a Security of such series for at least 6 months may, on behalf of himself or herself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee with respect to the series or, in the case of clause (iv), with respect to all series.
(e) The Company may remove the Trustee if the Company shall determine that the services provided by the Trustee hereunder may be obtained at
substantially lower cost to the Company.
(f) If the Trustee shall resign, be removed or become incapable of acting with respect to any
series of Securities, or if a vacancy shall occur in the office
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of Trustee with respect to any series of Securities for any cause, the Company shall promptly appoint a successor Trustee for that series of Securities. If, within one year after such
resignation, removal or incapacity, or the occurrence of such vacancy, a successor Trustee with respect to such series of Securities shall be appointed by Act of the Holders of 66 2⁄3% in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee with respect to such series and supersede the successor Trustee appointed by the Company with respect to such series. If no successor Trustee with respect to such series shall have been so appointed by the Company or the
Securityholders of such series and accepted appointment in the manner hereinafter provided, any Securityholder who has been bona fide Holder of a Security of that series for at least 6 months may, on behalf of himself or herself and all others
similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to such series.
(g) The Company shall give notice of each resignation and each removal of the Trustee with respect to any series and each appointment of a
successor Trustee with respect to any series by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Securities of that series as their names and addresses appear in the Security Register. Each notice shall
include the name of the successor Trustee and the address of its principal Corporate Trust Office.
Section 6.11.
Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder with respect to all series of Securities shall execute, acknowledge and deliver to the Company and to the predecessor Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the predecessor Trustee shall become effective, and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of
the predecessor Trustee with respect to any such series; but, on request of the Company or the successor Trustee, such predecessor Trustee shall, upon payment of its reasonable charges, if any, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the predecessor Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such predecessor Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company,
the predecessor Trustee and each successor Trustee with respect to the Securities of any applicable series shall execute and deliver an indenture supplemental hereto which (1) shall contain such provisions as shall be deemed necessary or
desirable to transfer and to conform to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of any series as to which the appointment of such successor Trustee
relates and (2) if the predecessor Trustee is not retiring with respect to all Securities, shall contain such
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provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of any series as to which
the predecessor Trustee is not being succeeded shall continue to be vested in the predecessor Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be Trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to
the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates; and, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred to in the first or second preceding paragraph, as the case may be.
No successor Trustee with respect to any series of Securities shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible with respect to that series under this Article.
Section 6.12. Merger,
Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be otherwise qualified
and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any
successor Trustee by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such
Securities.
Section 6.13. Preferential Collection of Claims Against Company. If and when the Trustee shall be
or shall become a creditor, of the Company (or of any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or against any such other
obligor, as the case may be).
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Section 6.14. Appointment of Authenticating Agent. At any time when any of the
Securities remain Outstanding the Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon
exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.06, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be reasonably acceptable to the Company
and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as an Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and, if other than the Company itself, subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to
law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating
Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and, if other than the Company, to the
Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and, if other than the Company, to the Company. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee, with the approval of the Company, may appoint a successor Authenticating Agent which
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shall be acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Securities of the series with respect to which such
Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to the Trustee’s certificate of authentication, an alternate certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
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| The U.S. Bank National Association, as Trustee |
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| By: |
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As Authenticating Agent |
ARTICLE 7
SECURITYHOLDERS’ LISTS AND REPORTS BY TRUSTEE
AND COMPANY
Section 7.01. Company to Furnish Trustee Names and Addresses of
Securityholders. The Company will furnish or cause to be furnished to the Trustee:
(a) semiannually, not more than 15 days
after January 1 and July 1 in each year, in such form as the Trustee may reasonably require, a list of the names and addresses of the Holders of Securities of each series as of such date, and
(b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, provided that if the Trustee shall be the Security Registrar for such series, such lists shall not be required to be furnished.
Section 7.02. Preservation of Information; Communications to Securityholders. (a) The Trustee shall preserve, in as
current a form as is reasonably
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practicable, the names and addresses of Holders of Securities contained in the most recent list furnished to the Trustee as provided in Section 7.01 and the names and addresses of Holders of
Securities received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.01 upon receipt of a new list so furnished.
(b) If three or more Holders of Securities of any series (hereinafter referred to as “applicants”) apply in writing to
the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security of such series for a period of at least six months preceding the date of such application, and such application states that the applicants desire
to communicate with other Holders of Securities of such series or with the Holders of all Securities with respect to their rights under this Indenture or under such Securities and is accompanied by a copy of the form of proxy or other communication
which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either:
(i) afford such applicants access to the information preserved at the time by the Trustee in accordance with
Section 7.02(a), or
(ii) inform such applicants as to the approximate number of Holders of Securities of such series
or all Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 7.02(a), and as to the approximate cost of mailing to such Securityholders the form of
proxy or other communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such applicants, mail to each Holder of a Security of such series or to all Securityholders, as the case may be, whose names and addresses appear in the information preserved at the
time by the Trustee in accordance with Section 7.02(a), a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment,
or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders of Securities of such series or all Securityholders, as the case may be, or would be in violation of applicable law.
Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or
if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee
shall mail copies of such material to all Securityholders of such series or all
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Securityholders, as the case may be, with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to
such applicants respecting their application.
(c) Every Holder of Securities, by receiving and holding the same, agrees with the Company
and the Trustee that neither the Company nor the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with Section 7.02(b), regardless of
the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 7.02(b).
Section 7.03. Reports by Trustee. (a) The Trustee shall transmit to Holders such reports concerning the Trustee and its
actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within 60 days after each
May 15 following the date of this Indenture, deliver to each Holder, as provided in Trust Indenture Act Section 313(c), a brief report dated as of such May 15, which complies with the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which
any Securities are listed, with the Commission and with the Company as required by Trust Indenture Act Section 313(d). The Company will promptly notify the Trustee when any Securities are listed on any stock exchange.
Section 7.04. Reports by Company. The Company will:
(a) So long as any Securities are outstanding, the Company shall file with the Trustee, within 15 days after filing with the
Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Company may be
required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. The Company shall be deemed to have complied with the previous sentence to the extent that such information, documents and
reports are filed with the Commission via EDGAR (or any successor electronic delivery procedure) or posted on the Company’s website; provided, however, that the Trustee shall have no obligation whatsoever to determine whether or
not such information, documents or reports have been filed pursuant to the EDGAR system (or its successor).
(b) Delivery of such
reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained
therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).
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ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Section 8.01. Company May Consolidate, etc., Only on Certain Terms. Neither the Company nor any guarantor shall consolidate
with or merge into any other Person or convey or transfer all or substantially all of its properties and assets to any Person, unless;
(a) either the Company or such guarantor, as the case may be, shall be the continuing Person, or the Person formed by such consolidation or
into which the Company or such guarantor, as the case may be, is merged or the Person which acquires by conveyance or transfer all or substantially all of the properties and assets of the Company or such guarantor, as the case may be, shall be a
Person organized and existing under the laws of the United States of America or any state thereof or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal, premium, if any, and interest, if any, on all the Securities or guarantees of the Securities, as the case may be, and the performance of every covenant of this Indenture on
the part of the Company, or such guarantor, as the case may be, to be performed or observed;
(b) immediately after giving effect to such
transaction, no Event of Default, or event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; and
(c) the Company has delivered to the Trustee an Opinion of Counsel and an Officers’ Certificate as conclusive evidence that any such
consolidation, merger, conveyance or transfer and any assumption permitted or required by this Article complies with the provisions of this Article.
Section 8.02. Successor Person Substituted. Upon any consolidation or merger, or any conveyance or transfer of all or
substantially all of the properties and assets of the Company or any guarantor in accordance with Section 8.01, the successor Person formed by such consolidation or into which the Company or such guarantor, as the case may be, is merged or the
Person to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or such guarantor, as the case may be, under this Indenture with the same effect as if such
successor Person had been named as the Company or such guarantor, as the case may be, herein and the Company or such guarantor, as the case may be, shall thereupon be released from all obligations hereunder and under the Securities or guarantee of
the Securities. Such successor Person thereupon may cause to be signed and may issue any or all
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of the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person, instead of the
Company, and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Company to
the Trustee for authentication, and any Securities which such successor Person thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities and guarantees of Debt Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities or guarantees of Debt Securities had been issued at the
date of the execution hereof.
In case of any such consolidation, merger, sale or conveyance such changes in phraseology and form (but not
in substance) may be made in the Securities thereafter to be issued as may be appropriate.
ARTICLE 9
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Securityholders. Without the consent of the Holders of any
Securities, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the TIA as in force at the date of execution thereof), in form
satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company or
any guarantor, or successive successions, and the assumption by any such successor of the covenants, agreements and obligations of the Company or such guarantor, as the case may be, pursuant to Article 8 hereof; or
(b) to add to the covenants of the Company such further covenants, restrictions or conditions for the protection of the Holders of the
Securities of any or all series as the Company and the Trustee shall consider to be for the protection of the Holders of the Securities of any or all series or to surrender any right or power herein conferred upon the Company (and if such covenants
or the surrender of such right or power are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included or such surrenders are expressly being made solely for the benefit of one or more
specified series); or
(c) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other
provision herein or in any supplemental indenture, or to make any other provisions with respect to matters or questions arising under this Indenture that do not adversely affect the interests of the Holders of Securities of any series in any
material respect; or
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(d) to add to this Indenture such provisions as may be expressly permitted by the TIA, excluding,
however, the provisions referred to in Section 316(a)(2) of the TIA as in effect at the date as of which this instrument is executed or any corresponding provision in any similar federal statute hereafter enacted; or
(e) to evidence the addition of any Subsidiary of the Company as a guarantor or the release of any guarantor and its obligations pursuant to
this Indenture; or
(f) to secure any series of Securities; or
(g) to establish any form of Security, as provided in Article 2 hereof, and to provide for the issuance of any series of Securities, as
provided in Article 3 hereof, and to set forth the terms thereof, and/or to add to the rights of the Holders of the Securities of any series; or
(h) to evidence and provide for the acceptance of appointment by another Person as a successor Trustee hereunder with respect to one or more
series of Securities and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to Section 6.11 hereof; or
(i) to add any additional Events of Default in respect of the Securities of any or all series (and if such additional Events of Default
are to be in respect of less than all series of Securities, stating that such Events of Default are expressly being included solely for the benefit of one or more specified series); or
(j) to comply with the requirements of the Commission in connection with the qualification of this Indenture under the TIA; or
(k) to make any change in any series of Securities or to add to this Indenture such provisions that do not adversely affect in any material
respect the interests of the Holders of such Securities.
Section 9.02. Supplemental Indentures With Consent of
Securityholders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture or indentures, by Act of said Holders delivered to the Company
and the Trustee, the Company and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such series under this Indenture; provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby:
(a) change the Scheduled Maturity Date or the stated payment date of
any payment of premium or interest payable on any Security, or reduce the principal amount thereof, or any amount of interest or premium payable thereon other than in connection with any amendments to redemption provisions); or
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(b) change the method of computing the amount of principal of any Security or any interest
payable thereon on any date, or change any Place of Payment where, or the coin or currency in which, any Security or any payment of premium or interest thereon is payable; or
(c) impair the right to institute suit for the enforcement of any payment described in clauses (a) or (b) on or after the same shall
become due and payable, whether at Maturity or, in the case of redemption or repayment, on or after the Redemption Date or the Repayment Date, as the case may be; or
(d) change or waive the redemption provisions of any series (unless otherwise specified in the terms of such Security); or
(e) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences, provided for in this Indenture; or
(f) modify any of the provisions of this Section, Section 5.13 or Section 10.08, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the references to “the Trustee” and concomitant changes in this Section and Section 10.07, or the deletion of this proviso, in accordance with the requirements of Sections 6.11 and
9.01(h); or adversely affect the right to repayment, if any, of Securities of any series at the option of the Holders thereof; or
(g)
except for releases in compliance with the terms of this Indenture, amend or modify the terms of any of the guarantee provisions of this Indenture in a manner adverse to the Holders;
(h) release any guarantor or co-obligor from any of its obligations under its guarantee of the Securities or this Indenture, except in
compliance with the terms of this Indenture; or
(i) waive any Event of Default under Section 5.01(a), Section 5.01(b) or
Section 5.01(c) hereof with respect to such Security.
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities, or that modifies the rights of the
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Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other
series.
It shall not be necessary for any Act of Securityholders under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
Section 9.03.
Execution of Supplemental Indentures. Upon request of the Company and, if applicable, upon filing with the Trustee of evidence of an Act of Securityholders as aforementioned, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, powers, trusts, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to,
enter into such supplemental indenture. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be
entitled to receive, and (subject to Section 6.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture.
Section 9.04. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this
Indenture shall be and be deemed to be modified and amended in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and the respective rights, limitation of rights, duties, powers, trusts and
immunities under this Indenture of the Trustee, the Company, and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be determined, exercised and enforced thereunder to the extent provided therein.
Section 9.05. Conformity With Trust Indenture Act. Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the TIA as then in effect.
Section 9.06. Reference in Securities to
Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee
as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any modification of this Indenture contained in any such
supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.
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ARTICLE 10
COVENANTS
Section 10.01. Payment of Principal, Premium and Interest. With respect to each series of Securities, the Company will duly
and punctually pay or cause to be paid the principal, premium, if any, and interest, if any, on such Securities in accordance with their terms and this Indenture, and will duly comply with all the other terms, agreements and conditions contained in
the Indenture for the benefit of the Securities of such series.
Section 10.02. Maintenance of Office or Agency.
So long as any of the Securities remain outstanding, the Company will maintain an office or agency in each Place of Payment where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and of any change in the location,
of such office or agency. If at any time the Company shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands.
Section 10.03. Money or Security Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent
for any series of Securities, it will, on or before each due date of the principal, premium, if any, or interest, if any, on any of the Securities of such series, segregate and hold in trust for the benefit of the Holders of the Securities of such
series a sum sufficient to pay such principal, premium, or interest so becoming due until such sums shall be paid to such Holders of such Securities or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, on or prior to
each due date of the principal, premium, if any, or interest, if any, on any Securities of such series, deposit with a Paying Agent a sum sufficient to pay such principal, premium, or interest so becoming due, such sum to be held in trust for the
benefit of the Holders of the Securities entitled to the same and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee for any series of Securities to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will
(a) hold all sums held by it for the payment of principal, premium, if any, or interest, if any, on Securities of such series in trust for the
benefit of the Holders of the Securities entitled thereto until such sums shall be paid to such Holders of such Securities or otherwise disposed of as herein provided;
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(b) give the Trustee notice of any default by the Company (or any other obligor upon the
Securities of such series) in the making of any such payment of principal, premium, if any, or interest, if any, on the Securities of such series; and
(c) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may, at any time, for the purpose of obtaining the satisfaction and discharge of this
Indenture with respect to any series of Securities or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent in respect of each and every series of
Securities as to which it seeks to discharge this Indenture or, if for any other purpose, all sums so held in trust by the Company in respect of all Securities, such sums to be held by the Trustee upon the same trusts as those upon which such sums
were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Section 10.04. Certificate to Trustee. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year
of the Company (beginning in 2016), an Officers’ Certificate, one of whose signatories shall be the Company’s principal executive, accounting or financial officer, stating that in the course of the performance by the signers of their
duties as officers of the Company they would normally have knowledge of any default by the Company in the performance of any of its covenants, conditions or agreements contained herein (without regard to any period of grace or requirement of notice
provided hereunder), stating whether or not they have knowledge of any such default and, if so, specifying each such default of which the signers have knowledge and the nature thereof.
Section 10.05. Corporate Existence. Subject to Article 8 the Company will do or cause to be done all things necessary to preserve
and keep in full force and effect its existence.
Section 10.06. Limitation on Liens.
(a) The Company will not, nor will it permit any Restricted Subsidiary to, issue, assume or guarantee any indebtedness for money borrowed
(hereinafter in this Section 10.06 and 10.07 called “Debt”) secured by a mortgage, deed of trust, security interest, pledge, lien or other encumbrance (mortgages, deeds of trust, security interests, pledges, liens and other
encumbrances being hereinafter in this Section 10.06 and 10.07 called “lien” or “liens”) upon any Principal Property owned by the Company or any Restricted Subsidiary or upon any shares of
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stock or indebtedness of any Restricted Subsidiary owned by the Company or any Restricted Subsidiary (whether such Principal Property, shares of stock or indebtedness are now owned or hereafter
acquired) without in any such case effectively providing concurrently with the issuance, assumption or guaranty of any such Debt that the Securities (together with, if the Company shall so determine, any other indebtedness of or guaranteed by the
Company or such Restricted Subsidiary ranking equally with the Securities and then existing or thereafter created) shall be secured equally and ratably with (or, at the option of the Company, prior to) such Debt so long as such Debt shall be so
secured; provided, however, that the foregoing restrictions shall not apply to Debt secured by:
(i) liens on
property, shares of stock or indebtedness (hereinafter in this Section 10.06 called “property”) of any corporation or other entity existing at the time such corporation or other entity becomes a Restricted Subsidiary;
(ii) liens on property existing at the time of acquisition of such property by the Company or a Restricted Subsidiary or liens
on property of a corporation or other entity existing at the time such corporation or other entity is merged into or consolidated with the Company or a Restricted Subsidiary; provided, however, that such liens do not attach to or
affect property theretofore owned by the Company or such Restricted Subsidiary;
(iii) liens to secure the payment of all
or any part of the purchase price of the property subject to such liens, or liens consisting of the interests of lessors in property under capital leases of such property;
(iv) liens on property of a Restricted Subsidiary securing Debt owing to the Company or to another Restricted Subsidiary;
(v) with respect to each series of Securities, liens existing on the first date on which the Securities of such series are
authenticated by the Trustee;
(vi) liens on property of the Company or a Restricted Subsidiary in favor of the United
States of America or any state thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any state thereof, or in favor of any other country or any political subdivision thereof, or in favor of
holders of securities issued by any such governmental authority or entity, to secure partial, progress, advance or other payments pursuant to any contract or statute (including, without limitation, liens to secure Debt of the industrial revenue bond
type);
(vii) liens on property (and improvements thereto) to secure any Debt incurred for the purpose of financing all or
any part of the purchase
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price or the cost of construction, development, or substantial repair, alteration or improvement of such property if such Debt is incurred prior to, at the time of or within one year after (or
pursuant to a commitment obtained not later than one year after) the later of the completion of or the placing into operation (exclusive of test and start-up periods) of such constructed, developed, repaired, altered or improved property;
(viii) liens arising in connection with contracts and subcontracts with or made at the request of the United States of America,
or any state thereof, or any department, agency or instrumentality of the United States or any state thereof;
(ix)
mechanics’, materialmen’s, carriers’, growers’, producers’, farmers’ and similar liens arising in the ordinary course of business (including construction of facilities) in respect of obligations which are not due or
which are being contested in good faith;
(x) any lien arising by reason of deposits with, or the giving of any form of
security to, any governmental agency or any body created or approved by law or governmental regulations, which is required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege,
franchise or license;
(xi) liens for taxes, assessments or governmental charges or levies not yet delinquent, or liens for
taxes, assessments or governmental charges or levies already delinquent but the validity of which is being contested in good faith;
(xii) liens (including judgment liens) arising in connection with legal proceedings; or
(xiii) liens incurred or deposits made in the ordinary course of business in connection with or to secure the performance of
bids, tenders, leases or trade contracts (other than for the payment of Debt) or to secure surety, appeal, indemnity, performance or other similar bonds;
(xiv) liens of any depositary bank consisting of statutory, common law or contractual rights of set-off or recoupment with
respect to any deposit account; or
(xv) any extension, renewal or replacement (or successive extensions, renewals or
replacements) in whole or in part of any lien referred to in the foregoing clauses (i) to (xiv), inclusive; provided, however, that (A) the principal amount of Debt secured thereby shall not exceed the sum of the principal
amount of and accrued and unpaid interest on the Debt so secured at the time of such extension, renewal or replacement and an amount necessary to pay any fees and expenses, including premiums, related to such extension, renewal or replacement, and
(B) such extension,
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renewal or replacement lien shall be limited to all or a part of the property which secured the lien so extended, renewed or replaced (plus improvements on such property).
(b) Notwithstanding the foregoing provisions of this Section, the Company and any one or more Restricted Subsidiaries may issue, assume or
guarantee Debt secured by liens which would otherwise be subject to the foregoing restrictions in an aggregate amount which, together with all other Debt of the Company and its Restricted Subsidiaries which (if originally issued, assumed or
guaranteed at such time) would otherwise be subject to the foregoing restrictions and any Attributable Debt (not including Debt permitted to be secured under clauses (i) through (xv) above), does not at the time exceed 15% of the
Company’s Consolidated Net Tangible Assets.
Section 10.07. Limitation on Sale and Lease-Back.
The Company will not, nor will it permit any Restricted Subsidiary to, enter into any arrangement with any Person providing for the
leasing by the Company or any Restricted Subsidiary of any Principal Property (except for temporary leases for a term of not more than three years and except for leases between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries), which Principal Property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person more than 120 days after the acquisition or completion of construction and commencement of full operation of
such Principal Property by the Company or a Restricted Subsidiary (herein referred to as a “Sale and Lease-Back Transaction”), unless (a) the Company or such Restricted Subsidiary would be entitled, pursuant to the provisions
of Section 10.06, to issue, assume or guarantee Debt secured by a lien upon such Principal Property at least equal in amount to the Attributable Debt in respect of such arrangement without equally and ratably securing the Securities,
provided, however, that from and after the date on which such arrangement becomes effective the Attributable Debt in respect of such arrangement shall be deemed for all purposes under Sections 10.06 and
10.07 to be Debt subject to the provisions of Section 10.06; or (b) the Company shall apply an amount in cash equal to the Attributable Debt in respect to such arrangement, within 120 days of the effective date of any such arrangement, to
the retirement (other than any mandatory retirement or by way of payment at maturity) of Debt of the Company or any Restricted Subsidiary (other than Debt owned by the Company or any Restricted Subsidiary and other than Debt of the Company which is
subordinated to the Securities) which by its terms matures at or is extendible or renewable at the option of the obligor to a date more than twelve months after the date of the creation of such Debt.
Section 10.08. Waiver of Certain Covenants. The Company may omit in respect of any series of Securities, in any particular
instance, to comply with any covenant or condition applicable to such series, if before or after the time for such compliance the Holders of at least a majority in principal amount of the Securities at the time Outstanding of such series shall, by
Act of such Securityholders, either
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waive such compliance in such instance or generally waive compliance with such covenant or condition, provided that no waiver by the Holders of the Securities of such series shall
extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect.
ARTICLE 11
REDEMPTION OF SECURITIES
Section 11.01. Applicability of Article. The Company may reserve the right to redeem and pay before the Scheduled Maturity
Date all or any part of the Securities of any series, either by optional redemption, sinking or purchase fund or analogous obligation or otherwise, by provision therefor in the form of Security for such series established and approved pursuant to
Section 2.02 and 2.03 or as otherwise provided in Section 3.01, and on such terms as are specified in such form or in the indenture supplemental hereto with respect to Securities of such series as provided in Section 3.01. Redemption
of Securities of any series shall be made in accordance with the terms of such Securities and, to the extent that this Article does not conflict with such terms, the succeeding Sections of this Article.
Section 11.02. Election to Redeem; Notice to Trustee. In case of any redemption at the election of the Company, the Company
shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee) notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be
redeemed. In the case of any redemption of Securities (a) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, or (b) pursuant to an election of the Company
which is subject to a condition specified in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers’ Certificate evidencing compliance with such restriction or condition.
Section 11.03. Selection by Trustee of Securities to be Redeemed. Except as otherwise provided in the terms of a particular
series of Securities, if fewer than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate, which may include provision for the selection for redemption of portions of the principal of Securities of such series of a denomination
larger than the minimum authorized denomination for Securities of that series. Unless otherwise provided in the terms of a particular series of Securities, the portions of the principal of Securities so selected for partial redemption shall be equal
to the minimum authorized denomination of the Securities of such series, or an integral multiple thereof, and the principal amount which remains outstanding shall not be less than the minimum authorized denomination for Securities of such series.
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The Trustee shall promptly notify the Company in writing of the Securities selected for
redemption and, in the case of any Security selected for partial redemption, the principal amount thereof to be redeemed.
For all
purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal of such
Security which has been or is to be redeemed.
Section 11.04. Notice of Redemption. Notice of redemption shall be given
by first-class mail, postage prepaid, mailed (or delivered electronically if held by the Depository Trust Company (“DTC”) in accordance with DTC’s customary procedures) not fewer than 30 nor more than 60 days
prior to the Redemption Date, to each Holder of Securities to be redeemed, at his or her address appearing in the Security Register on the applicable Record Date.
All notices of redemption shall state:
(1) the Redemption Date;
(2)
the Redemption Price, or if not then ascertainable, the manner of calculation thereof;
(3) if fewer than all Outstanding Securities of
any series are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Securities to be redeemed, from the Holder to whom the notice is given and that on and after the date fixed for
redemption, upon surrender of such Security, a new Security or Securities of the same series in the aggregate principal amount equal to the unredeemed portion thereof will be issued in accordance with Section 11.07;
(4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security, and that interest, if any, thereon
shall cease to accrue from and after said date;
(5) the place where such Securities are to be surrendered for payment of the Redemption
Price, which shall be the office or agency maintained by the Company in the Place of Payment pursuant to Section 10.02 hereof; and
(6) that the redemption is on account of a sinking or purchase fund, or other analogous obligation, if that is the case.
Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company’s
request, by the Trustee in the name and at the expense of the Company.
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Section 11.05. Deposit of Redemption Price. On or prior to any Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.03) an amount of money sufficient to pay the Redemption Price
of all the Securities which are to be redeemed on that date.
Section 11.06. Securities Payable on Redemption Date.
Notice of Redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default
in the payment of the Redemption Price) such Securities shall cease to bear interest. Upon surrender of such Securities for redemption in accordance with the notice, such Securities shall be paid by the Company at the Redemption Price. Any
installment of interest due and payable on or prior to the Redemption Date shall be payable to the Holders of such Securities registered as such on the relevant Record Date according to the terms and the provisions of Section 3.07 above;
unless, with respect to an Interest Payment Date that falls on a Redemption Date, such Securities provide that interest due on such date is to be paid to the Person to whom principal is payable.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security, or as otherwise provided in such Security.
Section 11.07. Securities Redeemed in Part. Any Security that is to be redeemed only in part shall be surrendered at the
office or agency maintained by the Company in the Place of Payment pursuant to Section 10.02 hereof with respect to that series (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security
without service charge and at the expense of the Company, a new Security or Securities of the same series, tenor, terms and Scheduled Maturity Date, of any authorized denomination as requested by such Holders in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so surrendered.
Section 11.08. Provisions with
Respect to any Sinking Funds. Unless the form or terms of any series of Securities shall provide otherwise, in lieu of making all or any part of any mandatory sinking fund payment with respect to such series of Securities in cash, the Company
may at its option (a) deliver to the Trustee for cancellation any Securities of such series theretofore acquired by the Company, or (b) receive credit for any Securities of such series (not previously so credited) acquired or redeemed by
the Company (other than through operation of a mandatory sinking fund) and theretofore delivered to the Trustee for cancellation, and if it does so then (i) Securities so delivered or credited shall be credited
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at the applicable sinking fund Redemption Price with respect to Securities of such series, and (ii) on or before the 60th day next preceding each sinking fund Redemption Date with respect to
such series of Securities, the Company will deliver to the Trustee (A) an Officers’ Certificate specifying the portions of such sinking fund payment to be satisfied by payment of cash and by the delivery or credit of Securities of such
series acquired or redeemed by the Company, and (B) such Securities, to the extent not previously surrendered. Such Officers’ Certificate shall also state the basis for any such credit and that the Securities for which the Company elects
to receive credit have not been previously so credited and were not acquired by the Company through operation of the mandatory sinking fund, if any, provided with respect to such Securities and shall also state that no Event of Default with respect
to Securities of such series has occurred and is continuing. All Securities so delivered to the Trustee shall be canceled by the Trustee and no Securities shall be authenticated in lieu thereof.
If the sinking fund payment or payments (mandatory or optional) with respect to any series of Securities made in cash plus any unused balance
of any preceding sinking fund payments with respect to Securities of such series made in cash shall exceed $50,000 (or a lesser sum if the Company shall so request), unless otherwise provided by the terms of such series of Securities, that cash
shall be applied by the Trustee on the sinking fund Redemption Date with respect to Securities of such series next following the date of such payment to the redemption of Securities of such series at the applicable sinking fund Redemption Price with
respect to Securities of such series, together with accrued interest, if any, to the date fixed for redemption, with the effect provided in Section 11.06. The Trustee shall select, in the manner provided in Section 11.03, for redemption on
such sinking fund Redemption Date a sufficient principal amount of Securities of such series to utilize that cash and shall thereupon cause notice of redemption of the Securities of such series for the sinking fund to be given in the manner provided
in Section 11.04 (and with the effect provided in Section 11.06) for the redemption of Securities in part at the option of the Company. Any sinking fund moneys not so applied or allocated by the Trustee to the redemption of Securities of
such series shall be added to the next cash sinking fund payment with respect to Securities of such series received by the Trustee and, together with such payment, shall be applied in accordance with the provisions of this Section 11.08. Any
and all sinking fund moneys with respect to Securities of any series held by the Trustee at the Maturity of Securities of such series, and not held for the payment or redemption of particular Securities of such series, shall be applied by the
Trustee, together with other moneys, if necessary, to be deposited sufficient for the purpose, to the payment of the principal of the Securities of such series at Maturity.
On or before each sinking fund Redemption Date provided with respect to Securities of any series, the Company shall pay to the Trustee in cash
a sum equal to all accrued interest, if any, to the date fixed for redemption on Securities to be redeemed on such sinking fund Redemption Date pursuant to this Section 11.08.
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The Trustee shall not redeem any Securities with sinking fund moneys or give any notice of
redemption of Securities by operation of the applicable sinking fund during the continuance of a default in payment of interest on Securities of such series or of any Event of Default with respect to such series, except that if the notice of
redemption of any Securities shall theretofore have been mailed in accordance with the provisions hereof, the Trustee shall redeem such Securities if cash sufficient for that purpose shall be deposited with the Trustee for that purpose in accordance
with the terms of this Article 11. Except as aforesaid, any moneys in the sinking fund with respect to Securities of any series at the time when any such default or Event of Default with respect to such series shall occur, and any moneys thereafter
paid into such sinking fund shall, during the continuance of such default or Event of Default with respect to such series, be held as security for the payment of all Securities of such series; provided, however, that in case such default or
Event of Default with respect to such series shall have been cured or waived as provided herein, such moneys shall thereafter be applied on the next sinking fund payment date on which such moneys may be applied pursuant to the provisions of this
Section 11.08.
ARTICLE 12
REPAYMENT AT OPTION OF HOLDERS
Section 12.01. Applicability of Article. Repayment of Securities of any series which are by their terms repayable before
their Scheduled Maturity Date at the option of Holders thereof shall be made in accordance with the terms of such Securities and (except as otherwise specified as contemplated by Section 3.01 for Securities of any series) in accordance with
this Article.
Section 12.02. Repayment of Securities. Securities of any series subject to repayment in whole or
in part at the option of the Holders thereof will, unless otherwise provided in the terms of such Securities, be repaid at a price equal to the principal amount thereof, together with interest thereon accrued to the Repayment Date specified in the
terms of such Securities. On or before the Repayment Date, the Company will deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.03) an
amount of money sufficient to pay the Repayment Price of all the Securities which are to be repaid on such date.
Section 12.03. Exercise of Option. Securities of any series subject to repayment at the option of the Holders thereof will, unless
otherwise specified in the terms of such Security, contain an “Option to Elect Repayment” form on the reverse of such Securities. To be repaid at the option of the Holder, any Security so providing for such repayment, with the “Option
to Elect Repayment” form on the reverse of such Security duly completed by the Holder, must be received by the Company at the Place of Payment therefor specified in the terms of such Security (or at such other place or places of which the
Company shall from time to time notify the Holders of such Securities) not earlier than 30 days nor later than
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15 days prior to the Repayment Date. If less than the entire principal amount of such Security is to be repaid in accordance with the terms of such Security, the principal amount of such Security
to be repaid, in increments of $1,000 unless otherwise specified in the terms of such Security, and the denomination or denominations of the Security or Securities to be issued to the Holder for the portion of the principal amount of such Security
surrendered that is not to be repaid must be specified. The principal amount of any Security providing for repayment at the option of the Holder thereof may not be repaid in part, if, following such repayment, the unpaid principal amount of such
Security would be less than the minimum authorized denomination of Securities of the series of which such Security to be repaid is a part. Except as otherwise may be provided by the terms of any Security providing for repayment at the option of the
Holder thereof, exercise of the repayment option by the Holder shall be irrevocable unless waived by the Company.
Section 12.04. When Securities Presented for Repayment Become Due and Payable. If Securities of any series providing for
repayment at the option of the Holders thereof shall have been surrendered as provided in this Article and as provided by the terms of such Securities, such Securities or the portions thereof, as the case may be, to be repaid shall become due and
payable and shall be paid by the Company on the Repayment Date therein specified, and on and after such Repayment Date (unless the Company shall default in the payment of such Securities on such Repayment Date) interest on such Securities or the
portions thereof, as the case may be, shall cease to accrue.
Section 12.05. Securities Repaid in Part. Upon
surrender of any Security which is to be repaid in part only, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge and at the expense of the Company, a new Security or
Securities of the same series, tenor, terms and Scheduled Maturity Date, of any authorized denomination specified by the Holder, in an aggregate principal amount equal to and in exchange for the portion of the principal of such Security so
surrendered which is not to be repaid.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year
first above written.
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| The J. M. Smucker Company |
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| By: |
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/s/ Mark R. Belgya |
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Name: |
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Mark R. Belgya |
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Title: |
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Senior Vice President and Chief Financial Officer |
[Signature Page to
Base Indenture]
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| U.S. Bank National Association, Trustee |
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| By: |
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/s/ Holly H. Pattison |
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Name: |
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Holly H. Pattison |
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Title: |
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Vice President |
[Signature Page to
Base Indenture]
Exhibit 4.2
EXECUTION VERSION
FIRST SUPPLEMENTAL INDENTURE
among
THE J. M. SMUCKER
COMPANY,
as Issuer
EACH OF THE GUARANTORS PARTY HERETO,
as Guarantors and
U.S. BANK
NATIONAL ASSOCIATION,
as Trustee
Dated as of
March 20, 2015
Supplemental to Indenture for Senior Debt Securities
Dated as of March 20, 2015
$500,000,000 1.750% Notes due 2018
$500,000,000 2.500% Notes due 2020
$400,000,000 3.000% Notes due 2022
$1,000,000,000 3.500% Notes due 2025
$650,000,000 4.250% Notes due 2035
$600,000,000 4.375% Notes due 2045
TABLE OF CONTENTS
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PAGE |
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| ARTICLE 1 |
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| SCOPE OF SUPPLEMENTAL INDENTURE; GENERAL |
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| Section 1.01. |
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Scope of Supplemental Indenture; General |
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2 |
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| Section 1.02. |
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Terms of Notes |
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3 |
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| ARTICLE 2 |
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| CERTAIN DEFINITIONS |
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| Section 2.01. |
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Certain Definitions |
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5 |
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| Section 2.02. |
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Rules of Construction |
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12 |
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| Section 2.03. |
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Interpretation |
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12 |
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| ARTICLE 3 |
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| COVENANTS |
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| Section 3.01. |
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Change of Control Triggering Event |
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12 |
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| Section 3.02. |
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Applicability of Covenants Contained in the Base Indenture |
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14 |
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| Section 3.03. |
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Future Guarantors |
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14 |
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| ARTICLE 4 |
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| THE NOTES |
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| Section 4.01. |
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Form and Dating |
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14 |
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| Section 4.02. |
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Transfer and Exchange |
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16 |
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| Section 4.03. |
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Definitive Notes |
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26 |
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| ARTICLE 5 |
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| REDEMPTION |
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| Section 5.01. |
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Optional Redemption |
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27 |
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| Section 5.02. |
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Applicability of Sections of the Base Indenture |
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27 |
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| Section 5.03. |
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Special Mandatory Redemption |
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27 |
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| ARTICLE 6 |
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| DEFEASANCE |
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| Section 6.01. |
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Defeasance |
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28 |
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| ARTICLE 7 |
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| SUBSIDIARY GUARANTEES |
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| Section 7.01. |
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Guarantees |
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28 |
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| Section 7.02. |
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Continuing Guarantee |
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29 |
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| Section 7.03. |
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Release of Guarantee |
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29 |
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| Section 7.04. |
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Notation Not Required |
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30 |
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| Section 7.05. |
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Waiver of Subrogation |
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30 |
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| Section 7.06. |
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Execution and Delivery of Guarantees |
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31 |
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| Section 7.07. |
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Notices |
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31 |
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| ARTICLE 8 |
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| INTERCREDITOR AGREEMENT |
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| Section 8.01. |
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Joinder to the Intercreditor Agreement |
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31 |
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| Section 8.02. |
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Duties of the Trustee Under the Intercreditor Agreement |
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32 |
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| Section 8.03. |
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Indemnification of the Trustee |
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32 |
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| Section 8.04. |
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Invalidated Payments Under the Intercreditor Agreement |
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32 |
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| ARTICLE 9 |
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| EVENTS OF DEFAULT |
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| ARTICLE 10 |
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| MODIFICATION AND WAIVER |
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| Section 10.01. |
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Mandatorily Redeemable Notes |
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32 |
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| Section 10.02. |
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Change of Control Triggering Event |
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33 |
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| ARTICLE 11 |
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| MISCELLANEOUS |
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| Section 11.01. |
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Ratification of Base Indenture |
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33 |
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| Section 11.02. |
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Trustee Not Responsible for Recitals |
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33 |
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| Section 11.03. |
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New York Law to Govern |
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33 |
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| Section 11.04. |
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Counterparts |
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33 |
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| Section 11.05. |
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Effect of Headings |
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33 |
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| EXHIBIT A-1. |
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Form of 2018 Note |
| EXHIBIT A-2. |
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Form of 2020 Note |
| EXHIBIT A-3. |
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Form of 2022 Note |
| EXHIBIT A-4. |
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Form of 2025 Note |
| EXHIBIT A-5. |
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Form of 2035 Note |
| EXHIBIT A-6. |
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Form of 2045 Note |
| EXHIBIT B. |
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Form of Supplemental Indenture in Respect of Guarantees |
| EXHIBIT C. |
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Form of Joinder and Acknowledgment to the Intercreditor Agreement |
ii
FIRST SUPPLEMENTAL INDENTURE, dated as of March 20, 2015 (this “First Supplemental
Indenture”), by and among THE J. M. SMUCKER COMPANY, an Ohio corporation (the “Company”), the GUARANTORS (as defined herein) and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (as defined in the
Indenture, the “Trustee”), to the Indenture, dated as of March 20, 2015 (the “Base Indenture” and, as supplemented by this First Supplemental Indenture, the “Indenture”), by and between the
Company and the Trustee.
RECITALS:
WHEREAS, the Company has duly authorized the execution and delivery of the Base Indenture to provide for the issuance from time to time of the
Company’s unsecured debentures, notes, or other evidences of indebtedness (as defined in the Indenture, the “Securities”), to be issued in one or more series;
WHEREAS, Section 9.01 of the Base Indenture permits the Company and the Trustee to enter into indentures supplemental to the Base
Indenture to establish the form and terms of any series of Securities as provided by Section 3.01 of the Base Indenture;
WHEREAS,
the Company desires and has requested the Trustee to join it in the execution and delivery of this First Supplemental Indenture in order to establish and provide for the issuance by the Company of each of the following new series of Securities:
1.750% Notes due 2018 (the “2018 Notes”), 2.500% Notes due 2020 (the “2020 Notes”), 3.000% Notes due 2022 (the “2022 Notes”), 3.500% Notes due 2025 (the “2025 Notes”), 4.250% Notes
due 2035 (the “2035 Notes”) and 4.375% Notes due 2045 (the “2045 Notes” and together with the 2018 Notes, the 2020 Notes, the 2022 Notes, the 2025 Notes and the 2035 Notes, the “Notes”), on the
terms set forth herein;
WHEREAS, the Company now wishes to issue Notes in an initial aggregate principal amount of $3,650,000,000;
WHEREAS, the conditions set forth in the Indenture for the execution and delivery of this First Supplemental Indenture have been complied
with; and
WHEREAS, all things necessary to make this First Supplemental Indenture a valid agreement of the Company and the Trustee, in
accordance with its terms, and a valid supplement to the Base Indenture have been done;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE
WITNESSETH:
In consideration of the purchase and acceptance of the Notes by the Holders thereof, the Company mutually covenants and
agrees with the Trustee, for the equal and ratable benefit of the Holders of the Notes, as follows:
ARTICLE 1
SCOPE OF SUPPLEMENTAL INDENTURE; GENERAL
Section 1.01. Scope of Supplemental Indenture; General. This First Supplemental Indenture supplements and, to the extent
inconsistent therewith, replaces the provisions of the Base Indenture, to which provisions reference is hereby made.
The changes,
modifications and supplements to the Base Indenture effected by this First Supplemental Indenture shall be applicable only with respect to, and govern the terms of, the Notes (which shall be initially in the aggregate principal amount set forth
below) and shall not apply to any other Securities that have been or may be issued under the Indenture unless a supplemental indenture with respect to such other Securities specifically incorporates such changes, modifications and supplements.
Pursuant to this First Supplemental Indenture, there is hereby created and designated the following series of Securities under the Indenture: the “1.750% Notes due 2018”, the “2.500% Notes due 2020”, the “3.000% Notes due
2022”, the “3.500% Notes due 2025”, the “4.250% Notes due 2035” and the “4.375% Notes due 2045”. The Notes shall be in the form of Exhibit A-1, A-2, A-3, A-4, A-5 and A-6
hereto, as applicable, the terms of which are incorporated herein by reference.
The CUSIP and ISIN numbers for each series of Notes,
issued pursuant to Rule 144A and Regulation S, respectively, are as set forth below:
Notes issued pursuant to Rule 144A:
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| 2018 Notes |
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CUSIP: 832696 AC2 |
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ISIN: US832696AC27 |
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| 2020 Notes |
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CUSIP: 832696 AE8 |
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ISIN: US832696AE82 |
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| 2022 Notes |
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CUSIP: 832696 AG3 |
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ISIN: US832696AG31 |
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| 2025 Notes |
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CUSIP: 832696 AJ7 |
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ISIN: US832696AJ79 |
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| 2035 Notes |
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CUSIP: 832696 AL2 |
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ISIN: US832696AL26 |
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| 2045 Notes |
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CUSIP: 832696 AN8 |
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ISIN: US832696AN81 |
Notes issued pursuant to Regulation S:
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| 2018 Notes |
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CUSIP: U8342L AA8 |
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ISIN: USU8342LAA80 |
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| 2020 Notes |
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CUSIP: U8342L AB6 |
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ISIN: USU8342LAB63 |
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| 2022 Notes |
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CUSIP: U8342L AC4 |
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ISIN: USU8342LAC47 |
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| 2025 Notes |
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CUSIP: U8342L AD2 |
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ISIN: USU8342LAD20 |
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| 2035 Notes |
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CUSIP: U8342L AE0 |
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ISIN: USU8342LAE03 |
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| 2045 Notes |
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CUSIP: U8342L AF7 |
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ISIN: USU8342LAF77 |
2
Section 1.02. Terms of Notes. The information applicable to the Notes required
pursuant to Section 3.01 of the Base Indenture is as follows:
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(1) |
the title of the Notes shall be (i) a series of Securities designated the “1.750% Notes due 2018”, (ii) a series of Securities designated the “2.500% Notes due 2020”, (iii) a series of
Securities designated the “3.000% Notes due 2022”, (iv) a series of Securities designated the “3.500% Notes due 2025”, (v) a series of Securities designated the “4.250% Notes due 2035” and (vi) a series
of Securities designated the “4.375% Notes due 2045”; |
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(2) |
The 1.750% Notes due 2018 will be initially issued in an aggregate principal amount of $500,000,000, the 2.500% Notes due 2020 will be initially issued in an aggregate principal amount of $500,000,000, the 3.000% Notes
due 2022 will be initially issued in an aggregate principal amount of $400,000,000, the 3.500% Notes due 2025 will be initially issued in an aggregate principal amount of $1,000,000,000, the 4.250% Notes due 2035 will be initially issued in an
aggregate principal amount of $650,000,000 and the 4.375% Notes due 2045 will be initially issued in an aggregate principal amount of $600,000,000. The aggregate principal amount of the Notes of each series is not limited hereby; |
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(3) |
the issue date of the Notes shall be March 20, 2015; |
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(4) |
the 2018 Notes will mature on March 15, 2018; the 2020 Notes will mature on March 15, 2020; the 2022 Notes will mature on March 15, 2022; the 2025 Notes will mature on March 15, 2025; the 2035 Notes
will mature on March 15, 2035; and the 2045 Notes will mature on March 15, 2045; |
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(5) |
principal and interest of the Notes are payable at the office or agency of the Trustee maintained for that purpose in St. Paul, Minnesota; |
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(6) |
the 2018 Notes will be issued at an issuance price of 99.850%; the 2020 Notes will be issued at an issuance price of 99.572%; the 2022 Notes will be issued at an issuance price of 99.557%; the 2025 Notes will be issued
at an issuance price of 99.975%; the 2035 Notes will be issued at an issuance price of 99.627%; and the 2045 Notes will be issued at an issuance price of 98.310%; |
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(7) |
the 2018 Notes will bear interest at a rate of 1.750% per annum; the 2020 Notes will bear interest at a rate of 2.500% per annum; the 2022
Notes will bear interest at a rate of 3.000% per annum; the 2025 Notes |
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will bear interest at a rate of 3.500% per annum; the 2035 Notes will bear interest at a rate of 4.250% per annum; and the 2045 Notes will bear interest at a rate of 4.375% per
annum; |
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(8) |
the date from which interest shall accrue and the Interest Payment Dates on which interest shall be payable will be as set forth in the form of Note attached hereto; |
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(10) |
the Notes will be redeemable in whole or in part, at the Company’s option at any time and from time to time at the Redemption Price and on the terms set forth in Article 5 below; |
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(11) |
the Mandatorily Redeemable Notes will be redeemable pursuant to the special mandatory redemption at the special mandatory redemption price and on the terms set forth in Article 5 of this First Supplemental Indenture;
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(12) |
the Notes are to be issued initially in global form and deposited with or on behalf of the Depository; |
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(13) |
the Notes will be issuable in minimum denomination of $2,000 and integral multiples of $1,000 in excess thereof; |
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(15) |
interest on the Notes will be computed and paid on the basis of a 360-day year of twelve 30-day months; |
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(16) |
the form and terms of the certificates, documents, and/or conditions relating to the issuance of the Securities in definitive form are as set forth in Article 4 of this First Supplemental Indenture; |
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(21) |
each series of the Notes shall be subject to the terms of the Registration Rights Agreement, including the payment of additional interest in accordance with and subject to the terms thereof; |
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(23) |
the depository for the Notes is the Depository and U.S. Bank National Association shall initially serve as the trustee, paying agent, registrar and custodian with respect to the Notes; |
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(25) |
the Events of Default set forth in Article 5 of the Base Indenture and as set forth in Article 9 of this First Supplemental Indenture shall apply to the Notes; |
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(26) |
the covenants set forth in Article 3 below and Article 10 of the Base Indenture shall apply to the Notes; |
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(27) |
the provisions of the indenture relating to discharge and defeasance shall apply to the Notes, and the covenants subject to Covenant Defeasance shall include all covenants set forth in the Indenture as modified by this
First Supplemental Indenture, except as noted in Section 4.03 of the Base Indenture; and |
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(28) |
the provisions of this First Supplemental Indenture. |
ARTICLE 2
CERTAIN DEFINITIONS
Section 2.01. Certain Definitions. The following definitions shall apply to the Notes. Capitalized terms used but not
defined herein have the meanings ascribed to such terms in the Base Indenture.
“2018 Notes” means the 1.750% Notes due
2018.
“2020 Notes” means the 2.500% Notes due 2020.
“2022 Notes” means the 3.000% Notes due 2022.
“2025 Notes” means the 3.500% Notes due 2025.
“2035 Notes” means the 4.250% Notes due 2035.
“2045 Notes” means the 4.375% Notes due 2045.
“Applicable Procedures” means, with respect to any transfer or transaction involving a Regulation S Global Note or beneficial
interest therein, the rules and procedures of the Depository for such Global Note, Euroclear and Clearstream, in each case to the extent applicable to such transaction and as in effect from time to time.
“Acquisition Deadline” has the meaning set forth in Section 5.03.
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“BAG Acquisition” means the acquisition of Blue Acquisition Group, Inc. pursuant
to the BAG Merger Agreement.
“BAG Merger Agreement” means the Agreement and Plan of Merger (as amended, supplemented or
otherwise modified from time to time in accordance with its terms) by and among BAG, SPF Holdings I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company, SPF Holdings II, LLC, a Delaware limited liability company and a wholly
owned subsidiary of the Company , and for the limited purposes set forth in the BAG Merger Agreement, Blue Holdings I, L.P.
“Below Investment Grade Rating Event” means the rating on the Notes is lowered by each of the Rating Agencies and the Notes
are rated below an Investment Grade Rating by each of the Rating Agencies on any date during the period commencing upon the first public announcement by the Company of any Change of Control (or pending Change of Control), and ending 60 days
following consummation of such Change of Control (which trigger period will be extended following consummation of a Change of Control for so long as either of the Rating Agencies has publicly announced that it is considering the possible downgrade
of the Notes, and a downgrade by each of the Rating Agencies that has made such an announcement would result in a Below Investment Grade Rating Event).
“Book-Entry Security” means a Note in the form prescribed in Section 4.01(c) evidencing all or part of a series of
Notes, issued to the Depository for such series or its nominee, and registered in the name of such Depository or nominee.
“Change
of Control” means the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one transaction or a series of related
transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than the Company or one of its
subsidiaries; (2) the adoption of a plan relating to the Company’s liquidation or dissolution; (3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Company’s outstanding Voting Stock, measured by voting power rather than number of shares;
provided that this clause (3) will not apply to acquisitions of capital stock by the Smucker Family so long as the acquisition by the Smucker Family of such capital stock will not result, directly or indirectly, in a “going private
transaction” within the meaning of the Exchange Act; (4) the Company consolidates with, or merges with or into, any person, or any person consolidates with, or merges with or into the Company, in any such event pursuant to a transaction in
which any of the Company’s outstanding Voting Stock or the Voting Stock of such other person is converted
6
into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Company’s Voting Stock outstanding immediately prior to such transaction
constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction; or (5) the first
day on which a majority of the members of the Company’s Board of Directors cease to be Continuing Directors. Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control under clause (3) or (4) above
if (i) the Company becomes a direct or indirect wholly owned subsidiary of a holding company or other Person and (ii) (A) the direct or indirect holders of the Voting Stock of such holding company or other Person immediately following
that transaction are substantially the same as the holders of the Company’s Voting Stock immediately prior to that transaction or (B) immediately following that transaction no person (other than a holding company satisfying the
requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company or other Person.
“Change of Control Offer” has the meaning ascribed to such term in Section 3.01 of this First Supplemental Indenture.
“Change of Control Payment” has the meaning ascribed to such term in Section 3.01 of this First Supplemental
Indenture.
“Change of Control Payment Date” has the meaning ascribed to such term in Section 3.01 of this First
Supplemental Indenture.
“Change of Control Triggering Event” means the occurrence of both a Change of Control and a
Below Investment Grade Rating Event.
“Clearstream” means Clearstream Banking, societe anonyme, Luxembourg.
“Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment
Banker as having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate
debt securities of a comparable maturity to the remaining term of such Notes.
“Comparable Treasury Price” means, with
respect to any Redemption Date for the Notes, (A) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Independent
Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.
7
“Continuing Director” means, as of any date of determination, any member of the
Company’s Board of Directors who (1) was a member of such Board of Directors on the date the Notes were issued or (2) was nominated for election, elected or appointed to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of such nomination, election or appointment (either by a specific vote or by approval of the Company’s proxy statement in which such member was named as a nominee for
election as a director, without objection to such nomination).
“Definitive Note” means a certificated Initial Note or
certificated Exchange Note (bearing the Restricted Notes Legend if the transfer of such Note is restricted by applicable law) that does not include the Global Notes Legend.
“Depository” means The Depository Trust Company, its nominees and their respective successors.
“Domestic Subsidiary” means a Subsidiary that is not a Foreign Subsidiary.
“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear System.
“End Date” has the meaning set forth in Section 5.03.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exchange Notes” means the Notes of the Company issued in exchange for Initial Notes pursuant to the Indenture and this First
Supplemental Indenture in connection with the Registered Exchange Offer.
“Excluded Subsidiary” means any Domestic
Subsidiary (i) that owns no material assets (directly or through its Subsidiaries) other than equity interests of one or more Foreign Subsidiaries that are “controlled foreign corporations” within the meaning of Section 957 of
the Code (“CFC”) or (ii) that is a direct or indirect subsidiary of a Foreign Subsidiary that is a CFC.
“Foreign Subsidiary” means a Subsidiary not organized or existing under the laws of the United States of America or any state
thereof or the District of Columbia.
“Global Notes” has the meaning set forth in Section 4.01(b).
“Global Notes Legend” means the legend set forth in Section 4.02(e)(i) to this First Supplemental Indenture.
“Guarantee” has the meaning ascribed to such term in Section 7.01 of this First Supplemental Indenture.
8
“Guarantors” means, initially, J.M. Smucker LLC, an Ohio limited liability
company, and The Folgers Coffee Company, a Delaware corporation, but subject to Section 7.03 and 7.06 hereof.
“Independent
Investment Banker” means one of the Reference Treasury Dealers appointed by the Company.
“Initial Notes” means
the Rule 144A Notes and the Regulation S Notes.
“Initial Purchasers” means J.P. Morgan Securities LLC and Merrill Lynch,
Pierce, Fenner & Smith Incorporated and the other initial purchasers listed on Schedule 1 to the Purchase Agreement.
“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the
equivalent) by S&P, and the equivalent investment grade credit rating from any replacement Rating Agency or Rating Agencies selected by the Company.
“Joinder to the Intercreditor Agreement” has the meaning set forth in Section 8.01.
“Mandatorily Redeemable Notes” means the 2025 Notes, the 2035 Notes and the 2045 Notes.
“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.
“Notes” has the meaning ascribed to such term in the preamble of this First Supplemental Indenture.
“Notes Custodian” means the custodian with respect to a Global Note (as appointed by the Depository) or any successor person
thereto, who will initially be the Trustee.
“Original Issue Date” means March 20, 2015.
“Participant” means members of, or participants in, the Depository.
“Primary Senior Indebtedness” means (a) indebtedness for money borrowed under the Company’s Third Amended and
Restated Credit Agreement, dated as of September 6, 2013, among the Company, Smuckers Foods of Canada Corp., the guarantors from time to time parties thereto, the lenders from time to time parties thereto and Bank of Montreal, as administrative
agent, the Company’s Term Loan Credit Agreement, dated as of March 2, 2015, among the Company, the guarantors from time to time parties thereto, the lenders from time to time parties thereto and Bank of America, N.A., as administrative
agent and the Company’s 3.500% Notes due 2018, issued pursuant to that certain Indenture, dated as of October 18, 2011, among the Company and U.S. Bank National
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Association, as Trustee, as supplemented by the First Supplemental Indenture, dated as of October 18, 2011, among the Company, the guarantors party thereto and U.S. Bank National
Association, as Trustee and (b) any future credit, loan or borrowing facility or any indenture, note purchase agreement or similar agreement by the Company or any of its Subsidiaries providing, in each case, for the incurrence of indebtedness
for money borrowed in a principal amount equal to or greater than $120,000,000.
“Primary Treasury Dealer” has the
meaning set forth in the definition of “Reference Treasury Dealer”.
“Purchase Agreement” means the Purchase
Agreement dated March 12, 2015, among the Company, the Guarantors and the Initial Purchasers.
“QIB” means a
“qualified institutional buyer” as defined in Rule 144A.
“Rating Agencies” means each of Moody’s and
S&P; provided, that if any of Moody’s or S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the control of the Company, the Company may appoint a “nationally
recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act as a replacement agency for Moody’s or S&P, or either of them, as the case may be.
“Reference Treasury Dealer” means (1) each of J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner &
Smith Incorporated and their respective successors; provided, however, that if any of the foregoing ceases to be a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”), the
Company will substitute therefor another Primary Treasury Dealer and (2) any other Primary Treasury Dealers selected by the Company.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the
average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by
such Reference Treasury Dealer at 3:30 p.m. New York time on the third Business Day preceding such Redemption Date.
“Registered
Exchange Offer” means the offer by the Company, pursuant to the Registration Rights Agreement, to certain Holders of Initial Notes, to issue and deliver to such Holders, in exchange for their Initial Notes, a like aggregate principal amount
of Exchange Notes registered under the Securities Act.
“Registration Rights Agreement” means the Registration Rights
Agreement dated March 20, 2015, among the Company, the Guarantors and the Initial Purchasers.
“Regulation S” means
Regulation S under the Securities Act.
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“Regulation S Global Notes” has the meaning set forth in Section 4.01(b).
“Regulation S Notes” means all Notes offered and sold outside the United States in reliance on Regulation S.
“Restricted Notes Legend” means the legend set forth in Section 4.02(e)(i)
“Restricted Period” with respect to any Notes means the period of 40 consecutive days beginning on and including the later of
(i) the day on which such Notes are first offered to persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the Original Issue Date with respect to such Notes.
“Rule 144A” means Rule 144A under the Securities Act.
“Rule 144A Global Notes” has the meaning set forth in Section 4.01(b).
“Rule 144A Notes” means all Notes offered and sold to QIBs in reliance on Rule 144A.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its
successors.
“Securities Act” means the Securities Act of 1933, as amended.
“Shelf Registration Statement” means a registration statement filed by the Company in connection with the offer and sale of
the Initial Notes pursuant to Section 2(b) of the Registration Rights Agreement.
“Smucker Family” means any of
(i) Timothy P. Smucker, Richard K. Smucker, Susan Smucker Wagstaff and Marcella Smucker Clark, (ii) any member of the immediate family, heirs, legatees, descendants and blood relatives to the fifth degree of consanguinity of any individual
mentioned in clause (i) and (iii) any trust (or other entity created for estate planning purposes) established for the benefit of any one or more of the individuals mentioned in clause (i), the members of their immediate families and the
lineal descendants of any of them (and the trustees of any such trust).
“special mandatory redemption” has the meaning
set forth in Section 5.03.
“special mandatory redemption date” has the meaning set forth in Section 5.03.
“special mandatory redemption price” has the meaning set forth in Section 5.03.
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“Transfer Restricted Notes” means Definitive Notes and any other Notes that bear
or are required to bear the Restricted Notes Legend.
“Treasury Rate” means, with respect to any Redemption Date for the
Notes, the rate per annum equal to the semiannual equivalent yield to maturity or interpolated yield to maturity (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.
“Voting Stock” of any
specified Person as of any date means the capital stock of such Person that is at the time entitled to vote generally in the election of the board of directors of such Person.
Section 2.02. Rules of Construction. Unless the context otherwise requires or except as otherwise expressly provided, the
term “interest” in this Indenture shall be construed to include additional interest, if any.
Section 2.03.
Interpretation. For purposes of the term “indebtedness” or terms of similar import as used herein or in the Indenture as it may relate to the Notes, any indebtedness of the Company or any of its Subsidiaries in respect of which a
notice of prepayment or redemption has been delivered in connection with the BAG Acquisition and for which the Company or any of its Subsidiaries has deposited cash with or for the benefit of the trustee or holder of such indebtedness to fund such
repayment or redemption shall be considered repaid or redeemed; provided that if any applicable deposit is returned with the consent or acquiescence of the Company and the corresponding indebtedness of the Company or any of its Subsidiaries
is not redeemed or cancelled, but remains outstanding, this paragraph shall not apply.
To the extent any provision of any Note conflicts
with the express provisions of this First Supplemental Indenture, the provisions of this First Supplemental Indenture shall govern and be controlling.
ARTICLE 3
COVENANTS
The
following covenants shall apply in addition to the covenants set forth in the Indenture, solely as it relates to the Notes and solely for the benefit of the Holders of the Notes:
Section 3.01. Change of Control Triggering Event.
(a) Upon the occurrence of a Change of Control Triggering Event with respect to the Notes, unless the Company has exercised its right to
redeem the Notes pursuant to Section 5.01 of this First Supplemental Indenture by giving
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irrevocable notice to the Trustee in accordance with the Indenture, each Holder of Notes shall have the right to require the Company to purchase all or a portion of such Holder’s Notes
pursuant to the offer described in this Section 3.01 (the “Change of Control Offer”), at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to but not including
the date of purchase (the “Change of Control Payment”), subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.
(b) Unless the Company has exercised its right to redeem the Notes, within 30 days following the date upon which the Change of Control
Triggering Event occurs with respect to the Notes, or at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, the Company shall be required to send, by first class mail, a
notice to each Holder of Notes, with a copy to the Trustee, which notice shall describe the terms of the Change of Control Offer. Such notice shall state, among other things, the transaction or transactions that constitute or may constitute the
Change of Control and an offer to repurchase the Notes and the purchase date, which must be no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law (the “Change of Control
Payment Date”). The notice, if mailed prior to the date of consummation of the Change of Control, shall state that the Change of Control Offer is conditioned on the Change of Control Triggering Event occurring on or prior to the Change of
Control Payment Date.
(c) On the Change of Control Payment Date, the Company shall, to the extent lawful:
(i) accept or cause a third party to accept for payment all Notes or portions of Notes properly tendered pursuant to the Change
of Control Offer;
(ii) deposit or cause a third party to deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all Notes or portions of Notes properly tendered; and
(iii) deliver or cause to be delivered
to the Trustee the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being repurchased and that all conditions precedent to the Change of Control Offer and to the
repurchase by the Company of Notes pursuant to the Change of Control Offer have been complied with.
(d) The Company shall not be required
to make a Change of Control Offer with respect to the Notes if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by the Company and such third party purchases all
the Notes properly tendered and not withdrawn under its offer.
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(e) The Company shall comply in all material respects with the requirements of Rule 14e-1 under
the Exchange Act, and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Triggering Event. To the extent that
the provisions of any such securities laws or regulations conflict with the provisions of this Section 3.01, the Company shall comply with those securities laws and regulations and shall not be deemed to have breached its obligations under this
Section 3.01 by virtue of any such conflicts.
Section 3.02. Applicability of Covenants Contained in the Base
Indenture. Each of the agreements and covenants of the Company contained in Article 10 of the Base Indenture shall apply to the Notes.
Section 3.03. Future Guarantors. From and after the Original Issue Date, the Company shall cause any Domestic Subsidiary
(but excluding any Excluded Subsidiary) that guarantees payment of the Company’s or its Subsidiaries’ Primary Senior Indebtedness to promptly execute and deliver to the Trustee a supplemental indenture pursuant to which such Subsidiary
shall guarantee payment of the Notes, whereupon such Subsidiary shall become a Guarantor for all purposes under the Indenture.
ARTICLE
4
THE NOTES
Section 4.01 Form and Dating.
(a) General. The 2018 Notes and the Trustee’s certificate of authentication relating thereto shall be substantially in the form of
Exhibit A-1 hereto. The 2020 Notes and the Trustee’s certificate of authentication relating thereto shall be substantially in the form of Exhibit A-2 hereto. The 2022 Notes and the Trustee’s certificate of authentication relating thereto
shall be substantially in the form of Exhibit A-3 hereto. The 2025 Notes and the Trustee’s certificate of authentication relating thereto shall be substantially in the form of Exhibit A-4 hereto. The 2035 Notes and the Trustee’s
certificate of authentication relating thereto shall be substantially in the form of Exhibit A-5 hereto. The 2045 Notes and the Trustee’s certificate of authentication relating thereto shall be substantially in the form of Exhibit A-6 hereto.
The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $2,000 and integral multiples of $1,000 in excess
thereof.
The Initial Notes issued on the date hereof will be (i) offered and sold pursuant to the Purchase Agreement and
(ii) resold initially only to (a) QIBs in
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reliance on Rule 144A and (b) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such Initial Notes may thereafter be transferred to, among others,
QIBs and purchasers in reliance on Regulation S.
The Company hereby designates the Depository as the initial Depository for the Global
Notes.
(b) Global Notes. The Rule 144A Notes shall be issued initially in the form of one or more Notes in registered, global form
(collectively, the “Rule 144A Global Notes”) and the Regulation S Notes shall be issued initially in the form of one or more Notes in registered, global form (collectively, the “Regulation S Global Notes”), in each
case without interest coupons and bearing the Global Notes Legend and Restricted Notes Legend, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Notes Custodian, and registered in the name of the
Depository or a nominee of the Depository, duly executed by the Company and authenticated by the Trustee as provided in the Indenture. Beneficial ownership interests in the Regulation S Global Notes shall not be exchangeable for interests in the
Rule 144A Global Notes or any other Note without a Restricted Notes Legend until the expiration of the Restricted Period, except as and to the extent expressly provided in Section 4.02(d) of this First Supplemental Indenture. The Rule 144A
Global Notes and the Regulation S Global Notes are collectively referred to herein as “Global Notes.” The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depository or its nominee as hereinafter provided.
(c) Book-Entry Provisions. This
Section 4.01(c) shall apply only to a Global Note deposited with or on behalf of the Depository. The Company shall execute and the Trustee shall, in accordance with this Section 4.01(c) and pursuant to an order of the Company, authenticate
and deliver initially one or more Global Notes that (a) shall be registered in the name of the Depository for such Global Note or Global Notes or the nominee of such Depository and (b) shall be delivered by the Trustee to such Depository
or pursuant to such Depository’s instructions or held by the Trustee as Notes Custodian.
Participants shall have no rights under the
Indenture with respect to any Global Note held on their behalf by the Depository or by the Trustee as Notes Custodian or under such Global Note, and the Depository may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Participants, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a
beneficial interest in any Global Note.
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Any Book-Entry Security issued hereunder shall, bear a legend in substantially the following
form:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.
(d) Definitive Notes. Except as provided in Section 4.03, owners of beneficial interests in Global
Notes will not be entitled to receive physical delivery of certificated Notes.
Section 4.02. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes are presented to the Security Registrar with a request:
(i) to register the transfer of such Definitive Notes; or
(ii) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations, the
Security Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Notes surrendered for transfer or exchange:
(A) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company
and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and
(B) are
accompanied by the following additional information and documents, as applicable:
(1) if such Definitive Notes are being
delivered to the Security Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in the form set forth on the reverse side of the Initial Note); or
(2) if such Definitive Notes are being transferred to the Company, a certification to that effect (in the form set forth on
the reverse side of the Initial Note); or
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(iii) in the case of Transfer Restricted Notes, if such Definitive Notes are
being transferred pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or in reliance upon another exemption from the registration requirements of the Securities Act, (i) a certification to that effect
(in the form set forth on the reverse side of the Initial Note) and (ii) if the Company or Security Registrar so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set
forth in the legend set forth in Section 4.02(e)(i).
(b) Restrictions on Exchange of a Definitive Note for a Beneficial Interest
in a Global Note. A Definitive Note may not be exchanged for a beneficial interest in a Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the Company and the Security Registrar, together with:
(i) (A) certification (in the form set forth on the reverse side of the Initial Note) that such Definitive Note is being
transferred (a) to a QIB in accordance with Rule 144A or (b) outside the United States in an offshore transaction within the meaning of Regulation S and in compliance with Rule 904 under the Securities Act or (B) such other
certification and opinion of counsel as the Company shall require; and
(ii) written instructions directing the Trustee to
make, or to direct the Notes Custodian to make, an adjustment on its books and records with respect to such Global Note to reflect an increase in the aggregate principal amount of the Notes represented by the Global Note, such instructions to
contain information regarding the Depository account to be credited with such increase, then the Trustee shall cancel such Definitive Note and cause, or direct the Notes Custodian to cause, in accordance with the standing instructions and procedures
existing between the Depository and the Notes Custodian, the aggregate principal amount of Notes represented by the Global Note to be increased by the aggregate principal amount of the Definitive Note to be exchanged and shall credit or cause to be
credited to the account of the Person specified in such instructions a beneficial interest in the Global Note equal to the principal amount of the Definitive Note so canceled. If no Global Notes are then outstanding and the Global Note has not been
previously exchanged for certificated securities pursuant to Section 4.03, the Company shall issue and the Trustee shall authenticate, upon receipt of a Company Order, a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes.
(i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depository, in
accordance
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with this First Supplemental Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depository and its direct and indirect participants
(including, if applicable, those of Euroclear and Clearstream) therefor, which may change from time to time. A transferor of a beneficial interest in a Global Note shall deliver a written order given in accordance with the Depository’s
procedures containing information regarding the participant account of the Depository to be credited with a beneficial interest in such Global Note or another Global Note and such account shall be credited in accordance with such order with a
beneficial interest in the applicable Global Note and the account of the Person making the transfer shall be debited by an amount equal to the beneficial interest in the Global Note being transferred. Transfers by an owner of a beneficial interest
in a Rule 144A Global Note to a transferee who takes delivery of such interest through a Regulation S Global Note, whether before or after the expiration of the Restricted Period, shall be made only upon receipt by the Trustee of a certification
from the transferor to the effect that such transfer is being made in accordance with Rules 903 or 904 of Regulation S or (if available) Rule 144 under the Securities Act and that, if such transfer is being made prior to the expiration of the
Restricted Period, the interest transferred shall be held immediately thereafter through Euroclear or Clearstream.
(ii) If
the proposed transfer is a transfer of a beneficial interest in one Global Note to a beneficial interest in another Global Note, the Security Registrar shall reflect on its books and records the date and an increase in the principal amount of the
Global Note to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Security Registrar shall reflect on its books and records the date and a corresponding decrease in the
principal amount of the Global Note from which such interest is being transferred. Any beneficial interest in one of the Global Notes that is transferred to a Person who takes delivery in the form of an interest in another Global Note will, upon
transfer, cease to be an interest in such Global Note and will become an interest in such other Global Note and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such
other Global Note for so long as it remains such an interest. The policies and practices of the Depository may prohibit transfers of beneficial interests in a Regulation S Global Note prior to the expiration of the Restricted Period.
(iii) Notwithstanding any other provisions of this First Supplemental Indenture (other than the provisions set forth in
Section 4.03), a Global Note may not be transferred in part, and may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository
or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository.
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(iv) In the event that a Global Note is exchanged for Definitive Notes pursuant
to Section 4.03 prior to the consummation of the Registered Exchange Offer or the effectiveness of the Shelf Registration Statement with respect to such Notes, such Notes may be exchanged only in accordance with such procedures as are
substantially consistent with the provisions of this Section 4.02 (including the certification requirements set forth on the reverse of the Initial Notes intended to ensure that such transfers comply with Rule 144, Rule 144A, Regulation S or
such other applicable exemption from registration under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Company.
(d) Restrictions on Transfer and Exchange of Regulation S Global Notes.
(i) Prior to the expiration of the Restricted Period, interests in a Regulation S Global Note may only be held through
Euroclear or Clearstream (as indirect participants in the Depository). During the Restricted Period, beneficial ownership interests in a Regulation S Global Note may only be sold, pledged or transferred through Euroclear or Clearstream in accordance
with the Applicable Procedures and only (a) to the Company, (b) so long as such security is eligible for resale pursuant to Rule 144A, to a person whom the selling holder reasonably believes is a QIB that purchases for its own account or
for the account of a QIB to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A, (c) in an offshore transaction in accordance with Regulation S, (d) pursuant to an available exemption from
registration under the Securities Act or (e) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. Prior to the expiration of
the Restricted Period, transfers by an owner of a beneficial interest in a Regulation S Global Note to a transferee who takes delivery of such interest through a Rule 144A Global Note shall be made only in accordance with the Applicable Procedures,
upon receipt by the Trustee of a written certification from the transferor of the beneficial interest in the form provided on the reverse of the Initial Note to the effect that such transfer is being made to a (a) QIB within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and (b) in accordance with all applicable securities laws of the states of the United States and any other applicable jurisdictions. Such written certification shall no longer be
required after the expiration of the Restricted Period. In the case of a transfer of a beneficial interest in a Regulation S Global Note for an interest in a Rule 144A Global Note, the transferee must, at the request of the Company, deliver an
opinion of counsel reasonably acceptable to the Company stating that the proposed transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
(ii) Upon the expiration of the Restricted Period, beneficial ownership interests in a Regulation S Global Note shall be
transferable in accordance with applicable law and the other terms of the Indenture.
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(e) Legends for Notes.
(i) Except as permitted by the following paragraphs (ii), (iii), (iv) or (v) each Note certificate evidencing the
Global Notes and the Definitive Notes (and all Notes issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form (each defined term in the legend being defined as such for purposes of the legend
only):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY, ON ITS OWN BEHALF OR ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, BY ITS ACCEPTANCE HEREOF
(1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
“OFFSHORE TRANSACTION” PURSUANT TO RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS [IN THE CASE OF RULE 144A NOTES:
ONE YEAR][IN THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DATE ON WHICH THE J. M. SMUCKER COMPANY (THE “COMPANY”) OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY, OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT
THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
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ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) or (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE INDENTURE IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE.
Each Regulation S Note shall bear an additional legend in substantially the following form:
BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
Each Definitive Note shall
bear the following additional legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH
CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
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(ii) Upon any sale or transfer of a Transfer Restricted Note that is a Definitive
Note, the Security Registrar shall permit the Holder thereof to exchange such Transfer Restricted Note for a Definitive Note that does not bear the legends set forth above and rescind any restriction on the transfer of such Transfer Restricted Note
if the Holder certifies in writing to the Security Registrar that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Initial Note).
(iii) After a transfer of any Initial Notes during the period of the effectiveness of a Shelf Registration Statement with
respect to such Initial Notes, all requirements pertaining to the Restricted Notes Legend on such Initial Notes shall cease to apply and the requirements that any such Initial Notes be issued in global form shall continue to apply.
(iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Notes pursuant to which Holders of such
Initial Notes are offered Exchange Notes in exchange for their Initial Notes, all requirements pertaining to Initial Notes that Initial Notes be issued in global form shall continue to apply, and Exchange Notes in global form without the Restricted
Notes Legend shall be available to Holders that exchange such Initial Notes in such Registered Exchange Offer.
(v) Upon a
sale or transfer after the expiration of the Restricted Period of any Initial Note acquired pursuant to Regulation S, all requirements that such Initial Note bear the Restricted Notes Legend shall cease to apply and the requirements requiring any
such Initial Note be issued in global form shall continue to apply.
(vi) To the extent that any Notes are represented by
one or more Global Notes held by or on behalf of the Depository, the Company may cause the Restrictive Notes Legend on any such Global Notes to be removed (or deemed removed) and cause such Global Notes to be identified by an unrestricted CUSIP at
any time on or after the one year anniversary of the later of (x) the Issue Date and (y) the date on which additional Notes bearing the same CUSIP were last issued (it being understood that, if additional Notes bear a different CUSIP, the
date after which the Company may cause the Restrictive Notes Legend to be removed with respect to such additional Notes shall be the one year anniversary of their date of issuance), without delivering an Opinion of Counsel, by:
(A) delivering to the Trustee a written notice (x) certifying that all Notes represented by such Global Notes would be
freely tradable under Rule 144 by a person who is not an affiliate of the Company (within the meaning of Rule 144) and has not been an affiliate of the Company (within the meaning of Rule 144)
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during the immediately preceding 90 days, (y) instructing the Trustee to take any actions as may be necessary so that the Restricted Notes Legend set forth on the Global Notes shall be
deemed removed from the Global Notes in accordance with the terms and conditions of the Notes and the Indenture, without further action on the part of Noteholders and (z) instructing the Trustee to take any actions as may be necessary so that
the restricted CUSIP number for the Notes shall be removed from the Global Notes and replaced with an unrestricted CUSIP number. Immediately upon receipt of such notice by the Trustee the Restricted Notes Legend will be deemed removed from each of
the Global Notes specified in such notice and the restricted CUSIP number will be deemed removed from each of such Global Notes and deemed replaced with an unrestricted CUSIP number; and
(B) providing the Depository an instruction letter for the Depository’s mandatory exchange process (or any successor
notice, form or action required pursuant to the Applicable Procedures) to the extent required.
(vii) From and after the
one year anniversary of the issue date of any Transfer Restricted Note, upon written direction of the Company:
(A) the
Registrar shall permit the Noteholder thereof to exchange any Transfer Restricted Note that is a Definitive Note for a Definitive Note that does not bear the legends set forth above and rescind any restriction on the transfer of such Transfer
Restricted Note if the Holder certifies in writing to the Registrar and the Company that its request for such exchange was made in reliance on Rule 144 and that such Holder is not an affiliate (as defined under Rule 144) of the Company; and
(B) beneficial interests in a Transfer Restricted Note that is a Global Note may be exchanged for beneficial interests in a
Global Note that does not bear the Restricted Notes Legend if the Noteholder certifies in writing to the Registrar and the Company that its request for such exchange was made in reliance on Rule 144 and that such Noteholder is not an
“affiliate” of the Company within the meaning of Rule 144.
(f) Cancellation or Adjustment of Global Note. At such time
as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, transferred, redeemed, repurchased or canceled, such Global Note shall be returned by the Depository to the Trustee for cancellation or retained and
canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, redeemed, repurchased or canceled, the
principal
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amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note)
with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction.
(g) Obligations with Respect to
Transfers and Exchanges of Notes.
(i) To permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate, upon receipt of a Company Order, Definitive Notes and Global Notes at the Security Registrar’s request.
(ii) No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections
3.01, 5.01 or 5.03 of this First Supplemental Indenture).
(h) Prior to the due presentation for registration of transfer of any Note, the
Company, the Trustee, the Paying Agent or the Security Registrar may deem and treat the person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Note and
for all other purposes whatsoever, whether or not such Note is overdue, and none of the Company, the Trustee, the Paying Agent or the Security Registrar shall be affected by notice to the contrary.
(i) The Company shall not be required to make and the Security Registrar need not register transfers or exchanges of Notes selected for
redemption (except, in the case of Notes to be redeemed in part, the portion thereof not to be redeemed) or any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.
(j) All Notes issued upon any transfer or exchange pursuant to the terms of this First Supplemental Indenture shall evidence the same Debt and
shall be entitled to the same benefits under the Indenture as the Notes surrendered upon such transfer or exchange.
(k) No Obligation
of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a
member of, or a participant in the Depository or any other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with
respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of
24
redemption or repurchase) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under
the Notes shall be given or made only to the registered Holders (which shall be the Depository or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depository subject to
the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this First Supplemental Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depository participants, members or beneficial owners in any Global
Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this First Supplemental Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements hereof.
(l) Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of a Company Order, the Trustee shall authenticate (i) one or more Global Notes without the Restricted Notes Legend in an aggregate principal amount
equal to the principal amounts of the beneficial interests in the Global Notes tendered for acceptance by Persons that certify in the applicable letters of transmittal that (x) they are not broker dealers, (y) they are not participating in
a distribution of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and (ii) Definitive Notes without the Restricted Notes Legend in an aggregate
principal amount equal to the principal amount of the Definitive Notes, if any, tendered for acceptance by Persons that certify in the applicable letters of transmittal that (x) they are not broker dealers, (y) they are not participating
in a distribution of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Global Notes with the Restricted Notes Legend to be reduced accordingly, and the Company shall execute and the Trustee shall authenticate and mail to the Persons designated by the Holders of the
Definitive Notes so accepted Definitive Notes without the Restricted Notes Legend in the applicable principal amount. Any Notes that remain outstanding after the consummation of the Exchange Offer, and Exchange Notes issued in connection with the
Exchange Offer, shall be treated as a single class of securities under the Indenture.
25
(m) In connection with any exchange of beneficial interests in a Global Note that bears a
Restricted Notes Legend for any Global Note that does not bear a Restricted Notes Legend in accordance with Section 4.02(e)(i), if a Global Note that does not bear a Restricted Notes Legend is not then outstanding (or an insufficient principal
amount of such Global Notes are outstanding to permit such exchange) and the Global Notes have not been previously exchanged for certificated securities pursuant to Section 4.03, the Company shall issue and the Trustee shall authenticate, upon
receipt of a Company Order, one or more new Global Notes without the Restricted Notes Legend in the appropriate principal amounts.
Section 4.03. Definitive Notes.
(a) A Global Note deposited with the Depository or with the Trustee as Notes Custodian pursuant to Section 4.01 shall be transferred to
the beneficial owners thereof in the form of Definitive Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 4.02 and
(i) the Depository (A) notifies the Company that the Depository is no longer willing or able to act as a depositary or clearing system for the Global Notes or (B) ceases to be a “clearing agency” registered under the
Exchange Act, and, in either event, a successor depositary or clearing system is not appointed by the Company within 90 days of such notice or becoming aware that the Depository is no longer so registered, (ii) the Company, in its sole
discretion, determines not to have the Notes represented by a Global Note and provide written notice to the Trustee, or (iii) upon the occurrence and continuation of an Event of Default.
(b) Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 4.03 shall be surrendered by the
Depository to the Trustee, to be so transferred, in whole or from time to time in part, without charge, and upon Company Order the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate
principal amount of Definitive Notes of authorized denominations. Any portion of a Global Note transferred pursuant to this Section 4.03 shall be executed, authenticated and delivered only in denominations of $2,000 of principal amount and any
integral multiple of $1,000 in excess thereof and registered in such names as the Depository shall direct. Any certificated Initial Note in the form of a Definitive Note delivered in exchange for an interest in the Global Note shall, except as
otherwise provided by Section 4.02, bear the Restricted Notes Legend.
(c) The registered Holder of a Global Note may grant proxies
and otherwise authorize any Person, including Participants and Persons that may hold interests through Participants, to take any action which a Holder is entitled to take under the Indenture or the Notes.
(d) Notwithstanding anything to the contrary provided herein, in no event shall any Regulation S Global Note be exchanged for Definitive Notes
prior to (a) the expiration of the Restricted Period and (b) the receipt of any certificates required under the provisions of Regulation S.
(e) In the event of the occurrence of any of the events specified in Section 4.03(a)(i), (ii) or (iii), the Company will promptly
make available to the Trustee a reasonable supply of Definitive Notes in fully registered form without interest coupons.
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ARTICLE 5
REDEMPTION
Section 5.01. Optional Redemption. The Notes shall be redeemable, at the option of the Company, at any time and from time
to time, in whole or in part, on not less than 30 nor more than 60 days’ prior notice mailed to the Holders of the Notes, with a copy provided to the Trustee. The Notes shall be redeemable at a Redemption Price, to be calculated by the Company,
equal to the greater of:
(a) 100% of the principal amount of the Notes to be redeemed; and
(b) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not including
interest accrued to the date of redemption), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15 basis points in the case of the 2018 Notes, 15 basis
points in the case of the 2020 Notes, 20 basis points in the case of the 2022 Notes, 25 basis points in the case of the 2025 Notes, 25 basis points in the case of the 2035 Notes and 30 basis points in the case of the 2045 Notes; plus, in each case,
accrued and unpaid interest on the Notes to be redeemed to the date of redemption.
Section 5.02. Applicability of Sections
of the Base Indenture. The provisions of Article 11 of the Base Indenture in respect of the Notes shall apply to any optional redemption of the Notes except when such provisions conflict with the foregoing.
Section 5.03. Special Mandatory Redemption.
In the event that (i) the consummation of the BAG Acquisition does not occur on or prior to August 3, 2015 (the “End
Date”) or (ii) the Company notifies the Trustee that the BAG Merger Agreement has been terminated in accordance with its terms prior to the consummation of the BAG Acquisition (the earlier of the date of delivery of such notice and the
End Date, the “Acquisition Deadline”), the Company shall redeem all and not less than all of the Mandatorily Redeemable Notes then outstanding (the “special mandatory redemption”) by a date no later than 10 days
after the Acquisition Deadline (the “special mandatory redemption date”) at a Redemption Price equal to 101% of the aggregate principal amount of the Mandatorily Redeemable Notes, plus accrued and unpaid interest, if any, to, but
excluding the special mandatory redemption date (the “special mandatory redemption price”).
27
The Company shall promptly, and in any event not more than three Business Days after the
Acquisition Deadline, deliver notice, executed by an officer of the Company, of the special mandatory redemption to the Trustee, who shall then promptly deliver such notice to each holder of Mandatorily Redeemable Notes at its registered address. If
funds sufficient to pay the special mandatory redemption price of the Mandatorily Redeemable Notes on the special mandatory redemption date are deposited with the Trustee or a Paying Agent on or before such special mandatory redemption date, then on
and after such special mandatory redemption date, the Mandatorily Redeemable Notes shall cease to bear interest and the Indenture shall be discharged and cease to be of further effect as to all Mandatorily Redeemable Notes.
ARTICLE 6
DEFEASANCE
Section 6.01. Defeasance. If the Company shall effect a defeasance or discharge of the Notes pursuant to Article 4 of the
Base Indenture, the Company shall cease to have any obligation to comply with the covenants set forth in Article 3 hereof (whether set forth specifically or by reference to provisions of the Base Indenture) and the provisions of Article 8 of the
Base Indenture.
ARTICLE 7
SUBSIDIARY GUARANTEES
Section 7.01. Guarantees.
(a) Each of the Guarantors, as primary obligor and not merely as surety, hereby jointly and severally, irrevocably and fully and
unconditionally guarantees to each Holder and to the Trustee and its successor and assigns (each, a “Guarantee”) on an unsecured, unsubordinated basis and equal in right of payment to all existing and future unsecured,
unsubordinated indebtedness of such Guarantor, the punctual payment when due of all monetary obligations of the Company under the Indenture (with respect to the Notes) and the Notes, whether for principal of or interest on the Notes.
(b) The obligations of each Guarantor shall be limited to the maximum amount as shall, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee, result in the obligations of such
Guarantor under the Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law, or being void or unenforceable under any law relating to insolvency of debtors.
28
(c) Each Guarantor further agrees that (to the fullest extent permitted by law) its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Indenture, the Notes or the obligations of the Company or any other Guarantor hereunder or thereunder, the absence of any action to enforce the same,
any waiver or consent by any Holder with respect to any provisions hereof or thereof, any release of any other Guarantor, the recovery of any judgment against the Company, any action to enforce the same, or any other circumstance that might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
(d) Each Guarantor hereby waives (to the fullest extent
permitted by law) the benefit of diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all
demands whatsoever and covenants that (except as otherwise provided in Section 7.03 of this First Supplemental Indenture) its Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes, the
Indenture and the Guarantee. Such Guarantee is a guarantee of payment and not of collection.
Section 7.02. Continuing
Guarantee.
(a) Each Guarantee shall be a continuing Guarantee and shall, (i) subject to Section 7.03 of this First
Supplemental Indenture, remain in full force and effect until payment in full of the principal amount of all outstanding Notes (whether by payment at maturity, purchase, redemption, defeasance, retirement or other acquisition), (ii) be binding
upon such Guarantor and (iii) inure to the benefit of and be enforceable by the Trustee, the Holders and their permitted successors, transferees and assigns.
(b) The obligations of each Guarantor hereunder shall continue to be effective or shall be reinstated, as the case may be, if at any time any
payment which would otherwise have reduced or terminated the obligations of any Guarantor hereunder and under its Guarantee (whether such payment shall have been made by or on behalf of the Company or by or on behalf of a Guarantor) is rescinded or
reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation or reorganization of the Company or any Guarantor or otherwise, all as though such payment had not been made.
Section 7.03. Release of Guarantee. Notwithstanding the provisions of Section 7.02 of this First Supplemental
Indenture, a Guarantor shall be automatically and unconditionally released from its obligations hereunder:
(a) with respect to any series
of Notes, upon the Company’s exercise of its legal defeasance option or its covenant defeasance option as described in
29
Article 4 of the Base Indenture with respect to such series of Notes or if the Company’s obligations under the Indenture are discharged in accordance with the terms of the Indenture;
(b) subject to the following sentence, with respect to all series of Notes, upon the issuance, sale, exchange, transfer or other disposition
(including through merger, consolidation, amalgamation or otherwise) of the capital stock of the applicable Guarantor (including any issuance, sale, exchange, transfer or other disposition following which the applicable Guarantor is no longer a
Subsidiary) if such issuance, sale, exchange, transfer or other disposition is made in a manner not in violation of this Indenture; or
(c) with respect to all series of Securities, upon the substantially simultaneous release or discharge of the guarantee by such Guarantor
under all of the Primary Senior Indebtedness of the Company and its Subsidiaries other than through discharges as a result of payment by such Guarantor on such guarantees (but including any release or discharge that would be conditioned only on the
release or discharge of the guarantee hereunder or of the guarantee of other Primary Senior Indebtedness).
Notwithstanding the foregoing,
a Guarantor shall not be automatically released from its obligations hereunder pursuant to Section 7.03(b) if, immediately after giving effect to the consummation of the transactions described in Section 7.03(b) and such release, such
Guarantor would be required (notwithstanding the consummation of such transactions) to become a Guarantor pursuant to Section 3.03 hereof.
If a Guarantor is released from its obligations hereunder pursuant to this Section 7.03, it shall cease to be a “Guarantor” as
defined in and for purposes hereof.
Section 7.04. Notation Not Required. Neither the Company nor any Guarantor shall
be required to make a notation on the Notes to reflect any Guarantee or any release thereof.
Section 7.05. Waiver of
Subrogation. Each Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of such Guarantor’s obligations
under its Guarantee and the Indenture, including, without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of any Holder of Notes against the Company, whether or
not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on
30
account of such claim or other rights in relation to the Trustee until all monetary obligations of the Company under the Indenture (with respect to the Notes) and the Notes, whether for principal
of or interest on the Notes, are paid in full. If any amount shall be paid to any Guarantor in violation of the preceding sentence and the Notes shall not have been paid in full, such amount shall have been deemed to have been paid to such Guarantor
for the benefit of, and held in trust for the benefit of, the Holders, and shall forthwith be paid to the Trustee for the benefit of such Holders to be credited and applied upon the Notes, whether matured or unmatured, in accordance with the terms
of the Indenture. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 7.05 is knowingly made in contemplation
of such benefits.
Section 7.06. Execution and Delivery of Guarantees. The Company shall cause each subsidiary that is
required to become a Guarantor pursuant to Section 3.03 of this First Supplemental Indenture to promptly execute and deliver to the Trustee a Supplemental Indenture substantially in the form set forth in Exhibit B to this First
Supplemental Indenture, or otherwise in form and substance reasonably satisfactory to the Trustee, evidencing its Guarantee on substantially the terms set forth in this Article 7. Concurrently therewith, the Company shall deliver to the Trustee an
Opinion of Counsel in form and substance reasonably satisfactory to the Trustee to the effect that such Supplemental Indenture has been duly authorized, executed and delivered by such subsidiary and that, subject to applicable bankruptcy,
insolvency, fraudulent transfer, fraudulent conveyance, reorganization, moratorium and other laws now or hereafter in effect affecting creditors’ rights or remedies generally and to general principles of equity (including standards of
materiality, good faith, fair dealing and reasonableness), whether considered in a proceeding at law or at equity, such Supplemental Indenture is a valid and binding agreement of such subsidiary, enforceable against such subsidiary in accordance
with its terms.
Section 7.07. Notices. Notice to any Guarantor shall be sufficient if addressed to such Guarantor care
of the Company at the address, place and manner provided in Section 11.04 of the Base Indenture.
ARTICLE 8
INTERCREDITOR AGREEMENT
Section 8.01. Joinder to the Intercreditor Agreement. On the date hereof, the Trustee shall execute an acknowledgement and
joinder to the Intercreditor Agreement (the “Joinder to the Intercreditor Agreement”), as agent for the Holders, in the form of Exhibit C attached hereto. Each Holder of Notes, by acceptance thereof, shall be deemed to have
(i) appointed and designated the Trustee as agent for such Holder for purposes of the Joinder to the Intercreditor Agreement and the Intercreditor Agreement, (ii) authorized and directed the Trustee to enter into the Joinder to the
Intercreditor Agreement for the benefit of
31
each such Holder, and (iii) authorized and directed the Trustee to sign the Joinder to the Intercreditor Agreement, to receive all notices, to take all action with respect thereto and to the
Intercreditor Agreement, and to exercise all rights and powers incidental to the Joinder to the Intercreditor Agreement and the Intercreditor Agreement.
Section 8.02. Duties of the Trustee Under the Intercreditor Agreement. The Trustee shall be an “Additional Primary
Senior Debt Agent” on behalf of the Holders of the Notes in accordance with Section 6.12 of the Intercreditor Agreement and shall assume the duties of the aforementioned “Additional Primary Senior Debt Agent” as required by the
Intercreditor Agreement.
Section 8.03. Indemnification of the Trustee. In connection with the Trustee assuming the
role of an “Additional Primary Senior Debt Agent” as defined in the Intercreditor Agreement (a) the Trustee shall be indemnified by the Company against any and all costs, expenses and liabilities incurred by the Trustee and
(b) the Trustee shall be indemnified by the Holders against any liabilities incurred by the Trustee pursuant to Section 3.4 of the Intercreditor Agreement.
Section 8.04. Invalidated Payments Under the Intercreditor Agreement. Promptly upon notice from the Trustee, the Holders
shall return or repay any funds received as may be required pursuant to Section 3.4 of the Intercreditor Agreement.
ARTICLE 9
EVENTS OF DEFAULT
For the sole benefit of the Holders of the Notes, the following Event of Default shall apply, solely with respect to the Notes, in addition to
the Events of Default set forth in Section 5.1 of the Indenture: default in the performance of the Company’s obligations under Section 5.03 of this First Supplemental Indenture.
ARTICLE 10
MODIFICATION AND WAIVER
Section 10.01. Mandatorily Redeemable Notes. Notwithstanding anything to the contrary in the Indenture, the provisions
related to the Company’s obligation to redeem the Mandatorily Redeemable Notes set forth in Section 5.03 may not be waived or modified for any series of Mandatorily Redeemable Notes without the written consent of holders of at least 66
2/3% in principal amount of such series of Mandatorily Redeemable Notes subject to such waiver or modification (and, for the avoidance of doubt, such amendments shall not require the consent of the Holder of each outstanding Note affected thereby).
32
Section 10.02. Change of Control Triggering Event. No modification or
amendment to the Indenture or the Notes may, without the consent of the Holder of each outstanding Note affected thereby: If a Change of Control Triggering Event occurs, limit a Holder’s right, if any, to repayment of the Notes at the
Holder’s option in connection therewith.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Ratification of Base Indenture. The Base Indenture, as supplemented by this First Supplemental Indenture, is
in all respects ratified and confirmed, and this First Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided.
Section 11.02. Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for the correctness of the same.
Section 11.03. New York Law to
Govern. This Indenture and the Notes shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required by mandatory
provisions of law.
Section 11.04. Counterparts. This First Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall together constitute one and the same instrument.
Section 11.05. Effect of Headings. The Article and Section headings herein and the Table of Contents are for convenience
only and shall not affect the construction hereof.
[Signature Page Follows]
33
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly
executed as of the date first above written.
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| THE J. M. SMUCKER COMPANY |
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| By: |
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/s/ Mark R. Belgya |
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Name: |
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Mark R. Belgya |
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Title: |
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Senior Vice President and Chief Financial Officer |
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| J.M. SMUCKER LLC |
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| By: |
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/s/ Debra A. Marthey |
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Name: |
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Debra A. Marthey |
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Title: |
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Vice President and Treasurer |
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| THE FOLGERS COFFEE COMPANY |
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| By: |
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/s/ Debra A. Marthey |
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Name: |
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Debra A. Marthey |
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Title: |
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Vice President and Treasurer |
[Signature Page to
First Supplemental Indenture]
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| U.S. BANK NATIONAL ASSOCIATION, as Trustee |
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| By: |
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/s/ Holly H. Pattison |
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Name: |
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Holly H. Pattison |
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Title: |
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Vice President |
[Signature Page to
First Supplemental Indenture]
EXHIBIT A-1 – Form of 1.750% Notes due 2018
THE J. M. SMUCKER COMPANY
1.750% Notes due 2018
CUSIP No.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
(“DTC” OR THE “DEPOSITORY”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INSOMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY, ON ITS OWN
BEHALF OR ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
(“RULE 144A”))
A1-1
OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN “OFFSHORE TRANSACTION” PURSUANT TO RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT
(“REGULATION S”), (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR][IN THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DATE ON WHICH THE J. M. SMUCKER COMPANY (THE “COMPANY”) OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY, OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL HAVE THE RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) or (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE INDENTURE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
[Restricted Notes Legend for
Notes Offered in Reliance on Regulation S]:
BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS
IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
A1-2
[Definitive Notes Legend]:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THE J. M.
SMUCKER COMPANY
1.750% Note due 2018
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| No.: [—] |
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CUSIP No.: [—] |
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$[—] |
THE J. M. SMUCKER COMPANY, an Ohio corporation (the “Company”, which term includes any
successor corporation), for value received promises to pay to CEDE & CO., or registered assigns, the principal sum of $[—] on March 15, 2018, unless earlier redeemed as herein provided.
Interest Payment Dates: March 15 and September 15 (each, an “Interest Payment Date”), commencing on
September 15, 2015.
Interest Record Dates: March 1 and September 1 (each, an “Interest Record Date”).
Payment of the principal of and interest on this Note shall be made at the office or agency of the Trustee maintained for that purpose in
St. Paul, Minnesota, in such currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, for so long as the Notes are represented in global form by one
or more Global Notes, all payments of principal of and interest shall be made by wire transfer of immediately available funds to the Depository or its nominee, as the case may be, as the registered owner of the Global Security representing such
Notes.
Reference is made to the further provisions of this Note set forth on the reverse hereof, which will for all purposes have the
same effect as if set forth at this place.
A1-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
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| THE J. M. SMUCKER COMPANY |
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Name: |
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Title: |
This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.
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| U.S. BANK NATIONAL ASSOCIATION, as Trustee |
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Dated: March 20, 2015
A1-4
[REVERSE OF NOTE]
This Note is one of the duly authorized securities of the Company (herein called the “Notes”) issued and to be issued in one
or more series under an Indenture dated as of March 20, 2015 (the “Base Indenture”), as amended by a First Supplemental Indenture dated as of March 20, 2015 (the “First Supplemental Indenture” and,
together with the Base Indenture, the “Indenture”), between the Company, the guarantors party thereto (the “Guarantors”) and U.S. Bank National Association, as trustee (herein called the “Trustee,”
which term includes any successor trustee under the Indenture with respect to the series of Notes represented hereby), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the Guarantors, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is a Global Note
representing the Company’s 1.750% Notes due 2018 in the aggregate principal amount of $500,000,000.
The amount of interest payable
on any interest payment date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. In the event that any date on which interest is payable on this Note is not a Business Day, then payment of interest payable on such
date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on such interest payment date.
The Notes are issuable only in fully registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 above
that amount. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
The Notes shall be redeemable, at the option of the Company, at any time and from time to time, in whole or
in part, on not less than 30 nor more than 60 days’ prior notice mailed to the Holders of the Notes, with a copy provided to the Trustee. The Notes shall be redeemable at a Redemption Price, to be calculated by the Company, equal to the greater
of (i) 100% of the principal amount of such Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not including interest accrued to the date
of redemption), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15 basis points, plus, in each case, accrued and unpaid interest on the Notes to be
redeemed to the Redemption Date.
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On and after any Redemption Date, interest will cease to accrue on the Notes called for
redemption. On or before the Redemption Date, the Company shall deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date all of the Notes so called for redemption at the appropriate
Redemption Price, together with accrued interest to the date fixed for redemption. If the Company is redeeming less than all of the Notes, the Trustee shall select, in such manner as it shall deem appropriate and fair, the Notes to be redeemed in
whole or in part.
Upon the occurrence of a Change of Control Triggering Event with respect to the Notes, unless the Company has exercised
its right to redeem the Notes as described above by giving irrevocable notice to the Trustee in accordance with the Indenture, each Holder of Notes shall have the right to require the Company to purchase all or a portion of such Holder’s Notes
pursuant to the offer described below (the “Change of Control Offer”), at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to but not including the date of purchase
(the “Change of Control Payment”), subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.
Unless the Company has exercised its right to redeem the Notes, within 30 days following the date upon which the Change of Control Triggering
Event occurs with respect to the Notes or at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, the Company shall be required to send, by first class mail, a notice to each
Holder of Notes, with a copy to the Trustee, which notice shall describe the terms of the Change of Control Offer. Such notice shall state, among other things, the transaction or transactions that constitute or may constitute the Change of Control
and offering to repurchase the Notes if this series and the purchase date, which must be no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law (the “Change of Control
Payment Date”). The notice, if mailed prior to the date of consummation of the Change of Control, shall state that the Change of Control Offer is conditioned on the Change of Control Triggering Event occurring on or prior to the Change of
Control Payment Date.
On the Change of Control Payment Date, the Company shall, to the extent lawful: (i) accept or cause a third
party to accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer; (ii) deposit or cause a third party to deposit with the paying agent an amount equal to the Change of Control Payment in
respect of all Notes or portions of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate principal amount of Notes or
portions of Notes being repurchased and that all conditions precedent to the Change of Control Offer and to the repurchase by the Company of Notes pursuant to the Change of Control Offer have been complied with.
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The Company shall not be required to make a Change of Control Offer with respect to the Notes if
a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by the Company and such third party purchases all Notes properly tendered and not withdrawn under its offer.
The Company shall comply in all material respects with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the purchase of the Notes as a result of a Change of Control Triggering Event.
To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes, the Company shall comply with those securities laws and regulations and shall not be deemed to have
breached its obligations under the Change of Control Offer provisions of the Notes by virtue of such conflicts.
The indebtedness
evidenced by this Note is, to the extent provided in the Indenture, the unsecured, unsubordinated obligation of the Company and will rank equally in right of payment to all of the Company’s existing and future unsecured, unsubordinated
indebtedness. This Note will, to the extent provided in the First Supplemental Indenture, be guaranteed, jointly and severally, by each of the Guarantors party to the First Supplemental Indenture on an unsecured, unsubordinated basis. This Note may
hereafter be entitled to certain other Guarantees made for the benefit of the Holders. Reference is made to Article 7 of the First Supplemental Indenture for terms relating to such Guarantees, including the release, termination and discharge
thereof. Neither the Company nor any Guarantor shall be required to make any notation on this Note to reflect any Guarantee or any such release, termination or discharge. Any payment in respect of the Guarantees that the Holders shall be entitled to
is subject to the terms of the Intercreditor Agreement (as defined in the Indenture).
The Notes are initially limited to $500,000,000
aggregate principal amount. The Company may from time to time, without notice to or the consent of the Holders of the Notes, create and issue additional Notes ranking equally and ratably with the Notes in all respects (other than the issue price,
the date of the issuance, the payment of interest accruing prior to the issue date of such additional Notes and the first payment of interest following the issue date of such additional Notes), provided that if the additional Notes are not fungible
with the existing Securities for United States federal income tax purposes, the additional Notes will have a separate CUSIP number. Any such additional Notes shall be consolidated and form a single series with the Notes initially issued, including
for purposes of voting and redemptions.
The Notes are not entitled to the benefit of any sinking fund.
A1-7
The Indenture imposes certain limitations on the ability of the Company to, among other things,
merge or consolidate with any other Person, and requires that the Company comply with certain further covenants, such as Limitations on Liens and Limitations on Sale and Leaseback as further described in the Indenture, all of which are applicable to
this Note. All such covenants and limitations are subject to a number of important qualifications and exceptions.
The Indenture contains
provisions for the defeasance at any time of (a) the entire indebtedness on this Note and (b) certain restrictive covenants and the related defaults and Events of Default, upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.
If an Event of Default with respect to Notes shall occur and be continuing, the principal
of the Notes may (subject to the conditions set forth in the Indenture) be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture contains provisions permitting, with certain exceptions therein provided, the Company and the Trustee, without the consent of
any of the Holders of the outstanding Notes, to modify and amend the Indenture for the purpose of, among other things, curing any ambiguity, defect or inconsistency.
The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the outstanding Notes, on behalf
of the Holders of all Notes, to waive any past default or Event of Default with respect to the Notes and its consequences, except a default in the payment of the principal of or interest on any of the Notes or in respect of a covenant or other
provision which, under the terms of the Indenture, cannot be modified or amended without the consent of the Holder of each outstanding Note.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the currency, herein prescribed.
No director, officer, employee, incorporator or stockholder, as such, of the Company, any Guarantor or any other obligor in respect of any
Note or any Subsidiary of any thereof shall have any liability for any obligation of the Company, any Guarantor or any other obligor in respect of any Note under the Indenture, the Notes or any Guarantee, or for any claim based on, in respect of, or
by reason of, any such obligation or its creation. Each Holder, by accepting this Note, hereby waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the
Security Register, upon surrender of this Security for registration of transfer at the office or agency of the
A1-8
Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes and of like tenor, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
All capitalized terms used in this Note which are not defined herein shall have the meanings assigned to them in the Indenture.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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A1-9
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF SECURITIES
This Certificate relates to $ principal amount of [ ]% Notes due
[ ] held in (check applicable space) book-entry or definitive form by
(the
“Transferor”).
The Transferor (check one box below):
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has requested the Trustee by written order to deliver in exchange for its beneficial interest in the global Note held by the Depository a Note or Notes in definitive, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such global Note (or the portion thereof indicated above); or |
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has requested the Trustee by written order to exchange or register the transfer of a Note or Notes. |
In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to
in Rule 144(k) under the Securities Act of 1933, the undersigned confirms that such Notes are being transferred in accordance with its terms:
CHECK ONE
BOX BELOW:
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to the Company; or |
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pursuant to an effective registration statement under the Securities Act of 1933; or |
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inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to
whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or |
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pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
A1-10
Prior to the expiration of the period referred to in Rule 144(k), unless one of the boxes is
checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered holder thereof; provided, however, that if box (4) or (5) is checked, the Trustee
may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information satisfactory to the Company and the Trustee to confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities Act of 1933.
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A1-11
SCHEDULE OF EXCHANGES
The following exchanges of a part of this Book-Entry Security have been made:
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| Date of Exchange |
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Amount of
decrease in
Principal
Amount of this
Book-Entry
Security |
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Amount of
increase in
Principal
Amount of this
Book-Entry
Security |
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Principal
Amount of this
Book-Entry
Security
following such
decrease (or
increase) |
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Signature of
authorized
signatory of
Trustee or
Security
Custodian |
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we
assign and transfer this Security to
(Print or type assignee’s name,
address and zip code)
(Insert assignee’s soc. sec. or
tax I.D. No.)
and irrevocably appoint
as agent
to transfer this Security on the books of the Company. The agent may substitute another to act for him.
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| Your Signature*: |
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Sign exactly as your name appears on the other side of this Security.
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NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be
guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in Security Transfer Agents Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. |
A1-13
EXHIBIT A-2 – Form of 2.500% Notes due 2020
THE J. M. SMUCKER COMPANY
2.500% Notes due 2020
CUSIP No.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
(“DTC” OR THE “DEPOSITORY”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INSOMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY, ON ITS OWN
BEHALF OR ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
(“RULE 144A”))
A2-1
OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN “OFFSHORE TRANSACTION” PURSUANT TO RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT
(“REGULATION S”), (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR][IN THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DATE ON WHICH THE J. M. SMUCKER COMPANY (THE “COMPANY”) OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY, OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE
TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) or (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (II) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE INDENTURE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
[Restricted Notes Legend for Notes Offered in Reliance on Regulation S]:
BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
A2-2
[Definitive Notes Legend]:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THE J. M.
SMUCKER COMPANY
2.500% Note due 2020
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CUSIP No.: [—] |
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$[—] |
THE J. M. SMUCKER COMPANY, an Ohio corporation (the “Company”, which term includes any
successor corporation), for value received promises to pay to CEDE & CO., or registered assigns, the principal sum of $[—] on March 15, 2020, unless earlier redeemed as herein provided.
Interest Payment Dates: March 15 and September 15 (each, an “Interest Payment Date”), commencing on
September 15, 2015.
Interest Record Dates: March 1 and September 1 (each, an “Interest Record Date”).
Payment of the principal of and interest on this Note shall be made at the office or agency of the Trustee maintained for that purpose in
St. Paul, Minnesota, in such currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, for so long as the Notes are represented in global form by one
or more Global Notes, all payments of principal of and interest shall be made by wire transfer of immediately available funds to the Depository or its nominee, as the case may be, as the registered owner of the Global Security representing such
Notes.
Reference is made to the further provisions of this Note set forth on the reverse hereof, which will for all purposes have the
same effect as if set forth at this place.
A2-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
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| THE J. M. SMUCKER COMPANY |
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Name: |
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Title: |
This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.
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| U.S. BANK NATIONAL ASSOCIATION, as Trustee |
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| By: |
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Name: |
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Title: |
Dated: March 20, 2015
A2-4
[REVERSE OF NOTE]
This Note is one of the duly authorized securities of the Company (herein called the “Notes”) issued and to be issued in one
or more series under an Indenture dated as of March 20, 2015 (the “Base Indenture”), as amended by a First Supplemental Indenture dated as of March 20, 2015 (the “First Supplemental Indenture” and, together with the
Base Indenture, the “Indenture”), between the Company, the guarantors party thereto (the “Guarantors”) and U.S. Bank National Association, as trustee (herein called the “Trustee,” which term
includes any successor trustee under the Indenture with respect to the series of Notes represented hereby), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Guarantors, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is a Global Note representing the
Company’s 2.500% Notes due 2020 in the aggregate principal amount of $500,000,000.
The amount of interest payable on any interest
payment date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. In the event that any date on which interest is payable on this Note is not a Business Day, then payment of interest payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on such interest payment date.
The Notes are issuable only in fully registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 above
that amount. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
The Notes shall be redeemable, at the option of the Company, at any time and from time to time, in whole or
in part, on not less than 30 nor more than 60 days’ prior notice mailed to the Holders of the Notes, with a copy provided to the Trustee. The Notes shall be redeemable at a Redemption Price, to be calculated by the Company, equal to the greater
of (i) 100% of the principal amount of such Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not including interest accrued to the date
of redemption), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15 basis points, plus, in each case, accrued and unpaid interest on the Notes to be
redeemed to the Redemption Date.
A2-5
On and after any Redemption Date, interest will cease to accrue on the Notes called for
redemption. On or before the Redemption Date, the Company shall deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date all of the Notes so called for redemption at the appropriate
Redemption Price, together with accrued interest to the date fixed for redemption. If the Company is redeeming less than all of the Notes, the Trustee shall select, in such manner as it shall deem appropriate and fair, the Notes to be redeemed in
whole or in part.
Upon the occurrence of a Change of Control Triggering Event with respect to the Notes, unless the Company has exercised
its right to redeem the Notes as described above by giving irrevocable notice to the Trustee in accordance with the Indenture, each Holder of Notes shall have the right to require the Company to purchase all or a portion of such Holder’s Notes
pursuant to the offer described below (the “Change of Control Offer”), at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to but not including the date of purchase
(the “Change of Control Payment”), subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.
Unless the Company has exercised its right to redeem the Notes, within 30 days following the date upon which the Change of Control Triggering
Event occurs with respect to the Notes or at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, the Company shall be required to send, by first class mail, a notice to each
Holder of Notes, with a copy to the Trustee, which notice shall describe the terms of the Change of Control Offer. Such notice shall state, among other things, the transaction or transactions that constitute or may constitute the Change of Control
and offering to repurchase the Notes if this series and the purchase date, which must be no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law (the “Change of Control
Payment Date”). The notice, if mailed prior to the date of consummation of the Change of Control, shall state that the Change of Control Offer is conditioned on the Change of Control Triggering Event occurring on or prior to the Change of
Control Payment Date.
On the Change of Control Payment Date, the Company shall, to the extent lawful: (i) accept or cause a third
party to accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer; (ii) deposit or cause a third party to deposit with the paying agent an amount equal to the Change of Control Payment in
respect of all Notes or portions of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate principal amount of Notes or
portions of Notes being repurchased and that all conditions precedent to the Change of Control Offer and to the repurchase by the Company of Notes pursuant to the Change of Control Offer have been complied with.
A2-6
The Company shall not be required to make a Change of Control Offer with respect to the Notes if
a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by the Company and such third party purchases all Notes properly tendered and not withdrawn under its offer.
The Company shall comply in all material respects with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the purchase of the Notes as a result of a Change of Control Triggering Event.
To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes, the Company shall comply with those securities laws and regulations and shall not be deemed to have
breached its obligations under the Change of Control Offer provisions of the Notes by virtue of such conflicts.
The indebtedness
evidenced by this Note is, to the extent provided in the Indenture, the unsecured, unsubordinated obligation of the Company and will rank equally in right of payment to all of the Company’s existing and future unsecured, unsubordinated
indebtedness. This Note will, to the extent provided in the First Supplemental Indenture, be guaranteed, jointly and severally, by each of the Guarantors party to the First Supplemental Indenture on an unsecured, unsubordinated basis. This Note may
hereafter be entitled to certain other Guarantees made for the benefit of the Holders. Reference is made to Article 7 of the First Supplemental Indenture for terms relating to such Guarantees, including the release, termination and discharge
thereof. Neither the Company nor any Guarantor shall be required to make any notation on this Note to reflect any Guarantee or any such release, termination or discharge. Any payment in respect of the Guarantees that the Holders shall be entitled to
is subject to the terms of the Intercreditor Agreement (as defined in the Indenture).
The Notes are initially limited to $500,000,000
aggregate principal amount. The Company may from time to time, without notice to or the consent of the Holders of the Notes, create and issue additional Notes ranking equally and ratably with the Notes in all respects (other than the issue price,
the date of the issuance, the payment of interest accruing prior to the issue date of such additional Notes and the first payment of interest following the issue date of such additional Notes), provided that if the additional Notes are not fungible
with the existing Securities for United States federal income tax purposes, the additional Notes will have a separate CUSIP number. Any such additional Notes shall be consolidated and form a single series with the Notes initially issued, including
for purposes of voting and redemptions.
The Notes are not entitled to the benefit of any sinking fund.
A2-7
The Indenture imposes certain limitations on the ability of the Company to, among other things,
merge or consolidate with any other Person, and requires that the Company comply with certain further covenants, such as Limitations on Liens and Limitations on Sale and Leaseback as further described in the Indenture, all of which are applicable to
this Note. All such covenants and limitations are subject to a number of important qualifications and exceptions.
The Indenture contains
provisions for the defeasance at any time of (a) the entire indebtedness on this Note and (b) certain restrictive covenants and the related defaults and Events of Default, upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.
If an Event of Default with respect to Notes shall occur and be continuing, the principal
of the Notes may (subject to the conditions set forth in the Indenture) be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture contains provisions permitting, with certain exceptions therein provided, the Company and the Trustee, without the consent of
any of the Holders of the outstanding Notes, to modify and amend the Indenture for the purpose of, among other things, curing any ambiguity, defect or inconsistency.
The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the outstanding Notes, on behalf
of the Holders of all Notes, to waive any past default or Event of Default with respect to the Notes and its consequences, except a default in the payment of the principal of or interest on any of the Notes or in respect of a covenant or other
provision which, under the terms of the Indenture, cannot be modified or amended without the consent of the Holder of each outstanding Note.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the currency, herein prescribed.
No director, officer, employee, incorporator or stockholder, as such, of the Company, any Guarantor or any other obligor in respect of any
Note or any Subsidiary of any thereof shall have any liability for any obligation of the Company, any Guarantor or any other obligor in respect of any Note under the Indenture, the Notes or any Guarantee, or for any claim based on, in respect of, or
by reason of, any such obligation or its creation. Each Holder, by accepting this Note, hereby waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the
Security Register, upon surrender of this Security for registration of transfer at the office or agency of the
A2-8
Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes and of like tenor, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
All capitalized terms used in this Note which are not defined herein shall have the meanings assigned to them in the Indenture.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
* * *
A2-9
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF SECURITIES
This Certificate relates to $ principal amount of [ ]% Notes due
[ ] held in (check applicable space) book-entry or definitive form by
(the
“Transferor”).
The Transferor (check one box below):
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has requested the Trustee by written order to deliver in exchange for its beneficial interest in the global Note held by the Depository a Note or Notes in definitive, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such global Note (or the portion thereof indicated above); or |
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has requested the Trustee by written order to exchange or register the transfer of a Note or Notes. |
In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to
in Rule 144(k) under the Securities Act of 1933, the undersigned confirms that such Notes are being transferred in accordance with its terms:
CHECK ONE
BOX BELOW:
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to the Company; or |
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pursuant to an effective registration statement under the Securities Act of 1933; or |
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inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to
whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or |
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pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
A2-10
Prior to the expiration of the period referred to in Rule 144(k), unless one of the boxes is
checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered holder thereof; provided, however, that if box (4) or (5) is checked, the Trustee
may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information satisfactory to the Company and the Trustee to confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities Act of 1933.
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A2-11
SCHEDULE OF EXCHANGES
The following exchanges of a part of this Book-Entry Security have been made:
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Amount of
decrease in
Principal
Amount of this
Book-Entry
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Amount of
increase in
Principal
Amount of this
Book-Entry
Security |
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Principal
Amount of this
Book-Entry
Security
following such
decrease (or
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Signature of
authorized
signatory of
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A2-12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we
assign and transfer this Security to
(Print or type assignee’s name,
address and zip code)
(Insert assignee’s soc. sec. or
tax I.D. No.)
and irrevocably appoint
as agent
to transfer this Security on the books of the Company. The agent may substitute another to act for him.
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Sign exactly as your name appears on the other side of this Security.
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NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be
guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in Security Transfer Agents Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. |
A2-13
EXHIBIT A-3 – Form of 3.000% Notes due 2022
THE J. M. SMUCKER COMPANY
3.000% Notes due 2022
CUSIP No.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (“DTC” OR THE “DEPOSITORY”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INSOMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY, ON ITS OWN BEHALF OR ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, BY ITS ACCEPTANCE HEREOF
(1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”))
A3-1
OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN “OFFSHORE TRANSACTION” PURSUANT TO RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT
(“REGULATION S”), (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR][IN THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DATE ON WHICH THE J. M. SMUCKER COMPANY (THE “COMPANY”) OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR
OF THIS SECURITY, OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S OR
(E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND;
PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) or (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE INDENTURE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
[Restricted Notes Legend for Notes Offered in Reliance on Regulation S]:
BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
A3-2
[Definitive Notes Legend]:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THE J. M.
SMUCKER COMPANY
3.000% Note due 2022
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CUSIP No.: [—] |
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$[—] |
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THE J. M. SMUCKER COMPANY, an Ohio corporation (the “Company”, which term includes any
successor corporation), for value received promises to pay to CEDE & CO., or registered assigns, the principal sum of $[—] on March 15, 2022, unless earlier redeemed as herein
provided.
Interest Payment Dates: March 15 and September 15 (each, an “Interest Payment Date”),
commencing on September 15, 2015.
Interest Record Dates: March 1 and September 1 (each, an “Interest
Record Date”).
Payment of the principal of and interest on this Note shall be made at the office or agency of the
Trustee maintained for that purpose in St. Paul, Minnesota, in such currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, for so long as the Notes
are represented in global form by one or more Global Notes, all payments of principal of and interest shall be made by wire transfer of immediately available funds to the Depository or its nominee, as the case may be, as the registered owner of the
Global Security representing such Notes.
Reference is made to the further provisions of this Note set forth on the reverse hereof,
which will for all purposes have the same effect as if set forth at this place.
A3-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
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| THE J. M. SMUCKER COMPANY |
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Name: |
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Title: |
This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.
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| U.S. BANK NATIONAL ASSOCIATION, as Trustee |
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Title: |
Dated: March 20, 2015
A3-4
[REVERSE OF NOTE]
This Note is one of the duly authorized securities of the Company (herein called the “Notes”) issued and to be issued
in one or more series under an Indenture dated as of March 20, 2015 (the “Base Indenture”), as amended by a First Supplemental Indenture dated as of March 20, 2015 (the “First Supplemental Indenture” and,
together with the Base Indenture, the “Indenture”), between the Company, the guarantors party thereto (the “Guarantors”) and U.S. Bank National Association, as trustee (herein called the “Trustee,”
which term includes any successor trustee under the Indenture with respect to the series of Notes represented hereby), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the Guarantors, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is a Global Note
representing the Company’s 3.000% Notes due 2022 in the aggregate principal amount of $400,000,000.
The amount of interest
payable on any interest payment date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. In the event that any date on which interest is payable on this Note is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on such interest payment date.
The Notes are issuable only in fully registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 above
that amount. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
The Notes shall be redeemable, at the option of the Company, at any time and from time to time, in whole or
in part, on not less than 30 nor more than 60 days’ prior notice mailed to the Holders of the Notes, with a copy provided to the Trustee. The Notes shall be redeemable at a Redemption Price, to be calculated by the Company, equal to the greater
of (i) 100% of the principal amount of such Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not including interest accrued to the date
of redemption), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 20 basis points, plus, in each case, accrued and unpaid interest on the Notes to be
redeemed to the Redemption Date.
A3-5
On and after any Redemption Date, interest will cease to accrue on the Notes called for
redemption. On or before the Redemption Date, the Company shall deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date all of the Notes so called for redemption at the appropriate
Redemption Price, together with accrued interest to the date fixed for redemption. If the Company is redeeming less than all of the Notes, the Trustee shall select, in such manner as it shall deem appropriate and fair, the Notes to be redeemed in
whole or in part.
Upon the occurrence of a Change of Control Triggering Event with respect to the Notes, unless the Company has
exercised its right to redeem the Notes as described above by giving irrevocable notice to the Trustee in accordance with the Indenture, each Holder of Notes shall have the right to require the Company to purchase all or a portion of such
Holder’s Notes pursuant to the offer described below (the “Change of Control Offer”), at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to but not including
the date of purchase (the “Change of Control Payment”), subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.
Unless the Company has exercised its right to redeem the Notes, within 30 days following the date upon which the Change of Control
Triggering Event occurs with respect to the Notes or at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, the Company shall be required to send, by first class mail, a
notice to each Holder of Notes, with a copy to the Trustee, which notice shall describe the terms of the Change of Control Offer. Such notice shall state, among other things, the transaction or transactions that constitute or may constitute the
Change of Control and offering to repurchase the Notes if this series and the purchase date, which must be no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law (the
“Change of Control Payment Date”). The notice, if mailed prior to the date of consummation of the Change of Control, shall state that the Change of Control Offer is conditioned on the Change of Control Triggering Event occurring on
or prior to the Change of Control Payment Date.
On the Change of Control Payment Date, the Company shall, to the extent lawful:
(i) accept or cause a third party to accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer; (ii) deposit or cause a third party to deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate
principal amount of Notes or portions of Notes being repurchased and that all conditions precedent to the Change of Control Offer and to the repurchase by the Company of Notes pursuant to the Change of Control Offer have been complied with.
A3-6
The Company shall not be required to make a Change of Control Offer with respect to the Notes if
a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by the Company and such third party purchases all Notes properly tendered and not withdrawn under its offer.
The Company shall comply in all material respects with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the purchase of the Notes as a result of a Change of Control
Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes, the Company shall comply with those securities laws and regulations and shall not be
deemed to have breached its obligations under the Change of Control Offer provisions of the Notes by virtue of such conflicts.
The
indebtedness evidenced by this Note is, to the extent provided in the Indenture, the unsecured, unsubordinated obligation of the Company and will rank equally in right of payment to all of the Company’s existing and future unsecured,
unsubordinated indebtedness. This Note will, to the extent provided in the First Supplemental Indenture, be guaranteed, jointly and severally, by each of the Guarantors party to the First Supplemental Indenture on an unsecured, unsubordinated basis.
This Note may hereafter be entitled to certain other Guarantees made for the benefit of the Holders. Reference is made to Article 7 of the First Supplemental Indenture for terms relating to such Guarantees, including the release, termination and
discharge thereof. Neither the Company nor any Guarantor shall be required to make any notation on this Note to reflect any Guarantee or any such release, termination or discharge. Any payment in respect of the Guarantees that the Holders shall be
entitled to is subject to the terms of the Intercreditor Agreement (as defined in the Indenture).
The Notes are initially limited to
$400,000,000 aggregate principal amount. The Company may from time to time, without notice to or the consent of the Holders of the Notes, create and issue additional Notes ranking equally and ratably with the Notes in all respects (other than the
issue price, the date of the issuance, the payment of interest accruing prior to the issue date of such additional Notes and the first payment of interest following the issue date of such additional Notes), provided that if the additional Notes are
not fungible with the existing Securities for United States federal income tax purposes, the additional Notes will have a separate CUSIP number. Any such additional Notes shall be consolidated and form a single series with the Notes initially
issued, including for purposes of voting and redemptions.
The Notes are not entitled to the benefit of any sinking fund.
A3-7
The Indenture imposes certain limitations on the ability of the Company to, among other things,
merge or consolidate with any other Person, and requires that the Company comply with certain further covenants, such as Limitations on Liens and Limitations on Sale and Leaseback as further described in the Indenture, all of which are applicable to
this Note. All such covenants and limitations are subject to a number of important qualifications and exceptions.
The Indenture contains
provisions for the defeasance at any time of (a) the entire indebtedness on this Note and (b) certain restrictive covenants and the related defaults and Events of Default, upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.
If an Event of Default with respect to Notes shall occur and be continuing, the principal
of the Notes may (subject to the conditions set forth in the Indenture) be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture contains provisions permitting, with certain exceptions therein provided, the Company and the Trustee, without the consent of
any of the Holders of the outstanding Notes, to modify and amend the Indenture for the purpose of, among other things, curing any ambiguity, defect or inconsistency.
The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the outstanding Notes, on behalf
of the Holders of all Notes, to waive any past default or Event of Default with respect to the Notes and its consequences, except a default in the payment of the principal of or interest on any of the Notes or in respect of a covenant or other
provision which, under the terms of the Indenture, cannot be modified or amended without the consent of the Holder of each outstanding Note.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the currency, herein prescribed.
No director, officer, employee, incorporator or stockholder, as such, of the Company, any Guarantor or any other obligor in respect of any
Note or any Subsidiary of any thereof shall have any liability for any obligation of the Company, any Guarantor or any other obligor in respect of any Note under the Indenture, the Notes or any Guarantee, or for any claim based on, in respect of, or
by reason of, any such obligation or its creation. Each Holder, by accepting this Note, hereby waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the
Security Register, upon surrender of this Security for registration of transfer at the office or agency of the
A3-8
Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes and of like tenor, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
All capitalized terms used in this Note which are not defined herein shall have the meanings assigned to them in the Indenture.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
* * *
A3-9
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF SECURITIES
This Certificate relates to $ principal amount of [ ]% Notes due
[ ] held in (check applicable space) book-entry or definitive form by
(the
“Transferor”).
The Transferor (check one box below):
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¨ |
has requested the Trustee by written order to deliver in exchange for its beneficial interest in the global Note held by the Depository a Note or Notes in definitive, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such global Note (or the portion thereof indicated above); or |
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¨ |
has requested the Trustee by written order to exchange or register the transfer of a Note or Notes. |
In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to
in Rule 144(k) under the Securities Act of 1933, the undersigned confirms that such Notes are being transferred in accordance with its terms:
CHECK ONE
BOX BELOW:
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to the Company; or |
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pursuant to an effective registration statement under the Securities Act of 1933; or |
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inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to
whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or |
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pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
A3-10
Prior to the expiration of the period referred to in Rule 144(k), unless one of the boxes
is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered holder thereof; provided, however, that if box (4) or (5) is checked, the
Trustee may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information satisfactory to the Company and the Trustee to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
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| [INSERT NAME OF TRANSFEROR] |
A3-11
SCHEDULE OF EXCHANGES
The following exchanges of a part of this Book-Entry Security have been made:
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| Date of Exchange |
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Amount of
decrease in
Principal
Amount of this
Book-Entry
Security |
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Amount of
increase in
Principal
Amount of this
Book-Entry
Security |
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Principal
Amount of this
Book-Entry
Security
following such
decrease (or
increase) |
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Signature of
authorized
signatory of
Trustee or
Security
Custodian |
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A3-12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we
assign and transfer this Security to
(Print or type assignee’s name,
address and zip code)
(Insert assignee’s soc. sec. or
tax I.D. No.)
and irrevocably appoint
as agent
to transfer this Security on the books of the Company. The agent may substitute another to act for him.
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| Date: |
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| Your Signature*: |
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| By: |
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| Name: |
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| Title: |
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Sign exactly as your name appears on the other side of this Security.
| * |
NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be
guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in Security Transfer Agents Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. |
A3-13
EXHIBIT A-4 – Form of 3.500% Notes due 2025
THE J. M. SMUCKER COMPANY
3.500% Notes due 2025
CUSIP No.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (“DTC” OR THE “DEPOSITORY”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INSOMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY, ON ITS OWN BEHALF OR ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, BY ITS ACCEPTANCE HEREOF
(1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”))
A4-1
OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN “OFFSHORE TRANSACTION” PURSUANT TO RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT
(“REGULATION S”), (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR][IN THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR
OF ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DATE ON WHICH THE J. M. SMUCKER COMPANY (THE “COMPANY”) OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY, OFFER, SELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL HAVE THE
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) or (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (II) IN EACH OF THE FOREGOING
CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE INDENTURE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
[Restricted Notes Legend for Notes Offered in Reliance on Regulation S]:
BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
A4-2
[Definitive Notes Legend]:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THE J. M.
SMUCKER COMPANY
3.500% Note due 2025
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| No.: [—] |
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CUSIP No.: [—] |
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$[—] |
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THE J. M. SMUCKER COMPANY, an Ohio corporation (the “Company”, which term includes any successor
corporation), for value received promises to pay to CEDE & CO., or registered assigns, the principal sum of $[—] on March 15, 2025, unless earlier redeemed as herein provided.
Interest Payment Dates: March 15 and September 15 (each, an “Interest Payment Date”), commencing on
September 15, 2015.
Interest Record Dates: March 1 and September 1 (each, an “Interest Record
Date”).
Payment of the principal of and interest on this Note shall be made at the office or agency of the Trustee
maintained for that purpose in St. Paul, Minnesota, in such currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, for so long as the Notes are
represented in global form by one or more Global Notes, all payments of principal of and interest shall be made by wire transfer of immediately available funds to the Depository or its nominee, as the case may be, as the registered owner of the
Global Security representing such Notes.
Reference is made to the further provisions of this Note set forth on the reverse hereof,
which will for all purposes have the same effect as if set forth at this place.
A4-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
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| THE J. M. SMUCKER COMPANY |
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| By: |
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Name: |
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Title: |
This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.
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| U.S. BANK NATIONAL ASSOCIATION, as Trustee |
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| By: |
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Name: |
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Title: |
Dated: March 20, 2015
A4-4
[REVERSE OF NOTE]
This Note is one of the duly authorized securities of the Company (herein called the “Notes”) issued and to be issued
in one or more series under an Indenture dated as of March 20, 2015 (the “Base Indenture”), as amended by a First Supplemental Indenture dated as of March 20, 2015 (the “First Supplemental Indenture” and,
together with the Base Indenture, the “Indenture”), between the Company, the guarantors party thereto (the “Guarantors”) and U.S. Bank National Association, as trustee (herein called the “Trustee,”
which term includes any successor trustee under the Indenture with respect to the series of Notes represented hereby), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the Guarantors, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is a Global Note
representing the Company’s 3.500% Notes due 2025 in the aggregate principal amount of $1,000,000,000.
The amount of interest
payable on any interest payment date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. In the event that any date on which interest is payable on this Note is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on such interest payment date.
The Notes are issuable only in fully registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 above
that amount. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
The Notes shall be redeemable, at the option of the Company, at any time and from time to time, in whole or
in part, on not less than 30 nor more than 60 days’ prior notice mailed to the Holders of the Notes, with a copy provided to the Trustee. The Notes shall be redeemable at a Redemption Price, to be calculated by the Company, equal to the greater
of (i) 100% of the principal amount of such Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not including interest accrued to the date
of redemption), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 25 basis points, plus, in each case, accrued and unpaid interest on the Notes to be
redeemed to the Redemption Date.
A4-5
On and after any Redemption Date, interest will cease to accrue on the Notes called for
redemption. On or before the Redemption Date, the Company shall deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date all of the Notes so called for redemption at the appropriate
Redemption Price, together with accrued interest to the date fixed for redemption. If the Company is redeeming less than all of the Notes, the Trustee shall select, in such manner as it shall deem appropriate and fair, the Notes to be redeemed in
whole or in part.
Upon the occurrence of a Change of Control Triggering Event with respect to the Notes, unless the Company has
exercised its right to redeem the Notes as described above by giving irrevocable notice to the Trustee in accordance with the Indenture, each Holder of Notes shall have the right to require the Company to purchase all or a portion of such
Holder’s Notes pursuant to the offer described below (the “Change of Control Offer”), at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to but not including
the date of purchase (the “Change of Control Payment”), subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.
Unless the Company has exercised its right to redeem the Notes, within 30 days following the date upon which the Change of Control
Triggering Event occurs with respect to the Notes or at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, the Company shall be required to send, by first class mail, a
notice to each Holder of Notes, with a copy to the Trustee, which notice shall describe the terms of the Change of Control Offer. Such notice shall state, among other things, the transaction or transactions that constitute or may constitute the
Change of Control and offering to repurchase the Notes if this series and the purchase date, which must be no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law (the
“Change of Control Payment Date”). The notice, if mailed prior to the date of consummation of the Change of Control, shall state that the Change of Control Offer is conditioned on the Change of Control Triggering Event occurring on
or prior to the Change of Control Payment Date.
On the Change of Control Payment Date, the Company shall, to the extent lawful:
(i) accept or cause a third party to accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer; (ii) deposit or cause a third party to deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate
principal amount of Notes or portions of Notes being repurchased and that all conditions precedent to the Change of Control Offer and to the repurchase by the Company of Notes pursuant to the Change of Control Offer have been complied with.
A4-6
The Company shall not be required to make a Change of Control Offer with respect to the Notes if
a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by the Company and such third party purchases all Notes properly tendered and not withdrawn under its offer.
The Company shall comply in all material respects with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the purchase of the Notes as a result of a Change of Control
Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes, the Company shall comply with those securities laws and regulations and shall not be
deemed to have breached its obligations under the Change of Control Offer provisions of the Notes by virtue of such conflicts.
The
indebtedness evidenced by this Note is, to the extent provided in the Indenture, the unsecured, unsubordinated obligation of the Company and will rank equally in right of payment to all of the Company’s existing and future unsecured,
unsubordinated indebtedness. This Note will, to the extent provided in the First Supplemental Indenture, be guaranteed, jointly and severally, by each of the Guarantors party to the First Supplemental Indenture on an unsecured, unsubordinated basis.
This Note may hereafter be entitled to certain other Guarantees made for the benefit of the Holders. Reference is made to Article 7 of the First Supplemental Indenture for terms relating to such Guarantees, including the release, termination and
discharge thereof. Neither the Company nor any Guarantor shall be required to make any notation on this Note to reflect any Guarantee or any such release, termination or discharge. Any payment in respect of the Guarantees that the Holders shall be
entitled to is subject to the terms of the Intercreditor Agreement (as defined in the Indenture).
The Notes are initially limited to
$1,000,000,000 aggregate principal amount. The Company may from time to time, without notice to or the consent of the Holders of the Notes, create and issue additional Notes ranking equally and ratably with the Notes in all respects (other than the
issue price, the date of the issuance, the payment of interest accruing prior to the issue date of such additional Notes and the first payment of interest following the issue date of such additional Notes), provided that if the additional Notes are
not fungible with the existing Securities for United States federal income tax purposes, the additional Notes will have a separate CUSIP number. Any such additional Notes shall be consolidated and form a single series with the Notes initially
issued, including for purposes of voting and redemptions.
The Notes are not entitled to the benefit of any sinking fund.
A4-7
In the event (i) the consummation of the BAG Acquisition does not occur on or prior
to August 3, 2015 (the “End Date”) or (ii) the Company notifies the Trustee that the BAG Merger Agreement has been terminated in accordance with its terms prior to the consummation of the BAG Acquisition (the earlier of
the date of delivery of such notice and the End Date, the “Acquisition Deadline”), the Company shall redeem all and not less than all of the Notes then outstanding (the “special mandatory redemption”) by a date no
later than 10 days after the Acquisition Deadline (the “special mandatory redemption date”) at a Redemption Price equal to 101% of the aggregate principal amount of the of such Notes, plus accrued and unpaid interest, if any, to,
but excluding the special mandatory redemption date (the “special mandatory redemption price”).
The Company
shall promptly, and in any event not more than three Business Days after the Acquisition Deadline, deliver notice of the special mandatory redemption to the Trustee, who shall then promptly deliver such notice to each holder of Notes at its
registered address. If funds sufficient to pay the special mandatory redemption price of the Notes on the special mandatory redemption date are deposited with the Trustee or a Paying Agent on or before such special mandatory redemption date, then on
and after such special mandatory redemption date, the Notes shall cease to bear interest and the Indenture shall be discharged and cease to be of further effect as to all Notes.
The Indenture imposes certain limitations on the ability of the Company to, among other things, merge or consolidate with any other Person,
and requires that the Company comply with certain further covenants, such as Limitations on Liens and Limitations on Sale and Leaseback as further described in the Indenture, all of which are applicable to this Note. All such covenants and
limitations are subject to a number of important qualifications and exceptions.
The Indenture contains provisions for the defeasance at
any time of (a) the entire indebtedness on this Note and (b) certain restrictive covenants and the related defaults and Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to
this Note.
If an Event of Default with respect to Notes shall occur and be continuing, the principal of the Notes may (subject to the
conditions set forth in the Indenture) be declared due and payable in the manner and with the effect provided in the Indenture.
The
Indenture contains provisions permitting, with certain exceptions therein provided, the Company and the Trustee, without the consent of any of the Holders of the outstanding Notes, to modify and amend the Indenture for the purpose of, among other
things, curing any ambiguity, defect or inconsistency.
The Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount of the outstanding Notes, on behalf of the Holders of all Notes, to waive any past default or Event of Default with respect to
A4-8
the Notes and its consequences, except a default in the payment of the principal of or interest on any of the Notes or in respect of a covenant or other provision which, under the terms of the
Indenture, cannot be modified or amended without the consent of the Holder of each outstanding Note.
No reference herein to the Indenture
and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the currency, herein
prescribed.
No director, officer, employee, incorporator or stockholder, as such, of the Company, any Guarantor or any other obligor in
respect of any Note or any Subsidiary of any thereof shall have any liability for any obligation of the Company, any Guarantor or any other obligor in respect of any Note under the Indenture, the Notes or any Guarantee, or for any claim based on, in
respect of, or by reason of, any such obligation or its creation. Each Holder, by accepting this Note, hereby waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the
Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
No service charge
shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
All capitalized terms used in this Note which are not defined herein shall have the meanings assigned to them in the Indenture.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
* * *
A4-9
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF SECURITIES
This Certificate relates to $ principal amount of [ ]% Notes due
[ ] held in (check applicable space) book-entry or definitive form by
(the
“Transferor”).
The Transferor (check one box below):
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¨ |
has requested the Trustee by written order to deliver in exchange for its beneficial interest in the global Note held by the Depository a Note or Notes in definitive, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such global Note (or the portion thereof indicated above); or |
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¨ |
has requested the Trustee by written order to exchange or register the transfer of a Note or Notes. |
In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to
in Rule 144(k) under the Securities Act of 1933, the undersigned confirms that such Notes are being transferred in accordance with its terms:
CHECK ONE
BOX BELOW:
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(1) |
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to the Company; or |
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(2) |
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pursuant to an effective registration statement under the Securities Act of 1933; or |
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(3) |
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inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to
whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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(4) |
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outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or |
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(5) |
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¨ |
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pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
A4-10
Prior to the expiration of the period referred to in Rule 144(k), unless one of the boxes is
checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered holder thereof; provided, however, that if box (4) or (5) is checked, the Trustee
may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information satisfactory to the Company and the Trustee to confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities Act of 1933.
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| [INSERT NAME OF TRANSFEROR] |
A4-11
SCHEDULE OF EXCHANGES
The following exchanges of a part of this Book-Entry Security have been made:
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| Date of Exchange |
|
Amount of
decrease in
Principal
Amount of this
Book-Entry
Security |
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Amount of
increase in
Principal
Amount of this
Book-Entry
Security |
|
Principal
Amount of this
Book-Entry
Security
following such
decrease (or
increase) |
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Signature of
authorized
signatory of
Trustee or
Security
Custodian |
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A4-12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we
assign and transfer this Security to
(Print or type assignee’s name,
address and zip code)
(Insert assignee’s soc. sec. or
tax I.D. No.)
and irrevocably appoint
as agent
to transfer this Security on the books of the Company. The agent may substitute another to act for him.
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| Date: |
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| Your Signature*: |
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| By: |
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| Name: |
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| Title: |
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Sign exactly as your name appears on the other side of this Security.
| * |
NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be
guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in Security Transfer Agents Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. |
A4-13
EXHIBIT A5 – Form of 4.250% Notes due 2035
THE J. M. SMUCKER COMPANY
4.250% Notes due 2035
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC” OR THE “DEPOSITORY”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INSOMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY, ON ITS OWN BEHALF OR ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, BY ITS ACCEPTANCE HEREOF
(1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”))
A5-1
OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN “OFFSHORE TRANSACTION” PURSUANT TO RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT
(“REGULATION S”), (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR][IN THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY
PREDECESSOR OF THIS SECURITY) AND THE LAST DATE ON WHICH THE J. M. SMUCKER COMPANY (THE “COMPANY”) OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY, OFFER, SELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL HAVE THE
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) or (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (II) IN EACH OF THE FOREGOING
CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE INDENTURE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
[Restricted Notes Legend for Notes Offered in Reliance on Regulation S]:
BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
A5-2
[Definitive Notes Legend]:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THE J. M.
SMUCKER COMPANY
4.250% Note due 2035
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$[—] |
THE J. M. SMUCKER COMPANY, an Ohio corporation (the “Company”, which term includes any
successor corporation), for value received promises to pay to CEDE & CO., or registered assigns, the principal sum of $[—] on March 15, 2035, unless earlier redeemed as herein
provided.
Interest Payment Dates: March 15 and September 15 (each, an “Interest Payment Date”), commencing on
September 15, 2015.
Interest Record Dates: March 1 and September 1 (each, an “Interest Record Date”).
Payment of the principal of and interest on this Note shall be made at the office or agency of the Trustee maintained for that purpose in
St. Paul, Minnesota, in such currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, for so long as the Notes are represented in global form by one
or more Global Notes, all payments of principal of and interest shall be made by wire transfer of immediately available funds to the Depository or its nominee, as the case may be, as the registered owner of the Global Security representing such
Notes.
Reference is made to the further provisions of this Note set forth on the reverse hereof, which will for all purposes have the
same effect as if set forth at this place.
A5-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
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| THE J. M. SMUCKER COMPANY |
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Name: |
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Title: |
This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.
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| U.S. BANK NATIONAL ASSOCIATION, as Trustee |
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Name: |
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Title: |
Dated: March 20, 2015
A5-4
[REVERSE OF NOTE]
This Note is one of the duly authorized securities of the Company (herein called the “Notes”) issued and to be issued
in one or more series under an Indenture dated as of March 20, 2015 (the “Base Indenture”), as amended by a First Supplemental Indenture dated as of March 20, 2015 (the “First Supplemental Indenture” and,
together with the Base Indenture, the “Indenture”), between the Company, the guarantors party thereto (the “Guarantors”) and U.S. Bank National Association, as trustee (herein called the “Trustee,”
which term includes any successor trustee under the Indenture with respect to the series of Notes represented hereby), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the Guarantors, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is a Global Note
representing the Company’s 4.250% Notes due 2035 in the aggregate principal amount of $650,000,000.
The amount of interest
payable on any interest payment date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. In the event that any date on which interest is payable on this Note is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on such interest payment date.
The Notes are issuable only in fully registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 above
that amount. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
The Notes shall be redeemable, at the option of the Company, at any time and from time to time, in whole or
in part, on not less than 30 nor more than 60 days’ prior notice mailed to the Holders of the Notes, with a copy provided to the Trustee. The Notes shall be redeemable at a Redemption Price, to be calculated by the Company, equal to the greater
of (i) 100% of the principal amount of such Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not including interest accrued to the date
of redemption), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 25 basis points, plus, in each case, accrued and unpaid interest on the Notes to be
redeemed to the Redemption Date.
A5-5
On and after any Redemption Date, interest will cease to accrue on the Notes called for
redemption. On or before the Redemption Date, the Company shall deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date all of the Notes so called for redemption at the appropriate
Redemption Price, together with accrued interest to the date fixed for redemption. If the Company is redeeming less than all of the Notes, the Trustee shall select, in such manner as it shall deem appropriate and fair, the Notes to be redeemed in
whole or in part.
Upon the occurrence of a Change of Control Triggering Event with respect to the Notes, unless the Company has
exercised its right to redeem the Notes as described above by giving irrevocable notice to the Trustee in accordance with the Indenture, each Holder of Notes shall have the right to require the Company to purchase all or a portion of such
Holder’s Notes pursuant to the offer described below (the “Change of Control Offer”), at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to but not including
the date of purchase (the “Change of Control Payment”), subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.
Unless the Company has exercised its right to redeem the Notes, within 30 days following the date upon which the Change of Control
Triggering Event occurs with respect to the Notes or at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, the Company shall be required to send, by first class mail, a
notice to each Holder of Notes, with a copy to the Trustee, which notice shall describe the terms of the Change of Control Offer. Such notice shall state, among other things, the transaction or transactions that constitute or may constitute the
Change of Control and offering to repurchase the Notes if this series and the purchase date, which must be no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law (the
“Change of Control Payment Date”). The notice, if mailed prior to the date of consummation of the Change of Control, shall state that the Change of Control Offer is conditioned on the Change of Control Triggering Event occurring on
or prior to the Change of Control Payment Date.
On the Change of Control Payment Date, the Company shall, to the extent lawful:
(i) accept or cause a third party to accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer; (ii) deposit or cause a third party to deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate
principal amount of Notes or portions of Notes being repurchased and that all conditions precedent to the Change of Control Offer and to the repurchase by the Company of Notes pursuant to the Change of Control Offer have been complied with.
A5-6
The Company shall not be required to make a Change of Control Offer with respect to the Notes if
a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by the Company and such third party purchases all Notes properly tendered and not withdrawn under its offer.
The Company shall comply in all material respects with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the purchase of the Notes as a result of a Change of Control
Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes, the Company shall comply with those securities laws and regulations and shall not be
deemed to have breached its obligations under the Change of Control Offer provisions of the Notes by virtue of such conflicts.
The
indebtedness evidenced by this Note is, to the extent provided in the Indenture, the unsecured, unsubordinated obligation of the Company and will rank equally in right of payment to all of the Company’s existing and future unsecured,
unsubordinated indebtedness. This Note will, to the extent provided in the First Supplemental Indenture, be guaranteed, jointly and severally, by each of the Guarantors party to the First Supplemental Indenture on an unsecured, unsubordinated basis.
This Note may hereafter be entitled to certain other Guarantees made for the benefit of the Holders. Reference is made to Article 7 of the First Supplemental Indenture for terms relating to such Guarantees, including the release, termination and
discharge thereof. Neither the Company nor any Guarantor shall be required to make any notation on this Note to reflect any Guarantee or any such release, termination or discharge. Any payment in respect of the Guarantees that the Holders shall be
entitled to is subject to the terms of the Intercreditor Agreement (as defined in the Indenture).
The Notes are initially limited to
$650,000,000 aggregate principal amount. The Company may from time to time, without notice to or the consent of the Holders of the Notes, create and issue additional Notes ranking equally and ratably with the Notes in all respects (other than the
issue price, the date of the issuance, the payment of interest accruing prior to the issue date of such additional Notes and the first payment of interest following the issue date of such additional Notes), provided that if the additional Notes are
not fungible with the existing Securities for United States federal income tax purposes, the additional Notes will have a separate CUSIP number. Any such additional Notes shall be consolidated and form a single series with the Notes initially
issued, including for purposes of voting and redemptions.
The Notes are not entitled to the benefit of any sinking fund.
A5-7
In the event (i) the consummation of the BAG Acquisition does not occur on or prior
to August 3, 2015 (the “End Date”) or (ii) the Company notifies the Trustee that the BAG Merger Agreement has been terminated in accordance with its terms prior to the consummation of the BAG Acquisition (the earlier of
the date of delivery of such notice and the End Date, the “Acquisition Deadline”), the Company shall redeem all and not less than all of the Notes then outstanding (the “special mandatory redemption”) by a date no
later than 10 days after the Acquisition Deadline (the “special mandatory redemption date”) at a Redemption Price equal to 101% of the aggregate principal amount of the of such Notes, plus accrued and unpaid interest, if any, to,
but excluding the special mandatory redemption date (the “special mandatory redemption price”).
The Company
shall promptly, and in any event not more than three Business Days after the Acquisition Deadline, deliver notice of the special mandatory redemption to the Trustee, who shall then promptly deliver such notice to each holder of Notes at its
registered address. If funds sufficient to pay the special mandatory redemption price of the Notes on the special mandatory redemption date are deposited with the Trustee or a Paying Agent on or before such special mandatory redemption date, then on
and after such special mandatory redemption date, the Notes shall cease to bear interest and the Indenture shall be discharged and cease to be of further effect as to all Notes.
The Indenture imposes certain limitations on the ability of the Company to, among other things, merge or consolidate with any other Person,
and requires that the Company comply with certain further covenants, such as Limitations on Liens and Limitations on Sale and Leaseback as further described in the Indenture, all of which are applicable to this Note. All such covenants and
limitations are subject to a number of important qualifications and exceptions.
The Indenture contains provisions for the defeasance at
any time of (a) the entire indebtedness on this Note and (b) certain restrictive covenants and the related defaults and Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to
this Note.
If an Event of Default with respect to Notes shall occur and be continuing, the principal of the Notes may (subject to the
conditions set forth in the Indenture) be declared due and payable in the manner and with the effect provided in the Indenture.
The
Indenture contains provisions permitting, with certain exceptions therein provided, the Company and the Trustee, without the consent of any of the Holders of the outstanding Notes, to modify and amend the Indenture for the purpose of, among other
things, curing any ambiguity, defect or inconsistency.
The Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount of the outstanding Notes, on behalf of the Holders of all Notes, to waive any past default or Event of Default with respect to
A5-8
the Notes and its consequences, except a default in the payment of the principal of or interest on any of the Notes or in respect of a covenant or other provision which, under the terms of the
Indenture, cannot be modified or amended without the consent of the Holder of each outstanding Note.
No reference herein to the Indenture
and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the currency, herein
prescribed.
No director, officer, employee, incorporator or stockholder, as such, of the Company, any Guarantor or any other obligor in
respect of any Note or any Subsidiary of any thereof shall have any liability for any obligation of the Company, any Guarantor or any other obligor in respect of any Note under the Indenture, the Notes or any Guarantee, or for any claim based on, in
respect of, or by reason of, any such obligation or its creation. Each Holder, by accepting this Note, hereby waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the
Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
No service charge
shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
All capitalized terms used in this Note which are not defined herein shall have the meanings assigned to them in the Indenture.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
* * *
A5-9
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF SECURITIES
This Certificate relates to $ principal amount of [ ]% Notes due
[ ] held in (check applicable space) book-entry or definitive form by
(the
“Transferor”).
The Transferor (check one box below):
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has requested the Trustee by written order to deliver in exchange for its beneficial interest in the global Note held by the Depository a Note or Notes in definitive, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such global Note (or the portion thereof indicated above); or |
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has requested the Trustee by written order to exchange or register the transfer of a Note or Notes. |
In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to
in Rule 144(k) under the Securities Act of 1933, the undersigned confirms that such Notes are being transferred in accordance with its terms:
CHECK ONE
BOX BELOW:
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to the Company; or |
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pursuant to an effective registration statement under the Securities Act of 1933; or |
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inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to
whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or |
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pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
A5-10
Prior to the expiration of the period referred to in Rule 144(k), unless one of the boxes
is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered holder thereof; provided, however, that if box (4) or (5) is checked, the
Trustee may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information satisfactory to the Company and the Trustee to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
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A5-11
SCHEDULE OF EXCHANGES
The following exchanges of a part of this Book-Entry Security have been made:
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Amount of
decrease in
Principal
Amount of this
Book-Entry
Security |
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Amount of
increase in
Principal
Amount of this
Book-Entry
Security |
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Principal
Amount of this
Book-Entry
Security
following such
decrease (or
increase) |
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Signature of
authorized
signatory of
Trustee or
Security
Custodian |
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A5-12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we
assign and transfer this Security to
(Print or type assignee’s name,
address and zip code)
(Insert assignee’s soc. sec. or
tax I.D. No.)
and irrevocably appoint
as agent
to transfer this Security on the books of the Company. The agent may substitute another to act for him.
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| Your Signature*: |
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Sign exactly as your name appears on the other side of this Security.
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NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be
guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in Security Transfer Agents Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. |
A5-13
EXHIBIT A-6 – Form of 4.375% Notes due 2045
THE J. M. SMUCKER COMPANY
4.375% Notes due 2045
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC” OR THE “DEPOSITORY”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INSOMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY, ON ITS OWN BEHALF OR ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, BY ITS ACCEPTANCE HEREOF
(1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”))
A6-1
OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN “OFFSHORE TRANSACTION” PURSUANT TO RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT
(“REGULATION S”), (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR][IN THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DATE ON WHICH THE J. M. SMUCKER COMPANY (THE “COMPANY”) OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY,
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND
THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) or (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (II) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE INDENTURE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
[Restricted Notes Legend for Notes Offered in Reliance on Regulation S]:
BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
A6-2
[Definitive Notes Legend]:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THE J. M.
SMUCKER COMPANY
4.375% Note due 2045
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| No.: [—] |
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CUSIP No.: [—] |
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$[—] |
THE J. M. SMUCKER COMPANY, an Ohio corporation (the “Company”, which term includes any
successor corporation), for value received promises to pay to CEDE & CO., or registered assigns, the principal sum of $[—] on March 15, 2045, unless earlier redeemed as herein
provided.
Interest Payment Dates: March 15 and September 15 (each, an “Interest Payment Date”), commencing on
September 15, 2015.
Interest Record Dates: March 1 and September 1 (each, an “Interest Record Date”).
Payment of the principal of and interest on this Note shall be made at the office or agency of the Trustee maintained for that purpose in
St. Paul, Minnesota, in such currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, for so long as the Notes are represented in global form by one
or more Global Notes, all payments of principal of and interest shall be made by wire transfer of immediately available funds to the Depository or its nominee, as the case may be, as the registered owner of the Global Security representing such
Notes.
Reference is made to the further provisions of this Note set forth on the reverse hereof, which will for all purposes have the
same effect as if set forth at this place.
A6-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
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| THE J. M. SMUCKER COMPANY |
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This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.
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| U.S. BANK NATIONAL ASSOCIATION, as Trustee |
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Dated: March 20, 2015
A6-4
[REVERSE OF NOTE]
This Note is one of the duly authorized securities of the Company (herein called the “Notes”) issued and to be issued
in one or more series under an Indenture dated as of March 20, 2015 (the “Base Indenture”), as amended by a First Supplemental Indenture dated as of March 20, 2015 (the “First Supplemental Indenture” and,
together with the Base Indenture, the “Indenture”), between the Company, the guarantors party thereto (the “Guarantors”) and U.S. Bank National Association, as trustee (herein called the “Trustee,”
which term includes any successor trustee under the Indenture with respect to the series of Notes represented hereby), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the Guarantors, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is a Global Note
representing the Company’s 4.375% Notes due 2045 in the aggregate principal amount of $600,000,000.
The amount of interest
payable on any interest payment date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. In the event that any date on which interest is payable on this Note is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on such interest payment date.
The Notes are issuable only in fully registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 above
that amount. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
The Notes shall be redeemable, at the option of the Company, at any time and from time to time, in whole or
in part, on not less than 30 nor more than 60 days’ prior notice mailed to the Holders of the Notes, with a copy provided to the Trustee. The Notes shall be redeemable at a Redemption Price, to be calculated by the Company, equal to the greater
of (i) 100% of the principal amount of such Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not including interest accrued to the date
of redemption), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 30 basis points, plus, in each case, accrued and unpaid interest on the Notes to be
redeemed to the Redemption Date.
A6-5
On and after any Redemption Date, interest will cease to accrue on the Notes called for
redemption. On or before the Redemption Date, the Company shall deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date all of the Notes so called for redemption at the appropriate
Redemption Price, together with accrued interest to the date fixed for redemption. If the Company is redeeming less than all of the Notes, the Trustee shall select, in such manner as it shall deem appropriate and fair, the Notes to be redeemed in
whole or in part.
Upon the occurrence of a Change of Control Triggering Event with respect to the Notes, unless the Company has
exercised its right to redeem the Notes as described above by giving irrevocable notice to the Trustee in accordance with the Indenture, each Holder of Notes shall have the right to require the Company to purchase all or a portion of such
Holder’s Notes pursuant to the offer described below (the “Change of Control Offer”), at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to but not including
the date of purchase (the “Change of Control Payment”), subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.
Unless the Company has exercised its right to redeem the Notes, within 30 days following the date upon which the Change of Control
Triggering Event occurs with respect to the Notes or at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, the Company shall be required to send, by first class mail, a
notice to each Holder of Notes, with a copy to the Trustee, which notice shall describe the terms of the Change of Control Offer. Such notice shall state, among other things, the transaction or transactions that constitute or may constitute the
Change of Control and offering to repurchase the Notes if this series and the purchase date, which must be no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law (the
“Change of Control Payment Date”). The notice, if mailed prior to the date of consummation of the Change of Control, shall state that the Change of Control Offer is conditioned on the Change of Control Triggering Event occurring on
or prior to the Change of Control Payment Date.
On the Change of Control Payment Date, the Company shall, to the extent lawful:
(i) accept or cause a third party to accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer; (ii) deposit or cause a third party to deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate
principal amount of Notes or portions of Notes being repurchased and that all conditions precedent to the Change of Control Offer and to the repurchase by the Company of Notes pursuant to the Change of Control Offer have been complied with.
A6-6
The Company shall not be required to make a Change of Control Offer with respect to the Notes if
a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by the Company and such third party purchases all Notes properly tendered and not withdrawn under its offer.
The Company shall comply in all material respects with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the purchase of the Notes as a result of a Change of Control
Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes, the Company shall comply with those securities laws and regulations and shall not be
deemed to have breached its obligations under the Change of Control Offer provisions of the Notes by virtue of such conflicts.
The
indebtedness evidenced by this Note is, to the extent provided in the Indenture, the unsecured, unsubordinated obligation of the Company and will rank equally in right of payment to all of the Company’s existing and future unsecured,
unsubordinated indebtedness. This Note will, to the extent provided in the First Supplemental Indenture, be guaranteed, jointly and severally, by each of the Guarantors party to the First Supplemental Indenture on an unsecured, unsubordinated basis.
This Note may hereafter be entitled to certain other Guarantees made for the benefit of the Holders. Reference is made to Article 7 of the First Supplemental Indenture for terms relating to such Guarantees, including the release, termination and
discharge thereof. Neither the Company nor any Guarantor shall be required to make any notation on this Note to reflect any Guarantee or any such release, termination or discharge. Any payment in respect of the Guarantees that the Holders shall be
entitled to is subject to the terms of the Intercreditor Agreement (as defined in the Indenture).
The Notes are initially limited to
$600,000,000 aggregate principal amount. The Company may from time to time, without notice to or the consent of the Holders of the Notes, create and issue additional Notes ranking equally and ratably with the Notes in all respects (other than the
issue price, the date of the issuance, the payment of interest accruing prior to the issue date of such additional Notes and the first payment of interest following the issue date of such additional Notes), provided that if the additional Notes are
not fungible with the existing Securities for United States federal income tax purposes, the additional Notes will have a separate CUSIP number. Any such additional Notes shall be consolidated and form a single series with the Notes initially
issued, including for purposes of voting and redemptions.
The Notes are not entitled to the benefit of any sinking fund.
A6-7
In the event (i) the consummation of the BAG Acquisition does not occur on or prior
to August 3, 2015 (the “End Date”) or (ii) the Company notifies the Trustee that the BAG Merger Agreement has been terminated in accordance with its terms prior to the consummation of the BAG Acquisition (the earlier of
the date of delivery of such notice and the End Date, the “Acquisition Deadline”), the Company shall redeem all and not less than all of the Notes then outstanding (the “special mandatory redemption”) by a date no
later than 10 days after the Acquisition Deadline (the “special mandatory redemption date”) at a Redemption Price equal to 101% of the aggregate principal amount of the of such Notes, plus accrued and unpaid interest, if any, to,
but excluding the special mandatory redemption date (the “special mandatory redemption price”).
The Company
shall promptly, and in any event not more than three Business Days after the Acquisition Deadline, deliver notice of the special mandatory redemption to the Trustee, who shall then promptly deliver such notice to each holder of Notes at its
registered address. If funds sufficient to pay the special mandatory redemption price of the Notes on the special mandatory redemption date are deposited with the Trustee or a Paying Agent on or before such special mandatory redemption date, then on
and after such special mandatory redemption date, the Notes shall cease to bear interest and the Indenture shall be discharged and cease to be of further effect as to all Notes.
The Indenture imposes certain limitations on the ability of the Company to, among other things, merge or consolidate with any other Person,
and requires that the Company comply with certain further covenants, such as Limitations on Liens and Limitations on Sale and Leaseback as further described in the Indenture, all of which are applicable to this Note. All such covenants and
limitations are subject to a number of important qualifications and exceptions.
The Indenture contains provisions for the defeasance at
any time of (a) the entire indebtedness on this Note and (b) certain restrictive covenants and the related defaults and Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to
this Note.
If an Event of Default with respect to Notes shall occur and be continuing, the principal of the Notes may (subject to the
conditions set forth in the Indenture) be declared due and payable in the manner and with the effect provided in the Indenture.
The
Indenture contains provisions permitting, with certain exceptions therein provided, the Company and the Trustee, without the consent of any of the Holders of the outstanding Notes, to modify and amend the Indenture for the purpose of, among other
things, curing any ambiguity, defect or inconsistency.
The Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount of the outstanding Notes, on behalf of the Holders of all Notes, to waive any past default or Event of Default with respect to
A6-8
the Notes and its consequences, except a default in the payment of the principal of or interest on any of the Notes or in respect of a covenant or other provision which, under the terms of the
Indenture, cannot be modified or amended without the consent of the Holder of each outstanding Note.
No reference herein to the Indenture
and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the currency, herein
prescribed.
No director, officer, employee, incorporator or stockholder, as such, of the Company, any Guarantor or any other obligor in
respect of any Note or any Subsidiary of any thereof shall have any liability for any obligation of the Company, any Guarantor or any other obligor in respect of any Note under the Indenture, the Notes or any Guarantee, or for any claim based on, in
respect of, or by reason of, any such obligation or its creation. Each Holder, by accepting this Note, hereby waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the
Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
No service charge
shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
All capitalized terms used in this Note which are not defined herein shall have the meanings assigned to them in the Indenture.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
* * *
A6-9
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF SECURITIES
This Certificate relates to $ principal amount of [ ]% Notes due
[ ] held in (check applicable space) book-entry or
definitive form by
(the
“Transferor”).
The Transferor (check one box below):
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has requested the Trustee by written order to deliver in exchange for its beneficial interest in the global Note held by the Depository a Note or Notes in definitive, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such global Note (or the portion thereof indicated above); or |
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has requested the Trustee by written order to exchange or register the transfer of a Note or Notes. |
In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to
in Rule 144(k) under the Securities Act of 1933, the undersigned confirms that such Notes are being transferred in accordance with its terms:
CHECK ONE
BOX BELOW:
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to the Company; or |
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pursuant to an effective registration statement under the Securities Act of 1933; or |
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inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to
whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or |
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pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
A6-10
Prior to the expiration of the period referred to in Rule 144(k), unless one of the boxes
is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered holder thereof; provided, however, that if box (4) or (5) is checked, the
Trustee may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information satisfactory to the Company and the Trustee to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
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A6-11
SCHEDULE OF EXCHANGES
The following exchanges of a part of this Book-Entry Security have been made:
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Amount of
decrease in
Principal
Amount of this
Book-Entry
Security |
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Amount of
increase in
Principal
Amount of this
Book-Entry
Security |
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Principal
Amount of this
Book-Entry
Security
following such
decrease (or
increase) |
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Signature of
authorized
signatory of
Trustee or
Security
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A6-12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we
assign and transfer this Security to
(Print or type assignee’s name,
address and zip code)
(Insert assignee’s soc. sec. or
tax I.D. No.)
and irrevocably appoint
as agent
to transfer this Security on the books of the Company. The agent may substitute another to act for him.
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Sign exactly as your name appears on the other side of this Security.
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NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be
guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in Security Transfer Agents Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. |
A6-13
EXHIBIT B
[Form of Supplemental Indenture in Respect of Subsidiary Guarantees]
SUPPLEMENTAL INDENTURE, dated as of ,
20 (this “Supplemental Indenture”), among [name of Guarantor(s)] (the “Guarantor(s)”), The J. M. Smucker Company, an Ohio corporation (the “Company”), and each other then-existing
Guarantor under the Indenture referred to below (the “Existing Guarantors”), and U.S. Bank National Association, a national banking association, as Trustee under the Indenture referred to below.
RECITALS
WHEREAS, the
Company, any Existing Guarantors and the Trustee have heretofore become parties to, or by supplemental indenture have become parties to, an Indenture, dated as of March 20, 2015 (the “Base Indenture” and, as supplemented by the
First Supplemental Indenture (the “First Supplemental Indenture”), dated as of March 20, 2015, the “Indenture”), providing for the issuance of 1.750% Notes due 2018, 2.500% Notes due 2020, 3.000% Notes due
2022, 3.500% Notes due 2025, 4.250% Notes due 2035 and 4.375% Notes due 2045 of the Company (the “Notes”);
WHEREAS, Section 7.06 of the First Supplemental Indenture provides that the Company is required to cause the Guarantor[s] to execute and
deliver to the Trustee a supplemental indenture evidencing its guarantee of the punctual payment when due of all monetary obligations of the Company under the Indenture (with respect to the Notes) and the Notes on the terms and conditions set forth
herein and in Article 7 of the First Supplemental Indenture;
WHEREAS, each Guarantor desires to enter into such supplemental indenture
for good and valuable consideration, including substantial economic benefit in that the financial performance and condition of such Guarantor is dependent on the financial performance and condition of the Company, the obligations hereunder of which
such Guarantor has guaranteed; and
WHEREAS, pursuant to Section 9.01 of the Base Indenture, the parties hereto are authorized to
execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of any Holder;
NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor[s], the Company, the Existing Guarantors and the Trustee mutually covenant and agree for the benefit of the
Holders of the Notes as follows:
1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the
preamble or recital hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a
whole and not to any particular section hereof.
B-1
2. Agreement to Guarantee. [The] [Each] Guarantor, as primary obligor and not merely as
surety, hereby jointly and severally, irrevocably and fully and unconditionally guarantees to each Holder and to the Trustee and its successor and assigns ([the] [each, a] “Guarantee”) on an unsecured, unsubordinated basis and equal
in right of payment to all existing and future unsecured, unsubordinated indebtedness of such Guarantor the punctual payment when due of all monetary obligations of the Company under the Indenture (with respect to the Notes) and the Notes, whether
for principal of or interest on the Notes, on the terms and subject to the conditions set forth in Article 7 of the First Supplemental Indenture and agrees to be bound by (and shall be entitled to the benefits of) all other applicable provisions of
the Indenture as a Guarantor.
3. Termination, Release and Discharge. [The] [Each] Guarantor’s Guarantee shall terminate and
be of no further force or effect, and [the] [each] Guarantor shall be released and discharged from all obligations in respect of such Guarantee, as and when provided in Section 7.03 of the First Supplemental Indenture.
4. Parties. Nothing in this Supplemental Indenture is intended or shall be construed to give any Person, other than the Holders and the
Trustee, any legal or equitable right, remedy or claim under or in respect of [the] [each] Guarantor’s Guarantee or any provision contained herein or in Article 7 of the First Supplemental Indenture.
5. Governing Law. This Supplemental Indenture and the Notes shall be deemed to be a contract under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required by mandatory provisions of law.
6. Ratification of Indenture; Supplemental Indentures Part of Indenture. The Indenture, as supplemented by this Supplemental Indenture, is in
all respects ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided. The recitals contained herein shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for the correctness of the same.
7. Counterparts. This Supplemental Indenture may be executed
in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.
8. Headings. The section headings herein are for convenience only and shall not affect the construction hereof.
B-2
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date
first above written.
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| [NAME OF GUARANTOR(S)] |
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Name: |
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Title: |
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| THE J. M. SMUCKER COMPANY |
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Title: |
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| U.S. BANK NATIONAL ASSOCIATION as Trustee |
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B-3
EXHIBIT C
[FORM OF ACKNOWLEDGEMENT AND JOINDER TO THE INTERCREDITOR AGREEMENT]
Reference is made to the Third Amended and Restated Intercreditor Agreement dated as of June 11, 2010 (the “Intercreditor
Agreement”), among the 2009 Agent, the Additional Primary Senior Debt Holders and the Additional Primary Senior Debt Agents. Capitalized terms used herein have the respective meanings specified in the Intercreditor Agreement.
By its signature below, the undersigned, an Additional Primary Senior Debt Agent referred to in the Intercreditor Agreement hereby agrees to
be a party to, and bound by the terms and conditions of, the Intercreditor Agreement and to require the holders of the applicable Additional Primary Debt for which the undersigned serves as the Additional Primary Senior Debt Agent to be bound (and
for any assignee thereof to be bound) by the terms and conditions of the Intercreditor Agreement as if it had been an original signatory party thereto (in the capacity as a Lender). Set forth below is the address for notices for the undersigned that
is to be set forth in Annex I to the Intercreditor Agreement.
The undersigned hereby represents and warrants to the 2009
Agent, each other Additional Primary Senior Debt Holder (as of the date hereof) and each other Additional Primary Senior Debt Agent (as of the date hereof) that the holders of the notes (each a “Noteholder” and together, the
“Noteholders”) issued pursuant to that certain Indenture dated as of March 20, 2015 among the J. M. Smucker Company, U.S. Bank, National Association, as trustee, and the guarantors party thereto and that certain Supplemental
Indenture dated as of March 20, 2015 among the J. M. Smucker Company, U.S. Bank, National Association, as trustee, and the guarantors party thereto (together, the “Indenture”) have appointed and designated it as their agent for
purposes of this Acknowledgment and Joinder Agreement and the Intercreditor Agreement, and have authorized and directed it to enter into this Acknowledgment and Joinder Agreement for the benefit of each Noteholder and have authorized and directed it
to sign this Acknowledgment and Joinder Agreement, to receive all notices, to take all action with respect to this Acknowledgment and Joinder Agreement and the Intercreditor Agreement and to exercise all rights and powers incidental hereto and
thereto. The undersigned further represents and warrants to the 2009 Agent, each other Additional Primary Senior Debt Holder (as of the date hereof) and each other Additional Primary Senior Debt Agent (as of the date hereof) that any and all action
taken by it in connection with this Acknowledgment and Joinder Agreement and the Intercreditor Agreement shall be done as authorized in the Additional Primary Senior Debt Agreement under which such Additional Primary Debt was issued, and the 2009
Agent, each other Additional Primary Senior Debt Holder (as of the date hereof) and each other Additional Primary Senior Debt Agent (as of the date hereof) shall be entitled to rely upon this representation notwithstanding any transfer at any time
of any interest in the Additional Primary Senior Debt Guarantied Obligations.
C-1
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C-2
Exhibit 4.3
EXECUTION VERSION
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT dated March 20, 2015 (this “Agreement”) is entered into by and among The J.M. Smucker
Company, an Ohio corporation (the “Company”), the guarantors listed in Schedule 1 hereto (the “Initial Guarantors”) and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
representatives of the several Initial Purchasers (collectively, the “Initial Purchasers”) named in the Purchase Agreement (as defined below).
The Company, the Initial Guarantors and the Initial Purchasers are parties to the Purchase Agreement dated March 12, 2015 (the
“Purchase Agreement”), which provides for the sale by the Company to the Initial Purchasers of $500,000,000 aggregate principal amount of the Company’s 1.750% Notes due 2018 (the “2018 Notes”), $500,000,000
aggregate principal amount of the Company’s 2.500% Notes due 2020 (the “2020 Notes”), $400,000,000 aggregate principal amount of the Company’s 3.000% Notes due 2022 (the “2022 Notes”), $1,000,000,000
aggregate principal amount of the Company’s 3.500% Notes due 2025 (the “2025 Notes”), $650,000,000 aggregate principal amount of the Company’s 4.250% Notes due 2035 (the “2035 Notes”) and $600,000,000
aggregate principal amount of the Company’s 4.375% Notes due 2045 (the “2045 Notes” and together with the 2018 Notes, 2020 Notes, 2022 Notes, 2025 Notes and 2035 Notes, the “Securities”) which will be
guaranteed on an unsecured and unsubordinated basis by each of the Guarantors. As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company and the Guarantors have agreed to provide to the Initial Purchasers and their
direct and indirect transferees, following the Completion Date (as defined herein), the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the following meanings:
“Additional Guarantor” shall mean any subsidiary of the Company that executes a Guarantee under the Indenture after the date
of this Agreement.
“Business Day” shall mean any day that is not a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to remain closed.
“Company” shall have the meaning set forth in
the preamble and shall also include the Company’s successors.
1
“Completion Date” shall mean the earlier of (i) the closing of the Mergers
as described in the offering memorandum dated March 12, 2015, relating to the offering of the Securities and (ii) August 3, 2015.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.
“Exchange Dates” shall have the meaning set forth in Section 2(a)(ii) hereof.
“Exchange Offer” shall mean the exchange offer by the Company and the Guarantors of Exchange Securities for Registrable
Securities pursuant to Section 2(a) hereof.
“Exchange Offer Registration” shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
“Exchange Offer Registration Statement” shall mean an
exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form) and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein or deemed a part thereof,
all exhibits thereto and any document incorporated by reference therein.
“Exchange Securities” shall mean unsubordinated
notes issued by the Company and guaranteed by the Guarantors under the Indenture containing terms substantially identical in all material respects to the applicable series of Securities (except that the transfer restrictions contained in the
Securities will be modified or eliminated, as appropriate, the Exchange Securities will not be subject to any increase in annual interest rate for failure to comply with this Agreement) and to be offered to Holders of Securities in exchange for
Securities pursuant to the Exchange Offer.
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Free Writing Prospectus” means each free writing prospectus (as defined in Rule 405 under the Securities Act) prepared by or
on behalf of the Company with its consent or used or referred to by the Company in connection with the sale of the Securities or the Exchange Securities.
“Guarantees” shall mean the guarantees of the Securities and guarantees of the Exchange Securities by the Guarantors under
the Indenture.
“Guarantors” shall mean the Initial Guarantors, any Additional Guarantor and any Guarantor’s
successor that Guarantees the Securities.
“Holders” shall mean the Initial Purchasers, for so long as they own any
Registrable Securities, and each of their successors, assigns and direct and indirect transferees who become owners of Registrable Securities under the Indenture; provided that, for purposes of Section 4 and Section 5 hereof, the
term “Holders” shall include Participating Broker-Dealers.
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“Indemnified Person” shall have the meaning set forth in Section 5(c)
hereof.
“Indemnifying Person” shall have the meaning set forth in Section 5(c) hereof.
“Indenture” shall mean the Indenture relating to the Securities, dated as of the date hereof, among the Company, the
Guarantors and U.S. Bank National Association, as trustee, and as the same may be amended from time to time in accordance with the terms thereof.
“Initial Purchasers” shall have the meaning set forth in the preamble.
“Inspector” shall have the meaning set forth in Section 3(a)(xiv) hereof.
“Issuer Information” shall have the meaning set forth in Section 5(a) hereof.
“Majority Holders” shall mean the Holders of a majority of the aggregate principal amount of the outstanding Registrable
Securities; provided that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, any Registrable Securities owned directly or indirectly by the Company or any of its affiliates
shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount; and provided, further, that if the Company shall issue any additional Securities under the Indenture
prior to consummation of the Exchange Offer or, if applicable, the effectiveness of any Shelf Registration Statement, such additional Securities and the Registrable Securities to which this Agreement relates shall be treated together as one class
for purposes of determining whether the consent or approval of Holders of a specified percentage of Registrable Securities has been obtained.
“Notice and Questionnaire” shall mean a notice of registration statement and selling security holder questionnaire
distributed to a Holder by the Company upon receipt of a Shelf Request from such Holder.
“Participating Broker-Dealers”
shall have the meaning set forth in Section 4(a) hereof.
“Participating Holder” shall mean any Holder of
Registrable Securities that has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 2(b) hereof.
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“Person” shall mean an individual, partnership, limited liability company,
corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.
“Prospectus” shall mean the prospectus included in, or, pursuant to the rules and regulations of the Securities Act, deemed a
part of, a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of
the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including any document incorporated by reference therein.
“Purchase Agreement” shall have the meaning set forth in the preamble.
“Registrable Securities” shall mean the Securities; provided that the Securities shall cease to be Registrable
Securities upon the earliest to occur of the following: (i) when a Registration Statement with respect to such Securities has become effective under the Securities Act and such Securities have been exchanged or disposed of pursuant to such
Registration Statement, (ii) when such Securities cease to be outstanding, (iii) except in the case of Securities that otherwise remain Registrable Securities and that are ineligible to be exchanged in the Exchange Offer, when the Exchange
Offer is consummated, (iv) when such Securities are sold pursuant to Rule 144 under the Securities Act (but not Rule 144A), provided that the Company shall have removed or caused to be removed any restrictive legend on such Securities or
(v) the third anniversary of the date of this Agreement.
“Registration Default” shall mean the occurrence of any of
the following, unless the Securities are earlier redeemed: (i) the Exchange Offer is not completed on or prior to the Target Registration Date, (ii) the Shelf Registration Statement, if required pursuant to Section 2(b)(i) or
Section 2(b)(ii) hereof, has not become effective on or prior to the Target Registration Date, (iii) if the Company receives a Shelf Request pursuant to Section 2(b)(iii), the Shelf Registration Statement required to be filed thereby
has not become effective by the later of (a) the Target Registration Date and (b) 90 days after delivery of such Shelf Request, (iv) the Shelf Registration Statement, if required by this Agreement, has become effective and thereafter
ceases to be effective or the Prospectus contained therein ceases to be usable, in each case whether or not permitted by this Agreement, at any time during the Shelf Effectiveness Period, and such failure to remain effective or usable exists for
more than 30 days (whether or not consecutive) in any 12-month period or (v) the Shelf Registration Statement, if required by this Agreement, has become effective and thereafter, on more than two occasions of at least fifteen
(15) consecutive days in any 12-month period during the Shelf Effectiveness Period, the Shelf Registration Statement ceases to be effective or the Prospectus contained therein ceases to be usable, in each case whether or not permitted by this
Agreement.
4
“Registration Expenses” shall mean any and all expenses incident to performance
of or compliance by the Company and the Guarantors with this Agreement, including without limitation: (i) all SEC, stock exchange or FINRA registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws (including reasonable fees and disbursements of not more than one counsel for any Underwriters or Holders in connection with blue sky qualification of any Exchange Securities or Registrable Securities),
(iii) all expenses of the Company and the Guarantors in preparing (and of any Person in assisting the Company and the Guarantors in preparing), word processing, printing and distributing any Registration Statement, any Prospectus, any Free
Writing Prospectus and any amendments or supplements thereto, any underwriting agreements, securities sales agreements or other similar agreements and any other documents relating to the Company’s and the Guarantor’s performance of and
compliance with this Agreement, (iv) all rating agency fees incurred by the Company or the Guarantors, (v) all fees and disbursements of the Company and the Guarantors relating to the qualification of the Indenture under applicable
securities laws, (vi) the reasonable fees and disbursements of the Trustee and its one counsel, (vii) the fees and disbursements of counsel for the Company and the Guarantors and, in the case of a Shelf Registration Statement, the
reasonable and actual out-of-pocket fees and disbursements of not more than one counsel for the Participating Holders (which counsel shall be a nationally recognized law firm experienced in securities law matters and which shall be selected by the
Participating Holders holding a majority of the aggregate principal amount of Registrable Securities held by such Participating Holders and which counsel may also be counsel for the Initial Purchasers) and (viii) the fees and disbursements of
the independent registered public accountants of the Company and the Guarantors, including the expenses of any special audits or “comfort” letters required by or incident to the performance of and compliance with this Agreement; but
excluding fees and expenses of counsel to the Initial Purchasers or any Underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions, brokerage commissions and transfer
taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder.
“Registration Statement” shall
mean any registration statement of the Company and the Guarantors that covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.
“SEC” shall mean the United States Securities and Exchange Commission.
“Securities” shall have the meaning set forth in the preamble.
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“Securities Act” shall mean the Securities Act of 1933, as amended from time to
time.
“Shelf Effectiveness Period” shall have the meaning set forth in Section 2(b) hereof.
“Shelf Registration” shall mean a registration effected pursuant to Section 2(b) hereof.
“Shelf Registration Statement” shall mean a “shelf” registration statement of the Company and the Guarantors that
covers all or a portion of the Registrable Securities (but, unless such Shelf Registration Statement is an automatic Shelf Registration Statement, no other securities unless approved by a majority in aggregate principal amount of the Securities held
by the Participating Holders) on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein. For the avoidance of doubt, “Shelf Registration Statement” shall include any
previously filed registration statement of the Company and/or the Guarantors that is amended or supplemented to satisfy the foregoing.
“Shelf Request” shall have the meaning set forth in Section 2(b) hereof.
“Staff” shall mean the staff of the SEC.
“Target Registration Date” shall mean 365 days after the date of this Agreement.
“Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended from time to time.
“Trustee” shall mean the trustee with respect to the Securities under the Indenture.
“Underwriter” shall have the meaning set forth in Section 3(e) hereof.
“Underwritten Offering” shall mean an offering in which Registrable Securities are sold to an Underwriter for reoffering to
the public.
2. Registration Under the Securities Act. (a) To the extent not prohibited by any applicable law or applicable
interpretations of the Staff, the Company and the Guarantors shall use their commercially reasonable efforts to, after the Completion Date (x) cause to be filed an Exchange Offer Registration Statement covering an offer to the Holders to
exchange all the Registrable Securities for Exchange Securities and (y) have such Registration Statement become effective and, at the request of one or more Participating Broker-Dealers,
6
remain effective until 180 days after the last Exchange Date for use by such Participating Broker-Dealers (or such shorter period as will terminate when all Registrable Securities covered by such
Registration Statement have been sold pursuant thereto). The Company and the Guarantors shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement is declared effective by the SEC and use their commercially reasonable
efforts to complete the Exchange Offer not later than 60 days after such effective date.
The Company and the Guarantors shall commence
the Exchange Offer by mailing or delivering the related Prospectus, appropriate letters of transmittal and other accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law, substantially
the following:
| (i) |
that the Exchange Offer is being made pursuant to this Agreement and that all Registrable Securities validly tendered and not properly withdrawn will be accepted for exchange; |
| (ii) |
the dates of acceptance for exchange (which shall be a period of at least 20 Business Days from the date the Exchange Offer is commenced) (the “Exchange Dates”); |
| (iii) |
that any Registrable Security not tendered will remain outstanding and continue to accrue interest but will not retain any rights under this Agreement, except as otherwise specified herein; |
| (iv) |
that any Holder electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to (A) surrender such Registrable Security, together with the appropriate letters of transmittal, to
the institution and at the address and in the manner specified in the notice, or (B) effect such exchange otherwise in compliance with the applicable procedures of the depositary for such Registrable Security, in each case prior to the close of
business on the last Exchange Date; and |
| (v) |
that any Holder will be entitled to withdraw its election, not later than the close of business on the last Exchange Date, by (A) delivering to the institution and at the address specified in the notice, a
facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange and a statement that such Holder is withdrawing its election to have such Securities exchanged or
(B) effecting such withdrawal in compliance with the applicable procedures of the depositary for the Registrable Securities. |
As a condition to participating in the Exchange Offer, a Holder will be required to represent to the Company and the Guarantors that
(1) any Exchange Securities to be received by it will be acquired in the ordinary course of its business, (2) at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any Person to participate in
the distribution
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(within the meaning of the Securities Act) of the Exchange Securities in violation of the provisions of the Securities Act, (3) it is not an “affiliate” (within the meaning of Rule
405 under the Securities Act) of the Company or any Guarantor, (4) if such Holder is a broker-dealer that will receive Exchange Securities for its own account in exchange for Registrable Securities that were acquired as a result of
market-making or other trading activities, then such Holder will deliver a Prospectus (or, to the extent permitted by law, make available a Prospectus to purchasers) in connection with any resale of such Exchange Securities, (5) such Holder
holds all right, title and interest in and to the Registrable Securities to be exchanged and (6) such Holder transfers all right, title and interest in the Registrable Securities to the Company in exchange for the Exchange Securities free and
clear of all liens, encumbrances, or rights or interests of third parties.
As soon as practicable after the last Exchange Date, the
Company and the Guarantors shall:
| (I) |
accept for exchange Registrable Securities or portions thereof validly tendered and not properly withdrawn pursuant to the Exchange Offer; and |
| (II) |
deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange by the Company and issue, and cause the Trustee to promptly authenticate and
deliver to each Holder, Exchange Securities equal in principal amount to the principal amount of the Registrable Securities tendered by such Holder; provided that if any of the Registrable Securities are in book-entry form, the Company shall, in
cooperation with the Trustee, effect the exchange of Registrable Securities in accordance with applicable book-entry procedures. |
The Company and the Guarantors shall use their commercially reasonable efforts to complete the Exchange Offer as provided above and shall
comply with the applicable requirements of the Securities Act, the Exchange Act and other applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than (a) that the
Exchange Offer does not violate any applicable law or applicable interpretations of the Staff and (b) as expressly set forth herein, including the making of the representations and warranties referred to in the second preceding paragraph and
compliance with the terms and conditions set forth in the third preceding paragraph.
(b) In the event that (i) the Company and the
Guarantors determine that the Exchange Offer Registration provided for in Section 2(a) hereof is not available or the Exchange Offer may not be completed as soon as practicable after the last Exchange Date because it would violate any
applicable law or applicable interpretations of the Staff, (ii) the Exchange Offer is not for any other reason completed by the Target Registration Date or (iii) prior to the last Exchange Date with respect to such Exchange Offer, upon
receipt of a written
8
request (a “Shelf Request”) from any Initial Purchaser representing that it holds Registrable Securities that are or were ineligible to be exchanged in such Exchange Offer, the
Company and the Guarantors shall use their commercially reasonable efforts to cause to be filed, after the Completion Date and as soon as practicable after such determination, date or Shelf Request, as the case may be, a Shelf Registration Statement
providing for the sale of all the Registrable Securities by the Holders thereof and to have such Shelf Registration Statement become effective; provided that (i) no Holder will be entitled to have any Registrable Securities included in
any Shelf Registration Statement, or entitled to use the prospectus forming a part of such Shelf Registration Statement, until such Holder shall have delivered a completed and signed Notice and Questionnaire and provided such other information
regarding such Holder to the Company as is contemplated by Section 3(b) hereof and, if necessary, the Shelf Registration Statement has been amended to reflect such information and (ii) the Company and the Guarantors shall be under no
obligation to file any such Shelf Registration Statement before they are obligated to file an Exchange Offer Registration Statement pursuant to Section 2(a) hereof.
In the event that the Company and the Guarantors are required to file a Shelf Registration Statement pursuant to clause (iii) of the
preceding sentence, the Company and the Guarantors shall use their commercially reasonable efforts to file and have become effective both an Exchange Offer Registration Statement pursuant to Section 2(a) hereof with respect to all Registrable
Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Initial Purchasers after completion
of the Exchange Offer.
The Company and the Guarantors agree to use their commercially reasonable efforts to keep the Shelf Registration
Statement continuously effective until the date on which the Securities covered thereby cease to be Registrable Securities (the “Shelf Effectiveness Period”). The Company and the Guarantors further agree to use their commercially
reasonable efforts to supplement or amend the Shelf Registration Statement, the related Prospectus and any Free Writing Prospectus if required by the rules, regulations or instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder or if reasonably requested in writing pursuant to the notice provisions hereof by a Participating Holder of Registrable Securities with respect to
information relating to such Holder prior to the end of the Shelf Effectiveness Period, and to use their commercially reasonable efforts to cause any such amendment to become effective, if required, and such Shelf Registration Statement, Prospectus
or Free Writing Prospectus, as the case may be, to become usable as soon as thereafter practicable. The Company and the Guarantors agree to furnish to the Participating Holders copies of any such supplement or amendment promptly after its being used
or filed with the SEC.
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(c) The Company and the Guarantors shall pay all Registration Expenses in connection with any
registration pursuant to Section 2(a) or Section 2(b) hereof. Each Holder shall pay all underwriting discounts and commissions, brokerage commissions, its own attorney fees (except as such fees may be covered by clause (vii) of the
definition of Registration Expenses) and transfer taxes, if any, relating to the sale or disposition of such Holder’s Registrable Securities pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof will not be deemed to have become effective unless it has
been declared effective by the SEC or otherwise becomes effective pursuant to SEC rules. A Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC
or is automatically effective upon filing with the SEC as provided by Rule 462 under the Securities Act or otherwise becomes effective pursuant to SEC rules.
If a Registration Default occurs, the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the
first 90-day period beginning on the day immediately following such Registration Default and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until and including the date such Registration
Default ends, up to a maximum increase of 1.00% per annum. A Registration Default ends when the Securities cease to be Registrable Securities or, if earlier, (1) in the case of a Registration Default under clause (i) of the definition
thereof, when the Exchange Offer is completed, (2) in the case of a Registration Default under clause (ii) or clause (iii) of the definition thereof, when the Shelf Registration Statement becomes effective or (3) in the case of a
Registration Default under clause (iv) or clause (v) of the definition thereof, when the Shelf Registration Statement again becomes effective or the Prospectus again becomes usable. If at any time more than one Registration Default has
occurred and is continuing, then, until the next date that there is no Registration Default, the increase in interest rate provided for by this paragraph shall apply as if there occurred a single Registration Default that begins on the date that the
earliest such Registration Default occurred and ends on such next date that there is no Registration Default.
(e) The Company shall be
entitled to suspend their obligation to file any amendment to a Shelf Registration Statement, furnish any supplement or amendment to a Prospectus included in a Shelf Registration Statement or any Free Writing Prospectus, make any other filing with
the SEC that would be incorporated by reference into a Shelf Registration Statement, cause a Shelf Registration Statement to remain effective or the Prospectus or any Free Writing Prospectus usable or take any similar action (collectively,
“Suspension Actions”) for one or more periods not to exceed an aggregate of 120 days during any 12-month period if there is a possible acquisition, disposition or business combination or other transaction, business development or
event involving the Company or the Guarantors that may require disclosure in the Shelf Registration Statement or Prospectus and the Company determines in the exercise of its
10
reasonable judgment (and not for the purpose of avoidance of its obligations hereunder) that such disclosure is not in the best interest of the Company and its stockholders. Upon the occurrence
of any of the conditions described in the foregoing sentence, the Company shall give prompt notice of the delay or suspension to the Participating Holders pursuant to Section 3(vi)(7). Upon the termination of such condition, the Company shall
promptly proceed with all Suspension Actions that were delayed or suspended and, if required, shall give prompt notice to the Participating Holders of the cessation of the delay or suspension pursuant to Section 3(vi)(7). Any such delay or
suspension shall not defer the obligations of the Company to pay additional interest provided by the paragraph above with respect to Registration Default.
(f) Without limiting the remedies available to the Initial Purchasers and the Holders, the Company and the Guarantors acknowledge that any
failure by the Company or the Guarantors to comply with their obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy
at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company’s
and the Guarantors obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures. (a) In
connection with their obligations pursuant to Section 2(a) and Section 2(b) hereof, the Company and the Guarantors shall in accordance with the terms of this Agreement:
(i) use their commercially reasonable efforts to prepare and file, after the Completion Date, with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form (A) shall be selected by the Company and the Guarantors, (B) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the Holders thereof
and (C) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith; and use their commercially reasonable efforts to cause such
Registration Statement to become effective and remain effective for the applicable period in accordance with Section 2 hereof;
(ii)
use their commercially reasonable efforts to prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective (subject to the provisions of
Sections 2(e) and 3(d) hereof) for the applicable period in accordance with Section 2 hereof and cause each Prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424 under the
Securities Act; and keep each Prospectus current during the period described in Section 4(3) of and Rule 174 under the Securities Act that is applicable to transactions by brokers or dealers with respect to the Registrable Securities or
Exchange Securities;
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(iii) to the extent any Free Writing Prospectus is used, file with the SEC any Free Writing
Prospectus that is required to be filed by the Company or the Guarantors with the SEC in accordance with the Securities Act and to retain any Free Writing Prospectus not required to be filed;
(iv) in the case of a Shelf Registration, use their commercially reasonable efforts to furnish to each Participating Holder, to counsel for
such Participating Holders (to the extent that the Company and the Guarantors have been requested to do so and provided with contact information for such counsel) and to each Underwriter of an Underwritten Offering of Registrable Securities, if any,
without charge, as many copies of each Prospectus, preliminary prospectus or Free Writing Prospectus, and any amendment or supplement thereto, as such Participating Holder, counsel or Underwriter may reasonably request in order to facilitate the
sale or other disposition of the Registrable Securities thereunder; and, subject to Section 3(c) hereof, the Company and the Guarantors consent to the use of such Prospectus, preliminary prospectus or such Free Writing Prospectus and any
amendment or supplement thereto in accordance with applicable law by each of the Participating Holders and any such Underwriters in connection with the offering and sale of the Registrable Securities covered by and in the manner described in such
Prospectus, preliminary prospectus or such Free Writing Prospectus or any amendment or supplement thereto in accordance with applicable law;
(v) use their commercially reasonable efforts to cooperate with the applicable Participating Holders and their counsel to register or qualify
the Registrable Securities under all applicable state securities or blue sky laws of such jurisdictions of the United States as any Participating Holder shall reasonably request in writing by the time the applicable Registration Statement becomes
effective; use their commercially reasonable efforts to cooperate with such Participating Holders in connection with any filings required to be made with FINRA; and use their commercially reasonable efforts to do any and all other acts and things
that may be reasonably necessary or advisable to enable each Participating Holder to complete the disposition in each such jurisdiction of the Registrable Securities owned by such Participating Holder; provided that neither the Company nor
any Guarantor shall be required to (1) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (2) execute or file any general consent
to service of process in any such jurisdiction or (3) subject itself to taxation or service of process in any such jurisdiction if it is not so subject;
(vi) notify counsel for the Initial Purchasers (such counsel being the counsel on the date of this Agreement unless the Initial Purchasers
notify the Company and the Guarantors in writing otherwise) and, in the case of a Shelf Registration, notify each Participating Holder and counsel for such Participating Holders (to the extent that the Company and the Guarantors have been provided
with contact information for such counsel) promptly and, if requested by any such Participating Holder or counsel, confirm such advice in writing (1) when a
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Registration Statement has become effective, when any post-effective amendment thereto has been filed and becomes effective, when any Free Writing Prospectus has been filed or any amendment or
supplement to the Prospectus or any Free Writing Prospectus has been filed, (2) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement, Prospectus or any Free Writing Prospectus or
for additional information, in each case after the Registration Statement has become effective, (3) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, including the receipt by the Company of any notice of objection of the SEC to the use of a Shelf Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the
Securities Act, (4) if, between the applicable effective date of a Shelf Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company or any Guarantor contained
in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to an offering of such Registrable Securities cease to be true and correct in all material respects or if the Company or any Guarantor receives
any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (5) of the happening of any event during the period a
Registration Statement is effective that in the good faith determination of the Company or the Guarantors makes any statement of material fact made in such Registration Statement or the related Prospectus or any Free Writing Prospectus untrue in any
material respect or that requires the making of any changes in such Registration Statement or Prospectus or any Free Writing Prospectus in order to make the statements therein not misleading, (6) of any determination by the Company or any
Guarantor that a post-effective amendment to a Registration Statement or any amendment or supplement to the Prospectus or any Free Writing Prospectus would be appropriate and (7) of any suspension of the Company’s obligation to file any
amendment to a Shelf Registration Statement, furnish any supplement or amendment to a Prospectus included in a Shelf Registration Statement or any Free Writing Prospectus, make any other filing with the SEC that would be incorporated by reference
into a Shelf Registration Statement, cause a Shelf Registration Statement to remain effective or the Prospectus or any Free Writing Prospectus usable or take any similar action determined pursuant to Section 2(e) (provided that such notice
required under this Section 3(a)(vi)(7) in connection with such suspension pursuant to Section 2(e) shall not require the Company to disclose the applicable possible acquisition or business combination or other transaction, business
development or event if the Company determines in good faith that such acquisition or business combination or other transaction, business development or event should remain confidential);
(vii) use their commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement
or, in the case of a Shelf Registration, the resolution of any objection of the SEC pursuant
13
to Rule 401(g)(2) under the Securities Act, including by filing an amendment to such Shelf Registration Statement on the proper form, as promptly as practicable, and provide prompt notice to each
Participating Holder of the withdrawal of any such order or such resolution;
(viii) in the case of a Shelf Registration, use their
commercially reasonable efforts to furnish to each Participating Holder, without charge, upon request, at least one conformed copy of each Registration Statement and any post-effective amendment thereto (without any documents incorporated therein by
reference or exhibits thereto, unless reasonably requested), in each case, if such documents are not available via EDGAR;
(ix) in the
case of a Shelf Registration, unless the Registrable Securities are in book-entry or global certificate only form, use their commercially reasonable efforts to reasonably cooperate (if applicable) with the Participating Holders to facilitate the
timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be issued in such denominations and registered in such names (consistent
with the provisions of the Indenture) as such Participating Holders may reasonably request at least two Business Days prior to the closing of any sale of Registrable Securities;
(x) upon the occurrence of any event contemplated by Section 3(a)(vi)(5) hereof, use their commercially reasonable efforts to prepare and
file with the SEC a supplement or post-effective amendment to the applicable Exchange Offer Registration Statement or Shelf Registration Statement or the related Prospectus or any Free Writing Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered (or, to the extent permitted by law, made available) to purchasers of the Registrable Securities, such Prospectus or Free Writing Prospectus, as the case may be, will not
contain any 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; and the Company and the Guarantors shall notify
(it being understood and agreed that no such notice or any notice under Section 3(a)(vi)(5) shall include any material non-public information with respect to the relevant event) the Participating Holders (in the case of a Shelf Registration
Statement) and the Initial Purchasers and any Participating Broker-Dealers known to the Company (in the case of an Exchange Offer Registration Statement) to suspend use of the Prospectus or any Free Writing Prospectus as promptly as practicable
after the occurrence of such an event, and such Participating Holders, such Participating Broker-Dealers and the Initial Purchasers, as applicable, hereby agree to suspend use of the Prospectus or any Free Writing Prospectus, as the case may be,
until the Company and the Guarantors have amended or supplemented the Prospectus or the Free Writing Prospectus, as the case may be, to correct such misstatement or omission; provided that neither the Company nor the Guarantors shall be required to
take any action pursuant to this Section 3(a)(x) during any suspension period pursuant to Sections 2(e) or 3(d) hereof;
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(xi) a reasonable time prior to the filing of any Registration Statement, any Prospectus, any
Free Writing Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or a Free Writing Prospectus or of any document that is to be incorporated by reference into a Registration Statement, a Prospectus or a
Free Writing Prospectus after initial filing of a Registration Statement (except for current reports filed on Form 8-K filed in the ordinary course of business), provide copies of such document to the Initial Purchasers and their counsel (and, in
the case of a Shelf Registration Statement, to the Participating Holders and their counsel to the extent that the Company and the Guarantors have been requested to do so and provided with contact information for such counsel) and make such of the
representatives of the Company and the Guarantors as shall be reasonably requested by the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Participating Holders or their counsel) available for discussion
of such document at reasonable times and upon reasonable notice; and the Company and the Guarantors shall not, at any time after initial filing of a Registration Statement, file any Prospectus, any Free Writing Prospectus, any amendment of or
supplement to a Registration Statement or a Prospectus or a Free Writing Prospectus, or any document that is to be incorporated by reference into a Registration Statement, a Prospectus or a Free Writing Prospectus (except for current reports filed
on Form 8-K in the ordinary course of business), of which the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Participating Holders and their counsel (to the extent that the Company and the Guarantors
have been requested to do so and provided with contact information for such counsel)) shall not have previously been advised and, to the extent requested, furnished a copy or to which the Initial Purchasers or their counsel (and, in the case of a
Shelf Registration Statement, the Participating Holders or their counsel) shall reasonably object in writing within five (5) Business Days after receipt thereof;
(xii) use their commercially reasonable efforts to obtain a CUSIP number for all Exchange Securities or Registrable Securities in the case of
a Shelf Registration Statement, as the case may be, not later than the initial effective date of a Registration Statement;
(xiii) use
their commercially reasonable efforts to cause the Indenture to be qualified under the Trust Indenture Act in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be; cooperate with the Trustee and
the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and execute, and use their commercially reasonable efforts to cause the Trustee to
execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner;
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(xiv) in the case of a Shelf Registration, make available for inspection by a representative of
the Participating Holders (an “Inspector”), any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, any attorneys and accountants designated by a majority in aggregate principal amount of the
Securities held by the Participating Holders and any attorneys and accountants designated by such Underwriter, at reasonable times and in a reasonable manner, all pertinent financial and other records, documents and properties of the Company and its
subsidiaries, and cause the respective officers, directors and employees of the Company and the Guarantors to supply all information reasonably requested by any such Inspector, Underwriter, attorney or accountant in connection with a Shelf
Registration Statement, in each case, as is customary “due diligence” examinations of underwritten offerings and subject to such parties conducting such investigation entering into confidentiality agreements as the Company and the
Guarantors may reasonably require; provided that if any such information is identified by the Company or any Guarantor as being confidential or proprietary, each Person receiving such information shall take such actions as are reasonably
necessary to protect the confidentiality of such information to the extent such action is otherwise not inconsistent with, an impairment of or in derogation of the rights and interests of any Inspector, Holder or Underwriter;
(xv) in the case of a Shelf Registration, use their commercially reasonable efforts to cause all Registrable Securities to be listed on any
securities exchange or any automated quotation system on which similar securities issued or guaranteed by the Company or any Guarantor are then listed if requested by the Majority Holders, to the extent such Registrable Securities satisfy applicable
listing requirements;
(xvi) if reasonably requested by any Participating Holder covered by a Shelf Registration Statement pursuant to
Section 2(b) hereof, promptly include or incorporate by reference in a Prospectus supplement or post-effective amendment such information with respect to such Participating Holder as such Participating Holder reasonably requests to be included
therein, based upon a reasonable belief that such information is required to be included therein or is necessary to make the information about such Participating Holder not misleading, and make all required filings of such Prospectus supplement or
such post-effective amendment as soon as reasonably practicable after the Company has received notification of the matters to be so included in such filing;
(xvii) in the case of a Shelf Registration, enter into such customary agreements and take all such other actions in connection therewith
(including those requested by the Participating Holders of a majority in principal amount of the Registrable Securities covered by the Shelf Registration Statement) in order to expedite or facilitate the disposition of such Registrable Securities
including,
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but not limited to, an Underwritten Offering and in such connection, (1) to the extent possible, make such representations and warranties to the Participating Holders and any Underwriters of
such Registrable Securities with respect to the business of the Company and its subsidiaries and the Registration Statement, Prospectus, any Free Writing Prospectus and documents incorporated by reference or deemed incorporated by reference, if any,
in each case, in form, substance and scope as are customarily made by issuers similar to the Company to underwriters in underwritten offerings and confirm the same if and when requested, (2) obtain opinions of counsel to the Company and the
Guarantors (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Participating Holders and such Underwriters and their respective counsel) addressed to each requesting Participating Holder and Underwriter
of Registrable Securities, covering the matters customarily covered in opinions requested in underwritten offerings, (3) use commercially reasonable efforts to obtain “comfort” letters from the independent registered public
accountants of the Company and the Guarantors (and, if necessary, any other registered public accountant of any subsidiary of the Company or any Guarantor, or of any business acquired by the Company or any Guarantor for which financial statements
and financial data are or are required to be included in the Registration Statement) addressed to each Participating Holder (to the extent permitted by applicable professional standards) and Underwriter of Registrable Securities, such letters to be
in customary form and covering matters of the type customarily covered in “comfort” letters in connection with underwritten offerings, including but not limited to financial information contained in any preliminary prospectus, Prospectus
or Free Writing Prospectus and (4) deliver such documents and certificates as may be reasonably requested by the Participating Holders of a majority in principal amount of the Registrable Securities being sold or the Underwriters, and which are
customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company and the Guarantors made pursuant to clause (1) above and to evidence compliance with any customary
conditions contained in an underwriting agreement; it being agreed that the representations and warranties, opinions of counsel and comfort letters delivered in connection with the initial offering of the Securities are customary; and
(xviii) so long as any Registrable Securities remain outstanding, cause each Additional Guarantor upon the creation or acquisition by the
Company of such Additional Guarantor, to execute a counterpart to this Agreement in the form attached hereto as Annex A and to deliver such counterpart, together with an opinion of counsel as to the enforceability thereof against such entity, to the
Initial Purchasers no later than five Business Days following the execution thereof.
(b) In the case of a Shelf Registration Statement,
the Company may require each Holder of Registrable Securities to furnish to the Company a Notice and Questionnaire and such other information regarding such Holder and the proposed disposition by such Holder of such Registrable Securities as the
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Company and the Guarantors may from time to time reasonably request in writing; provided that if a Holder fails to provide the requested information within ten (10) Business Days after
receiving such request, the Company or the Guarantors may exclude such Holder’s Registrable Securities from such Shelf Registration Statement; provided further that any failure to provide such information shall not require the Company or the
Guarantors to pay any increase in interest rate provided for in Section 2 hereof.
(c) Each Participating Holder agrees that, upon
receipt of any notice from the Company and the Guarantors of the happening of any event of the kind described in Section 3(a)(vi)(3), Section 3(a)(vi)(4), Section 3(a)(vi)(5), Section 3(a)(vi)(6) or Section 3(a)(vi)(7)
hereof, such Participating Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Shelf Registration Statement until such Participating Holder’s receipt of the copies of the supplemented or amended Prospectus
and any Free Writing Prospectus contemplated by Section 3(a)(x) hereof and, if so directed by the Company and the Guarantors, such Participating Holder will deliver to the Company and the Guarantors all copies in its possession, other than
permanent file copies then in such Participating Holder’s possession, of the Prospectus and any Free Writing Prospectus covering such Registrable Securities that is current at the time of receipt of such notice.
(d) If the Company and the Guarantors shall give any notice to suspend the disposition of Registrable Securities pursuant to a Registration
Statement, the Company and the Guarantors shall not be required to maintain the effectiveness thereof during the period of such suspension, and the Company and the Guarantors shall extend the period during which such Registration Statement shall be
maintained effective pursuant to this Agreement on a day-by-day basis by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders of such Registrable Securities shall
have received copies of the supplemented or amended Prospectus or any Free Writing Prospectus necessary to resume such dispositions or notice from the Company and the Guarantors that such amendment or supplement is not necessary. The Company and the
Guarantors may give any such notice only twice during any 365-day period and any such suspensions shall not exceed 30 days for each suspension and there shall not be more than two suspensions in effect during any 365-day period.
(e) The Participating Holders who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten
Offering, the investment bank or investment banks and manager or managers (each an “Underwriter”) that will administer the offering will be selected by the Holders of a majority in principal amount of the Registrable Securities
included in such offering, subject in each case to the approval of the Company and the Guarantors, which approval shall not be unreasonably withheld so long as such bank or manager is internationally recognized as an underwriter of debt securities
offerings). All fees, costs and expenses of the Underwriters, except for Registration Expenses, shall be borne solely by the Holders of Registrable Securities.
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(f) No Holder of Registrable Securities may participate in any Underwritten Offering hereunder
unless such Holder (a) agrees to sell such Holder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
4. Participation of Broker-Dealers in Exchange Offer. (a) The Staff has taken the position that any broker-dealer that receives
Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a “Participating Broker-Dealer”) may be
deemed to be an “underwriter” within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Securities.
The Company and the Guarantors understand that it is the Staff’s position that if the Prospectus contained in the Exchange Offer
Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying
the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers (or, to the extent permitted by law, made available to purchasers) to satisfy their prospectus delivery obligation under the Securities
Act in connection with resales of Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the Securities Act.
(b) In light of the above, and notwithstanding the other provisions of this Agreement, the Company and the Guarantors agree to use their
commercially reasonable efforts to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement for a period of up to 180 days after the last Exchange Date (as such period may be extended pursuant to Section 3(d)
hereof), in order to expedite or facilitate the disposition of any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above. The Company and the Guarantors further agree that,
subject to Section 3(c), Participating Broker-Dealers shall be authorized to deliver such Prospectus (or, to the extent permitted by law, make available) during such period in connection with the resales contemplated by this Section 4.
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(c) The Initial Purchasers shall have no liability to the Company, any Guarantor or any Holder
with respect to any request that they may make pursuant to Section 4(b) hereof.
5. Indemnification and Contribution.
(a) The Company and each Guarantor, jointly and severally, agree to indemnify and hold harmless each Initial Purchaser, and each Holder, their respective affiliates, directors and officers and each Person, if any, who controls any Initial
Purchaser or any Holder within the meaning of 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, reasonable legal fees
and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (1) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or
(2) any untrue statement or alleged untrue statement of a material fact contained in any Prospectus, any Free Writing Prospectus or any “issuer information” (“Issuer Information”) filed or required to be filed
pursuant to Rule 433(d) under the Securities Act, or any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading,
in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information
relating to any Initial Purchaser or information relating to any Holder furnished to the Company in writing through J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, any Initial Purchaser or any selling Holder,
respectively, expressly for use therein. In connection with any Underwritten Offering permitted by Section 3, the Company and the Guarantors, jointly and severally, will also indemnify the Underwriters, if any, selling brokers, dealers and
similar securities industry professionals participating in the distribution, their respective affiliates and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above
with respect to the indemnification of the Holders, if requested in connection with any Registration Statement, any Prospectus, any Free Writing Prospectus or any Issuer Information.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors, the Initial Purchasers and the
other selling Holders, the directors and officers of the Company and the Guarantors and each Person, if any, who controls the Company, the Guarantors, any Initial Purchaser and any other selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue
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statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in any Registration Statement, any Prospectus and any Free Writing Prospectus. Any underwriting agreement entered into in connection with any Underwritten Offering permitted by Section 3, shall include provisions
whereby each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors, the Initial Purchasers and the selling Holders, the directors and officers of the Company and the Guarantors and each Person, if
any, who controls the Company, the Guarantors, any Initial Purchaser and any selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph
(a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any
information relating to such Underwriter furnished to the Company in writing by such Underwriter expressly for use in any Registration Statement and any Prospectus.
(c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted
against any Person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such Person (the “Indemnified Person”) shall promptly notify the Person against whom such indemnification
may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under paragraph (a) or (b) above except to
the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b) above. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person
thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 5 that the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. 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; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are
different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying
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Person 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 and
agreed 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 shall be reimbursed as they are incurred. Any such separate firm (x) for any Initial Purchaser, its affiliates, directors and officers and any control Persons of such Initial Purchaser
shall be designated in writing by J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, (y) for any other Holder, its directors and officers and any control Persons of such Holder shall be designated in
writing by the Majority Holders and (z) in all other cases shall be designated in writing by the Company. 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 each 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 Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any
settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional release of such Indemnified Person, in
form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to or any admission of fault, culpability or a failure
to act by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors
from the offering of the Securities and the Exchange Securities, on the one hand, and by the Holders from receiving Securities or Exchange Securities registered under the Securities Act, on the other hand, or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative
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benefits referred to in clause (i) but also the relative fault of the Company and the Guarantors on the one hand and the Holders on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantors on the one hand and the Holders on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Guarantors or by the Holders and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(e) The
Company, the Guarantors and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding
the provisions of this Section 5, in no event shall a Holder be required to contribute any amount in excess of the amount by which the total price at which the Securities or Exchange Securities sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations to contribute pursuant to this Section 5 are several and not joint.
(f) The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies that may otherwise be
available to any Indemnified Person at law or in equity.
(g) The indemnity and contribution provisions contained in this Section 5
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 the Initial Purchasers or any Holder or any Person controlling any Initial Purchaser or
any Holder, or by or on behalf of the Company or the Guarantors or the officers or directors of or any Person controlling the Company or the Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable
Securities pursuant to a Shelf Registration Statement.
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6. General.
(a) No Inconsistent Agreements. The Company and the Guarantors represent, warrant and agree that (i) the rights granted to
the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of any other outstanding securities issued or guaranteed by the Company or any Guarantor under any other agreement in effect as of
the date hereof and (ii) neither the Company nor any Guarantor has entered into, or on or after the date of this Agreement will enter into, any agreement that is inconsistent with the rights granted to the Holders of Registrable Securities in
this Agreement or otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company and the Guarantors have obtained the written
consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consent; provided that no amendment, modification, supplement,
waiver or consent to any departure from the provisions of Section 5 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. Any amendments, modifications, supplements, waivers or
consents pursuant to this Section 6(b) shall be by a writing executed by each of the parties hereto. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof that relate exclusively to the rights of Holders whose
Registrable Securities are being tendered pursuant to the Exchange Offer, and that do not affect directly or indirectly the rights of other Holders whose Registrable Securities are not being tendered pursuant to such Exchange Offer, may be given by
the Holders of a majority of the outstanding principal amount of Registrable Securities being tendered pursuant to such Exchange Offer; provided that no amendment, modification, supplement, waiver or consent to any departure from the
provisions of Section 5 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. Each Holder of Registrable Securities outstanding at the time of any such amendment, modification,
supplement, waiver or consent thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this Section 6(b), whether or not any notice, writing or marking indicating such amendment,
modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such Holder.
(c)
Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telecopier/facsimile, or any courier guaranteeing overnight delivery (i) if to a
Holder, at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Initial Purchasers, the address set forth
in the Purchase Agreement; (ii) if to the Company and the Guarantors, initially at the Company’s address set forth in the Purchase Agreement and
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thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c); and (iii) to such other persons at their respective addresses as
provided in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c). All such notices and communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged, if telecopied/faxed; and on the next Business Day if timely delivered to an air courier
guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and
transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities in any manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement
and such Person shall be entitled to receive the benefits hereof. The Initial Purchasers (in their capacity as Initial Purchasers) shall have no liability or obligation to the Company or the Guarantors with respect to any failure by a Holder to
comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement.
(e) Third
Party Beneficiaries. Each Holder shall be a third party beneficiary to the agreements made hereunder between the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of other Holders hereunder.
(f) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in
“portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document
bearing the original signature.
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(g) Headings. The headings in this Agreement are for convenience of reference only,
are not a part of this Agreement and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law.
This Agreement, and any claim, controversy or dispute arising under or related to this Agreement, shall be governed by and construed in accordance with the laws of the State of New York.
(i) Entire Agreement; Severability. This Agreement contains the entire agreement between the parties relating to the subject
matter hereof and supersedes all oral statements and prior writings with respect thereto. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable
or against public policy, the remainder of the terms, provisions, covenants and restrictions contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated. The Company, the Guarantors and the Initial
Purchasers shall endeavor in good faith negotiations to replace the invalid, void or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, void or unenforceable provisions.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
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| THE J.M. SMUCKER COMPANY |
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| By |
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/s/ Mark R. Belgya |
| Name: |
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Mark R. Belgya |
| Title: |
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Senior Vice President and Chief Financial Officer |
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| GUARANTORS |
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| J.M. SMUCKER LLC |
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|
| By |
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/s/ Debra A. Marthey |
| Name: |
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Debra A. Marthey |
| Title: |
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Vice President and Treasurer |
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| THE FOLGERS COFFEE COMPANY |
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| By |
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/s/ Debra A. Marthey |
| Name: |
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Debra A. Marthey |
| Title: |
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Vice President and Treasurer |
[Signature page to
Registration Rights Agreement]
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| Confirmed and accepted as of the date first written above: |
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| J.P. MORGAN SECURITIES LLC |
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| By |
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/s/ Som Bhattacharyya |
| Name: |
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Som Bhattacharyya |
| Title: |
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Vice President |
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| MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED |
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| By |
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/s/ Andrew Karp |
| Name: |
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Andrew Karp |
| Title: |
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Managing Director |
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| For themselves and on behalf of the several Initial Purchasers |
[Signature page to
Registration Rights Agreement]
Schedule 1
Initial Guarantors
J.M. Smucker LLC
The Folgers Coffee Company
Annex A
Counterpart to Registration Rights Agreement
The undersigned hereby absolutely, unconditionally and irrevocably agrees as a Guarantor (as defined in the Registration Rights Agreement,
dated March 20, 2015 by and among The J.M. Smucker Company, an Ohio corporation, the Guarantors party thereto and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of themselves and the other
Initial Purchasers) to be bound by the terms and provisions of such Registration Rights Agreement.
IN WITNESS WHEREOF, the undersigned
has executed this counterpart as of [—].
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| [GUARANTOR] |
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| By |
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| Name: |
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| Title: |
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Exhibit 10.2
1-year Performance Options
NONSTATUTORY STOCK OPTION AGREEMENT
This NONSTATUTORY STOCK OPTION AGREEMENT (this “Agreement”), dated
[ ], 2015 (the “Date of Grant”), is between The J. M. Smucker Company, an Ohio corporation (the “Company”), and
[ ] (the “Optionee”). The award hereunder is granted pursuant to the terms of the Company’s 2010 Equity and
Incentive Compensation Plan (the “Plan”). Capitalized terms used herein but not defined will have the respective meanings set forth in the Plan.
1. Option. (a) Grant of Option. The Company hereby grants to the Optionee, as of the Date of Grant, the right and option (this
“Option”) to purchase [ ] Common Shares, at a price per Common Share of [$ ] (the “Exercise
Price”).1 This Option is not intended to qualify as an Incentive Stock Option for purposes of Section 422 of the Code.
(b) Vesting. Subject to the terms of this Agreement, this Option will vest and become exercisable subject to the Optionee’s
Continuous Service (as hereinafter defined) and the achievement of Management Objectives determined by the Board and set forth on Appendix A hereto. Provided that the applicable Management Objectives are satisfied, the Common Shares subject to this
Option will vest on [ , 2016]2, subject to the Optionee’s Continuous Service on such date.
(c) Termination of Continuous Service. If the Optionee’s continuous service with the Company (“Continuous
Service”) terminates for any reason, this Option, to the extent not then vested, will immediately terminate without consideration.
2. Term. This Option will terminate on [ , 2025]3 (the “Option Expiration Date”); provided that if:
(a) the Optionee’s Continuous Service is terminated by the Company for any reason other than a Termination for Cause,
death, or permanent disability, then the Optionee may exercise the vested portion of this Option in full until the 90th day following such termination (at which time this Option will be
cancelled), but not later than the Option Expiration Date;
(b) the Optionee’s Continuous Service is voluntarily
terminated by the Optionee (except as provided in Section 2(d) below), then the Optionee may exercise the vested portion of this Option in full until the 30th day following such termination
(at which time this Option will be cancelled), but not later than the Option Expiration Date;
(c) the Optionee’s
Continuous Service is terminated by the Company due to the Optionee’s death or permanent disability, then the Optionee (or his or her beneficiary, in the case of death) may exercise the vested portion of this Option in full until one year
following such termination (at which time this Option will be cancelled), but not later than the Option Expiration Date;
| 1 |
NTD: Insert Market Value per Share on the Date of Grant. |
| 2 |
NTD: Insert the end of the fiscal year for the first year following the Date of Grant. |
| 3 |
NTD: Insert 10 years from the Date of Grant. |
(d) the Optionee’s Continuous Service is terminated by the Company as a
result of a Termination for Cause (or by the Optionee at a time when the Company could terminate the Optionee under a Termination for Cause), then this Option will be cancelled upon the date of such termination; and
(e) the Optionee’s Continuous Service is terminated as a result of the Optionee’s retirement, then the Optionee may
exercise the vested portion of this Option in full until the earlier of (x) the fifth year following such retirement and (y) the Option Expiration Date. For purposes of this Agreement, whether the Optionee’s Continuous Service with
the Company has been terminated as a result of the Optionee’s retirement will be determined by the Board in its sole discretion.
3.
Exercise. Subject to Sections 1 and 2 of this Agreement and the terms of the Plan, this Option may be exercised, in whole or in part, in cash or in any other form of legal consideration that may be acceptable to the Board in accordance with
the terms of the Plan.
4. Adjustments. This Option will be subject to the adjustment provisions of Section 12 of the Plan.
5. Tax Withholding. Delivery of the Common Shares purchased upon exercise of this Option will be reduced by the amount equal to
the applicable federal, state and local income taxes and other amounts required to be withheld (the “Withholding Taxes”) in connection with such exercise. Subject to the limitations of applicable law, the Company will have the power
and the right to deduct or withhold, or require the Optionee to remit to the Company, the minimum statutory amount to satisfy the Withholding Taxes with respect to any taxable event arising as a result of this Agreement. The Optionee is advised to
consult with the Optionee’s own tax advisors regarding the exercise of this Option and holding of the Common Shares.
6. Rights of
the Optionee. Neither this Option, the execution of this Agreement nor the exercise of any portion of this Option will confer upon the Optionee any right to, or guarantee of, continued employment by or service with the Company, or in any way
limit the right of the Company to terminate the Continuous Service of the Optionee at any time, subject to the terms of any written employment or similar agreement between or among the Company and the Optionee.
7. Transfer Restrictions. This Option will be subject to the provisions of Section 16 of the Plan relating to the prohibition on
the assignment or transfer of the rights granted hereunder.
8. Professional Advice. The acceptance and exercise of this Option may
have consequences under federal and state tax and securities laws that may vary depending upon the individual circumstances of the Optionee. Accordingly, the Optionee acknowledges that the Optionee has been advised to consult his or her personal
legal and tax advisors in connection with this Agreement and this Option.
9. Construction. This Option is granted by the Company
pursuant to the Plan and is in all respects subject to the terms and conditions of the Plan. The Optionee hereby
2
acknowledges that a copy of the Plan has been delivered to the Optionee and accepts this Option subject to all terms and provisions of the Plan, which are incorporated herein by reference. In the
event of a conflict or ambiguity between any term or provision contained herein and a term or provision of the Plan, the Plan will govern and prevail. The construction of and decisions under the Plan and this Agreement are vested in the Board, whose
determinations will be final, conclusive and binding upon the Optionee.
10. Governing Law. This Agreement will be construed and
enforced in accordance with the laws of the State of Ohio, without giving effect to the choice of law principles thereof.
11.
Counterparts. This Agreement may be executed in counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.
12. Notices. Any notice hereunder by the Optionee will be given to the Company in writing and such notice will be deemed duly given
only upon receipt thereof by the Corporate Secretary of the Company at the Company’s principal executive offices. Any notice hereunder by the Company will be given to the Optionee in writing at the most recent address as the Optionee may have
on file with the Company.
13. Binding Effect. This Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective heirs, executors, administrators, successors and assigns.
14. Entire Agreement. This Agreement and the Plan
constitute the entire agreement between the parties hereto with respect to the subject matter hereof and thereof, merging any and all prior agreements.
[SIGNATURES ON FOLLOWING PAGE]
3
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Date of Grant.
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| THE J. M. SMUCKER COMPANY |
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| By: |
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| Name: |
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| Title: |
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| OPTIONEE |
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| By: |
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[ ] |
4
Exhibit 10.3
3-year Performance Options with Cumulative Vesting
NONSTATUTORY STOCK OPTION AGREEMENT
This NONSTATUTORY STOCK OPTION AGREEMENT (this “Agreement”), dated
[ ], 2015 (the “Date of Grant”), is between The J. M. Smucker Company, an Ohio corporation (the “Company”), and
[ ] (the “Optionee”). The award hereunder is granted pursuant to the terms of the Company’s 2010 Equity and
Incentive Compensation Plan (the “Plan”). Capitalized terms used herein but not defined will have the respective meanings set forth in the Plan.
1. Option. (a) Grant of Option. The Company hereby grants to the Optionee, as of the Date of Grant, the right and option (this
“Option”) to purchase [ ] Common Shares, at a price per Common Share of [$ ] (the “Exercise
Price”).1 This Option is not intended to qualify as an Incentive Stock Option for purposes of Section 422 of the Code.
(b) Vesting. Subject to the terms of this Agreement, this Option will vest and become exercisable in three installments subject to the
Optionee’s Continuous Service (as hereinafter defined) and the achievement of Management Objectives determined by the Board and set forth on Appendix A hereto. Provided that the applicable Management Objectives are satisfied,
[ ] of the Common Shares subject to this Option will vest on [ , 2016]2, [ ] of the Common Shares subject to this Option will vest on
[ , 2017],3 and
[ ] of the Common Shares subject to this Option will vest on
[ , 2018]4, subject to the Optionee’s Continuous Service on each of these dates (each such date, the “Applicable
Vesting Date”). Notwithstanding the foregoing, with respect to the Common Shares subject to this Option which do not vest due to the non-achievement of the applicable Management Objectives on the Applicable Vesting Date, such Common Shares
will be eligible to vest in the event the applicable Management Objectives and Continuous Service requirements are satisfied with respect to the next Applicable Vesting Date.
(c) Termination of Continuous Service. If the Optionee’s continuous service with the Company (“Continuous
Service”) terminates for any reason, this Option, to the extent not then vested, will immediately terminate without consideration.
2. Term. This Option will terminate on [ , 2025]5 (the “Option Expiration Date”); provided that if:
(a) the Optionee’s Continuous Service is terminated by the Company for any reason other than a Termination for Cause,
death, or permanent disability, then the Optionee may exercise the vested portion of this Option in full until the 90th day following such termination (at which time this Option will be
cancelled), but not later than the Option Expiration Date;
| 1 |
NTD: Insert Market Value per Share on the Date of Grant. |
| 2 |
NTD: Insert the end of the fiscal year for the first year following the Date of Grant. |
| 3 |
NTD: Insert the end of the fiscal year for the second year following the Date of Grant. |
| 4 |
NTD: Insert the end of the fiscal year for the third year following the Date of Grant. |
| 5 |
NTD: Insert 10 years from the Date of Grant. |
(b) the Optionee’s Continuous Service is voluntarily terminated by the
Optionee (except as provided in Section 2(d) below), then the Optionee may exercise the vested portion of this Option in full until the 30th day following such termination (at which time this
Option will be cancelled), but not later than the Option Expiration Date;
(c) the Optionee’s Continuous Service is
terminated by the Company due to the Optionee’s death or permanent disability, then the Optionee (or his or her beneficiary, in the case of death) may exercise the vested portion of this Option in full until one year following such termination
(at which time this Option will be cancelled), but not later than the Option Expiration Date;
(d) the Optionee’s
Continuous Service is terminated by the Company as a result of a Termination for Cause (or by the Optionee at a time when the Company could terminate the Optionee under a Termination for Cause), then this Option will be cancelled upon the date of
such termination; and
(e) the Optionee’s Continuous Service is terminated as a result of the Optionee’s
retirement, then the Optionee may exercise the vested portion of this Option in full until the earlier of (x) the fifth year following such retirement and (y) the Option Expiration Date. For purposes of this Agreement, whether the
Optionee’s Continuous Service with the Company has been terminated as a result of the Optionee’s retirement will be determined by the Board in its sole discretion.
3. Exercise. Subject to Sections 1 and 2 of this Agreement and the terms of the Plan, this Option may be exercised, in whole or in
part, in cash or in any other form of legal consideration that may be acceptable to the Board in accordance with the terms of the Plan.
4. Adjustments. This Option will be subject to the adjustment provisions of Section 12 of the Plan.
5. Tax Withholding. Delivery of the Common Shares purchased upon exercise of this Option will be reduced by the amount equal to the
applicable federal, state and local income taxes and other amounts required to be withheld (the “Withholding Taxes”) in connection with such exercise. Subject to the limitations of applicable law, the Company will have the power and
the right to deduct or withhold, or require the Optionee to remit to the Company, the minimum statutory amount to satisfy the Withholding Taxes with respect to any taxable event arising as a result of this Agreement. The Optionee is advised to
consult with the Optionee’s own tax advisors regarding the exercise of this Option and holding of the Common Shares.
6. Rights of
the Optionee. Neither this Option, the execution of this Agreement nor the exercise of any portion of this Option will confer upon the Optionee any right to, or guarantee of, continued employment by or service with the Company, or in any way
limit the right of the Company to terminate the Continuous Service of the Optionee at any time, subject to the terms of any written employment or similar agreement between or among the Company and the Optionee.
2
7. Transfer Restrictions. This Option will be subject to the provisions of Section 16
of the Plan relating to the prohibition on the assignment or transfer of the rights granted hereunder.
8. Professional Advice. The
acceptance and exercise of this Option may have consequences under federal and state tax and securities laws that may vary depending upon the individual circumstances of the Optionee. Accordingly, the Optionee acknowledges that the Optionee has been
advised to consult his or her personal legal and tax advisors in connection with this Agreement and this Option.
9. Construction.
This Option is granted by the Company pursuant to the Plan and is in all respects subject to the terms and conditions of the Plan. The Optionee hereby acknowledges that a copy of the Plan has been delivered to the Optionee and accepts this Option
subject to all terms and provisions of the Plan, which are incorporated herein by reference. In the event of a conflict or ambiguity between any term or provision contained herein and a term or provision of the Plan, the Plan will govern and
prevail. The construction of and decisions under the Plan and this Agreement are vested in the Board, whose determinations will be final, conclusive and binding upon the Optionee.
10. Governing Law. This Agreement will be construed and enforced in accordance with the laws of the State of Ohio, without giving
effect to the choice of law principles thereof.
11. Counterparts. This Agreement may be executed in counterparts, each of which
will be deemed to be an original but all of which together will constitute one and the same instrument.
12. Notices. Any notice
hereunder by the Optionee will be given to the Company in writing and such notice will be deemed duly given only upon receipt thereof by the Corporate Secretary of the Company at the Company’s principal executive offices. Any notice hereunder
by the Company will be given to the Optionee in writing at the most recent address as the Optionee may have on file with the Company.
13.
Binding Effect. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.
14. Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and thereof, merging any and all prior agreements.
[SIGNATURES ON FOLLOWING PAGE]
3
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Date of Grant.
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| THE J. M. SMUCKER COMPANY |
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| By: |
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| Name: |
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| Title: |
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| OPTIONEE |
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| By: |
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[ ] |
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Exhibit 10.4
NONSTATUTORY STOCK OPTION AGREEMENT
This NONSTATUTORY STOCK OPTION AGREEMENT (this “Agreement”), dated
[ , 2015] (the “Date of Grant”)1, is between The J. M. Smucker Company, an Ohio corporation (the
“Company”), and David J. West (the “Optionee”). The award hereunder is granted pursuant to the terms of the Company’s 2010 Equity and Incentive Compensation Plan (the “Plan”). Capitalized terms
used herein but not defined will have the respective meanings set forth in the Plan.
1. Option.
(a) Grant of Option. As contemplated by the Employment Agreement, dated as of February 3, 2015, between the Company and the
Optionee (the “Employment Agreement”), the Company hereby grants to the Optionee, as of the Date of Grant, the right and option (this “Option”) to purchase 125,000 Common Shares, at a price per Common Share of
[$ ] (the “Exercise Price”).2 This Option is not intended to qualify as an Incentive Stock Option for purposes of Section 422
of the Code.
(b) Vesting. Subject to the terms of this Agreement, this Option will vest and become exercisable in three
installments subject to the Optionee’s Continuous Service (as hereinafter defined) and the achievement of Management Objectives determined by the Board and set forth on Appendix A hereto. Provided that the applicable Management Objectives are
satisfied, 41,667 of the Common Shares subject to this Option will vest on [ , 2016]3, 41,667 of the Common Shares subject to
this Option will vest on [ , 2017],4 and 41,666 of the Common Shares subject to this Option will vest on
[ , 2018]5, subject to the Optionee’s Continuous Service (including service as an employee or as a director) on each of
these dates (each such date, the “Applicable Vesting Date”), other than as specifically stated herein. Notwithstanding the foregoing, with respect to the Common Shares subject to this Option which do not vest due to the
non-achievement of the applicable Management Objectives on the Applicable Vesting Date, such Common Shares will be eligible to vest in the event the applicable Management Objectives and Continuous Service requirements are satisfied with respect to
the next Applicable Vesting Date.
(c) Termination of Continuous Service. If the Optionee’s continuous service with the
Company (“Continuous Service”) terminates for any reason, this Option, to the extent not then vested, will immediately terminate without consideration. Notwithstanding anything herein to the contrary, if the Optionee’s
Continuous Service is terminated by the Company without “Cause” or by the Optionee for “Good Reason” (each of Cause and Good Reason, as defined in the Employment Agreement), then, subject to the Optionee’s
execution and non-revocation of the Release (as defined in the Employment Agreement) and the Optionee’s material compliance with Sections 1(c), 7 and 8 of the Employment Agreement, the Optionee will be treated as having provided Continuous
Service for an additional year following such
| 1 |
Per the Employment Agreement, this grant has to be made within 30 calendar days of the Closing. |
| 2 |
NTD: Insert Market Value per Share on the Date of Grant. |
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NTD: Insert 1st anniversary of the Closing. |
| 4 |
NTD: Insert 2nd anniversary of the Closing. |
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NTD: Insert 3rd anniversary of the Closing. |
termination for purposes of satisfying the service requirements of Section 1(b) hereof; for the avoidance of doubt, this Option will still be subject to the achievement of the applicable
Management Objectives. In addition, if the Optionee’s Continuous Service is terminated by the Company for Cause, then the Optionee will immediately forfeit all of this Option, whether vested or unvested.
2. Term. This Option will terminate on [ , 2025]6 (the “Option Expiration Date”); provided that if:
(a) the Optionee’s Continuous Service is terminated for any reason other than for Cause, then the Optionee (or his
beneficiary, in the case of death) may exercise the vested portion of this Option in full until the third anniversary of such termination (at which time this Option will be cancelled), but not later than the Option Expiration Date; and
(b) the Optionee’s Continuous Service is terminated by the Company for Cause, then this Option will be cancelled upon the
date of such termination.
3. Exercise. Subject to Sections 1 and 2 of this Agreement and the terms of the Plan, this Option may be
exercised, in whole or in part, in cash or in any other form of legal consideration that may be acceptable to the Board in accordance with the terms of the Plan.
4. Adjustments. This Option will be subject to the adjustment provisions of Section 12 of the Plan.
5. Tax Withholding. Delivery of the Common Shares purchased upon exercise of this Option will be reduced by the amount equal to the
applicable federal, state and local income taxes and other amounts required to be withheld (the “Withholding Taxes”) in connection with such exercise. Subject to the limitations of applicable law, the Company will have the power and
the right to deduct or withhold, or require the Optionee to remit to the Company, the minimum statutory amount to satisfy the Withholding Taxes with respect to any taxable event arising as a result of this Agreement. The Optionee is advised to
consult with the Optionee’s own tax advisors regarding the exercise of this Option and holding of the Common Shares.
6. Rights of
the Optionee. Neither this Option, the execution of this Agreement nor the exercise of any portion of this Option will confer upon the Optionee any right to, or guarantee of, continued employment by or service with the Company, or in any way
limit the right of the Company to terminate the Continuous Service of the Optionee at any time, subject to the terms of the Employment Agreement or any other written employment or similar agreement between or among the Company and the Optionee.
7. Transfer Restrictions. This Option will be subject to the provisions of Section 16 of the Plan relating to the prohibition on
the assignment or transfer of the rights granted hereunder.
| 6 |
NTD: Insert 10 years from the Date of Grant. |
2
8. Professional Advice. The acceptance and exercise of this Option may have consequences
under federal and state tax and securities laws that may vary depending upon the individual circumstances of the Optionee. Accordingly, the Optionee acknowledges that the Optionee has been advised to consult his personal legal and tax advisors in
connection with this Agreement and this Option.
9. Construction. This Option is granted by the Company pursuant to the Plan and is
in all respects subject to the terms and conditions of the Plan. The Optionee hereby acknowledges that a copy of the Plan has been delivered to the Optionee and accepts this Option subject to all terms and provisions of the Plan, which are
incorporated herein by reference. In the event of a conflict or ambiguity between any term or provision contained herein and a term or provision of the Plan, the Plan will govern and prevail. The construction of and decisions under the Plan and this
Agreement are vested in the Board, whose determinations will be final, conclusive and binding upon the Optionee.
10. Governing
Law. This Agreement will be construed and enforced in accordance with the laws of the State of Ohio, without giving effect to the choice of law principles thereof.
11. Counterparts. This Agreement may be executed in counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Notices. All notices and other communications hereunder will be made in
accordance with the procedures under Section 11 of the Employment Agreement.
13. Binding Effect. This Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.
14.
Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties hereto with respect to the subject matter hereof and thereof, merging any and all prior agreements.
[SIGNATURES ON FOLLOWING PAGE]
3
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Date of Grant.
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| THE J. M. SMUCKER COMPANY |
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| By: |
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| Name: |
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| Title: |
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| OPTIONEE |
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| By: |
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DAVID J. WEST |
4
Exhibit 10.5
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (this “Agreement”), dated as of March 20, 2015, is made by and between The J.
M. Smucker Company, an Ohio corporation (the “Company”), and [ ] (the “Executive”).
WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and
that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of
members of the Company’s management, including the Executive, to their assigned duties without distraction in connection with a potential Change in Control;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof.
2. Term of Agreement. The Term of this Agreement will commence on March 20, 2015 (the “Commencement Date”)
and continue until the second anniversary of the Commencement Date; provided, however, that commencing on the first anniversary of the Commencement Date and each subsequent anniversary thereafter, the Term will continue to
automatically be extended for one additional year unless, not later than 60 days prior to such anniversary, the Company or the Executive has given notice not to extend the Term; and further provided, however, that if a Change in
Control occurs during the Term, the Term will expire no earlier than 24 months beyond the month in which such Change in Control occurred.
3. Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of
the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in
Section 10.1 hereof, no Severance Payments will be payable under this Agreement unless there has been (or, under the terms of the second sentence of Section 6.1 hereof, there is deemed to have been) a termination of the Executive’s
employment with the Company following a Change in Control and during the Term. This Agreement will not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the
Company, the Executive will not have any right to be retained in the employ of the Company.
4. Continued Employment. In
consideration of the Company entering into this Agreement, the Executive agrees that, subject to the terms and conditions of this
1
Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six months
from the date of such Potential Change in Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death or Disability, or
(iv) the termination by the Company of the Executive’s employment for any reason.
5. Compensation Other Than Severance
Payments.
5.1 Following a Change in Control and during the Term, during any period that the Executive fails to perform the
Executive’s full-time duties with the Company as a result of incapacity due to physical or mental injury, infirmity or incapacity, the Company will pay the Annual Base Salary, together with all compensation and benefits payable to the Executive
under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period (other than any disability plan), until the Executive’s employment is terminated by the Company for Disability.
5.2 If the Executive’s employment has terminated for any reason following a Change in Control and during the Term, the Company will pay,
subject to the nonduplication of benefits provisions set forth in Section 12 of this Agreement, the Annual Base Salary together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the
Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason. The Company will also pay to the Executive any earned but unpaid cash bonuses for the prior completed fiscal year, unless the Executive’s employment is terminated by the Company for Cause.
5.3 If the Executive’s employment is terminated for any reason following a Change in Control and during the Term, the Company will,
subject to the nonduplication of benefits provisions set forth in Section 12 of this Agreement, pay to the Executive the Executive’s post-termination compensation and benefits as such payments become due. Such post-termination compensation
and benefits will be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more
favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason.
6. Severance Payments.
6.1 If the Executive incurs a “separation from service” (within the meaning of Section 409A) on or following a Change in
Control and during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then, provided that the Executive executes a general release of claims in the
form attached as Exhibit A hereto (the “Release”), and all applicable revocation periods relating to the release expire within 29 days following the
2
Date of Termination, then the Company will pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (collectively, the “Severance
Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement (except for Section 6.1(B) below), the Executive will be deemed to have incurred a
separation from service following a Change in Control by the Company without Cause or by the Executive with Good Reason if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or
not a Change in Control occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates
the Executive’s employment for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the
Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change
in Control (whether or not a Change in Control occurs).
(A) In lieu of any further salary payments to the Executive for periods
subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company will pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of the (i) Annual Base
Salary, and (ii) the Target Annual Bonus.
(B) The Company will pay the Executive a lump sum payment of a prorated cash bonus for the
bonus period during which the termination of employment occurs determined by multiplying (i) the Target Annual Bonus by (ii) a fraction, the numerator of which is the number of days Executive was employed with the Company during the
applicable bonus period and the denominator of which is the total number of calendar days in such bonus period.
(C) The Company will pay
the Executive a lump sum payment equal to the cost of COBRA coverage for 18 months for continued medical benefits for the Executive and the Executive’s dependents (including the Executive’s spouse) who were covered as of such termination
event under the medical benefit plan as in effect for employees of the Company during the period immediately prior to the Change in Control, or an equivalent medical benefit plan.
(D) If requested by the Executive, the Company will provide the Executive with third-party outplacement services suitable to the
Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of
an offer of employment, provided, however, that in no case will the Company be required to pay in excess of $25,000 over such period in providing outplacement services and that all reimbursements hereunder will be paid to the Executive
within 30 calendar days following the date on which the Executive submits the invoice but no later than the earlier of (1) the end of the taxable year following the year in which the expense was incurred and (2) December 31 of
the third calendar year following the year of the Executive’s Date of Termination.
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6.2 (A) Notwithstanding any other provisions in this Agreement, in the event that any payment or
benefit received or to be received by the Executive (including any payment or benefit received in connection with a Change in Control or the termination of the Executive’s employment, whether pursuant to the terms of this Agreement or any other
plan, program, arrangement or agreement) (all such payments and benefits, collectively, the “Total Payments”) would be subject (in whole or part), to any excise tax imposed under Section 4999 of the Code, or any successor
provision thereto (the “Excise Tax”), then after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, program, arrangement or agreement, the Company will
reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if the net amount of such
Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions
attributable to such reduced Total Payments), is greater than or equal to the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments
and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total
Payments).
(B) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order:
(i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and
benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A
24), will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced;
(iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation
Section 1.280G-1, Q&A 24), will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will next be reduced pro-rata. Any reductions made pursuant to each of clauses
(i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to Section 409A, and second, a pro-rata reduction of cash payments and
payments and benefits due in respect of any equity subject to Section 409A as deferred compensation.
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(C) For purposes of determining whether and the extent to which the Total Payments will be
subject to the Excise Tax: (i) no portion of the Total Payments the receipt or enjoyment of which the Executive has waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of
the Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which, in the opinion of a nationally recognized tax counsel (“Tax Counsel”) selected by the Company and reasonably
acceptable to the Executive and the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the “Auditor”), does not constitute a “parachute payment” within the
meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel,
constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as set forth in Section 280G(b)(3) of the Code) that is allocable to
such reasonable compensation; and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments will be determined by the Auditor in accordance with the principles of Sections 280G(d)(3) and
(4) of the Code.
(D) At the time that payments are made under this Agreement, the Company will provide the Executive with a written
statement setting forth the manner in which such payments were calculated and the basis for such calculations, including any opinions or other advice the Company received from Tax Counsel, the Auditor, or other advisors or consultants (and any such
opinions or advice which are in writing will be attached to the statement). If the Executive objects to the Company’s calculations, the Company will pay to the Executive such portion of the Total Payments (up to 100% thereof) as the Executive
determines is necessary to result in the proper application of this Section 6.2. All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the
expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive
under this Agreement.
(E) If the Executive receives reduced payments and benefits by reason of this Section 6.2 and it is
established pursuant to a determination of a court of competent jurisdiction which is not subject to review or as to which the time to appeal has expired, or pursuant to an Internal Revenue Service proceeding, that the Executive could have received
a greater amount without resulting in any Excise Tax, then the Company will thereafter pay the Executive the aggregate additional amount which could have been paid without resulting in any Excise Tax as soon as reasonably practicable.
6.3 Subject to Section 6.4, the payments provided in subsections (A), (B) and (C) of Section 6.1 hereof will be made
on the 30th day following the Date of Termination. Notwithstanding anything set forth herein to the contrary, to the extent that any severance payable under a plan or agreement covering the Executive as of the date of this Agreement constitutes
deferred compensation under Section 409A, then to the extent required to avoid accelerated taxation and/or tax penalties under Section 409A,
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the portion of the benefits payable hereunder equal to such other amount will instead be provided in the form set forth in such other plan or agreement. Further, to the extent, if any, that
provisions of this Agreement affect the time or form of payment of any amount which constitutes deferred compensation under Section 409A, then to the extent required to avoid accelerated taxation and/or tax penalties under Section 409A, if
the Change in Control does not constitute a change in control event under Section 409A, the time and form (but not the amount) of payment will be the time and form that would have been applicable in absence of a Change in Control.
6.4 (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the
meaning of Section 409A and determined pursuant to procedures adopted by the Company) at the time of the Executive’s separation from service and if any portion of the payments or benefits to be received by the Executive upon separation
from service would be considered deferred compensation under Section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service will
instead be paid or made available on the earlier of (i) the first business day of the seventh month following the date of the Executive’s separation from service or (ii) the Executive’s death.
(B) With respect to any amount of expenses eligible for reimbursement under Section 6.1(D), such expenses will be reimbursed by the
Company within 30 calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related
expenses. In no event will the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor will the Executive’s right
to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit.
(C) For purposes of Section 409A,
the Executive’s right to receive any “installment” payments pursuant to this Agreement will be treated as a right to receive a series of separate and distinct payments.
(D) For purposes of Sections 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise
be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with Section 409A.
6.5 The Company also will pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any
non-frivolous issue hereunder relating to the termination of the Executive’s employment or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement. Such payments will be made within five business days (but
in any event no later than December 31 of the year following the year in which the Executive incurs the expenses) after delivery of the Executive’s written requests for payment accompanied with such evidence of fees and
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expenses incurred as the Company reasonably may require, provided that (i) the amount of such legal fees and expenses that the Company is obligated to pay in any given calendar year will not
affect the legal fees and expenses that the Company is obligated to pay in any other calendar year, (ii) the Executive’s right to have the Company pay such legal fees and expenses may not be liquidated or exchanged for any other benefit,
and (iii) the Executive will not be entitled to reimbursement unless he or she has submitted an invoice for such fees and expenses at least ten business days before the end of the calendar year next following the calendar year in which
such fees and expenses were incurred. The Company will also pay all legal fees and expenses incurred by the Executive in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to
any payment or benefit hereunder. Payment pursuant to the preceding sentence will be made within 15 business days after delivery of the Executive’s written request for payment but in no event later than the end of the calendar year
following the calendar year in which the taxes that are the subject of the audit or proceeding are remitted to the taxing authority, or where as a result of the audit or proceeding no taxes are remitted, the end of the calendar year in which the
audit is completed or there is a final and nonappealable settlement or other resolution of the matter.
7. Termination Procedures and
Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and during the Term, any purported
termination of the Executive’s employment (other than by reason of death) will be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 11 hereof. For purposes of this
Agreement, a “Notice of Termination” means a notice which will indicate the specific termination provision in this Agreement relied upon and will set forth in reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive’s employment under the provision so indicated.
7.2 Date of Termination. “Date of
Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, means (i) if the Executive incurs a separation from service due to Disability, 15 calendar
days after Notice of Termination is given (provided that the Executive has not returned to the full-time performance of the Executive’s duties during such 15 calendar day period), and (ii) if the Executive incurs a separation from
service for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, will be the 15th calendar day after Notice of Termination is given and, in the case of a termination by the
Executive, will not be less than 15 calendar days nor more than 60 calendar days, respectively, from the date such Notice of Termination is given; provided, however, that in the case of a termination of the Executive’s
employment by the Executive for Good Reason, the notice and cure provisions provided in the definition of Good Reason will control); and provided, further, that in the case of a termination of the Executive’s employment by the
Company for Cause, the date specified in the Notice of Termination will be the date on which the Notice of Termination is given.
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8. No Mitigation. The Company agrees that, if the Executive’s employment with the
Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof.
9. Restrictive Covenants.
9.1 The Executive agrees that restrictions on his or her activities during and after the Executive’s employment are necessary to protect
the goodwill, Confidential Information and other legitimate interests of the Company and its Subsidiaries, and that the agreed restrictions set forth below will not deprive the Executive of the ability to earn a livelihood:
(A) In the event that, during the 18 months following Date of Termination (the “Non-Competition Period”), the Executive
will, without the prior written consent of the Board, directly or indirectly, as employee, agent, consultant, stockholder, director, manager, co-partner or in any other individual or representative capacity, own, operate, manage, control, engage in,
invest in or participate in any manner in, act as consultant or advisor to, render services for (alone or in association with any person, firm, corporation or entity), or otherwise assist any person or entity (other than the Company) that engages in
or owns, invests in, operates, manages or controls any venture or enterprise that directly or indirectly engages or proposes to engage in any Competitive Business, then the Company’s obligations to make any further payments or provide any
further benefits under Section 6.1 will immediately terminate.
(B) During the Non-Competition Period, the Executive will not
directly or indirectly, either on the Executive’s own account or for any company, limited liability company, partnership, joint venture or other entity or person (including, without limitation, through any existing or future Affiliate), solicit
any employee of the Company or any existing or future Affiliate to leave his or her employment or knowingly induce or knowingly attempt to induce any such employee to terminate or breach his or her employment agreement with the Company or any
existing or future Affiliate, if any. Notwithstanding the foregoing, the provisions of this Section 9.1(B) will not be violated by (i) general advertising or solicitation not specifically targeted at Company-related persons or entities;
(ii) the Executive serving as a reference, upon request, for any employee of the Company or any of its Subsidiaries or Affiliates, or (iii) actions taken by any person or entity with which the Executive is associated if the Executive is
not personally involved in any manner in the matter and has not identified such Company-related person or entity for soliciting or hiring.
(C) From and after the Notice of Termination, the Executive shall not publicly make any negative, disparaging, detrimental or derogatory
remarks or statements (written, oral, telephonic, electronic, or by any other method) about the Company or its Subsidiaries or any of their respective owners, partners, managers, directors, officers, employees or agents, including, without
limitation, any remarks or statements that could be reasonably expected to adversely affect in a material manner (i) the conduct of the Company’s or its Subsidiaries’ businesses or (ii) the business
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reputation or relationships of the Company or its Subsidiaries and/or any of their past or present officers, directors, agents, employees, attorneys, successors and assigns, in each case, except
to the extent required by law or legal process. Similarly, from and after the Notice of Termination, the Board shall not make any such statements about the Executive.
(D) During and after the Executive’s employment, unless otherwise required by law or legal process, the Executive shall not disclose any
Confidential Information.
10. Successors; Binding Agreement.
10.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession had taken place.
10.2 This Agreement will inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive dies while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, will be paid in accordance with the terms of this Agreement to the executors,
personal representatives or administrators of the Executive’s estate.
11. Notices. For the purpose of this Agreement, notices
and all other communications provided for in this Agreement will be in writing and will be deemed to have been duly given when delivered or mailed by United States registered mail, overnight delivery service, return receipt requested, postage
prepaid, addressed, if to the Executive, to the address on file with the Company and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address will be effective only upon actual receipt:
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c/o The J. M. Smucker Company |
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One Strawberry Lane |
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Orrville, Ohio 44667 |
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Attn: General Counsel |
12. Miscellaneous. This Agreement may be terminated, amended, or modified by the Board at any time
prior to a Change in Control, but not during a Potential Change in Control. During a Potential Change in Control or at any time within two years following a Change in Control, no provision of this Agreement may be amended, modified, waived or
discharged unless such amendment, waiver, modification
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or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. This Agreement supersedes any other severance agreement or any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the
Company is terminated during the Term and on or following a Change in Control (or deemed to have been so terminated), by the Company other than for Cause, death or Disability or by the Executive for Good Reason. Further, to the extent this Agreement
does not supersede any other agreement providing severance to the Executive or setting forth the terms and conditions of the Executive’s employment with the Company, it will not result in any duplication of benefits to the Executive. The
validity, interpretation, construction and performance of this Agreement will be governed by the laws of the State of Ohio, without regard to its conflicts of law principles. All references to sections of the Exchange Act or the Code will be deemed
also to refer to any successor provisions to such sections. Any payments provided for hereunder will be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has
agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6
and 7 hereof) will survive such expiration. To the extent applicable, it is intended that the compensation arrangements under this Agreement be in full compliance with Section 409A. This Agreement will be construed in a manner to give
effect to such intention.
13. Validity. The invalidity or unenforceability of any provision of this Agreement will not affect the
validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.
14. Counterparts.
This Agreement may be executed in several counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.
15. Settlement of Disputes. All claims by the Executive for benefits under this Agreement will be directed to and determined by the
Board and will be in writing. Any denial by the Board of a claim for benefits under this Agreement will be delivered to the Executive in writing and will set forth the specific reasons for the denial and the specific provisions of this Agreement
relied upon. The Board will afford a reasonable opportunity to the Executive for a review of the decision denying a claim and will further allow the Executive to appeal to the Board a decision of the Board within 60 calendar days after
notification by the Board that the Executive’s claim has been denied. Notwithstanding the above, in the event of any dispute, any decision by the Board hereunder on or following a Change in Control will be subject to a de novo review by a court
of competent jurisdiction.
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Notwithstanding any provision of this Agreement to the contrary, the Executive will be entitled
to seek specific performance of the Executive’s right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.
16. Definitions. For purposes of this Agreement, the following terms will have the meanings indicated below:
(A) “Annual Base Salary” “ means the Executive’s annual base salary as in effect immediately prior to the Date of
Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason.
(B)
“Affiliate” will have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.
(C) “Auditor” will have the meaning set forth in Section 6.2 hereof.
(D) “Beneficial Owner” will have the meaning set forth in Rule 13d-3 under the Exchange Act.
(E) “Board” means the Board of Directors of the Company.
(F) “Cause” for termination by the Company of the Executive’s employment means (i) the Executive’s willful and
continuous gross neglect of the Executive’s duties for which he or she is employed, (ii) personal dishonesty or willful misconduct resulting or intended to result, directly or indirectly, in the Executive’s gain or personal enrichment
at the expense of the Company or a Subsidiary or (iii) conviction of, or guilty or no contest plea to, a felony. No act will be considered “willful” unless it is done, or omitted to be done, in bad faith and without reasonable belief
that the Executive’s action or omission was in the best interests of the Company.
(G) “Change in Control” will have
the meaning given to such term in The J. M. Smucker Company 2010 Equity and Incentive Compensation Plan, as may be amended from time to time, or any successor of such plan, in each case as such definition is in effect on the date of this Agreement.
(H) “Code” means the Internal Revenue Code of 1986, as amended from time to time.
(I) “Company” means The J. M. Smucker Company and will include any successor to its business and/or assets.
(J) “Competitive Business” means any businesses in which the Company is engaged during the Executive’s employment with
the Company, which includes, without limitation: (i) the retail coffee, consumer foods, food service, and natural foods businesses conducted worldwide and (ii) the dry and canned pet food and pet snacks businesses conducted worldwide.
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(K) “Confidential Information” means the Company’s confidential and
proprietary information, including, but not limited to, information or plans regarding the Company’s customer relationships; personnel; technology and intellectual property; sales, marketing and financial operations and methods; and other
compilations of information, records and specifications, and may have access to and become acquainted with the confidential and proprietary information of Company or its respective Affiliates. Confidential Information does not include any
information that is or becomes generally known to the public or industry, other than due to the fault of Executive.
(L) “Date of
Termination” will have the meaning set forth in Section 7.2 hereof.
(M) “Disability” means the failure of
Executive to have performed the essential functions of Executive’s position hereunder due to a physical or mental injury, infirmity or incapacity for 6 consecutive months.
(N) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
(O) “Excise Tax” means any excise tax imposed under section 4999 of the Code.
(P) “Executive” means the individual named in the first paragraph of this Agreement.
(Q) “Good Reason” means the occurrence of any of the following events without the Executive’s written consent:
(i) a material adverse change in the Executive’s title, position, duties, authorities and responsibilities; (ii) a material reduction in the Executive’s annual base salary or bonus opportunity; (iii) a material reduction in
the aggregate health and welfare benefits provided to the Executive pursuant to the health and welfare plans, programs and arrangements in which the Executive is eligible to participate (or, if greater, a material reduction in the aggregate health
and welfare benefits provided to the Executive pursuant to the health and welfare plans, programs and arrangements in which the Executive was eligible to participate immediately prior to a Change in Control); or (iv) relocation of the
Executive’s primary work location by more than 50 miles from its then current location. A termination for Good Reason will not occur unless: (x) the Executive provides the Company with a written notice detailing the specific circumstances
alleged to constitute Good Reason within 90 days after the first occurrence of such circumstances, (y) the Company fails to cure such Good Reason event(s) within 30 days following receipt of such notice to cure such circumstances in all
material respects, and (z) following the Company’s failure to cure during the 30-day cure period, the Executive terminates employment no later than 90 days after the expiration of such period.
(R) “Notice of Termination” will have the meaning set forth in Section 7.1 hereof.
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(S) “Person” will have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term will not include (i) the Company or any of its Subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
(T) “Potential Change in Control” is
deemed to have occurred if the event set forth in any one of the following paragraphs has occurred before the date of the first occurrence of a Change in Control:
(I) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;
(II) the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute
a Change in Control;
(III) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company
representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates) and such Person becomes required to file a Schedule 13D under the Exchange Act; or
(IV) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.
For the avoidance of doubt, a Potential Change in Control will be deemed terminated upon (i) the termination of an agreement under clause
(I) or (ii) the Company or Person in clause (II) ceases taking actions or renounces an intention to take actions which, if consummated, would constitute a Change in Control.
(U) “Release” will have the meaning set forth in Section 6.1 hereof.
(V) “Section 409A” means section 409A of the Code and any proposed, temporary or final regulation, or any other
guidance, promulgated with respect to section 409A by the U.S. Department of Treasury or the Internal Revenue Service.
(W)
“Severance Payments” will have the meaning set forth in Section 6.1 hereof.
(X) “Subsidiary” means
any corporation or other business organization of which the securities having a majority of the normal voting power in electing the board of directors or similar governing body of such entity are, at the time of determination, owned by the Company
directly or indirectly through one or more Subsidiaries.
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(Y) “Target Annual Bonus” means the Executive’s target annual cash bonus
pursuant to any annual bonus or incentive plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance
constituting Good Reason; provided, that if the Executive is not eligible to receive a specified target annual cash bonus following the Change in Control, then Target Annual Bonus will mean such target annual cash bonus in effect as of
immediately prior to the date of the Change in Control.
(Z) “Tax Counsel” will have the meaning set forth in
Section 6.2 hereof.
(AA) “Term” means the period of time described in Section 2 hereof (including any
extension, continuation or termination described therein).
(BB) “Total Payments” means those payments so described in
Section 6.2 hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
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| THE J. M. SMUCKER COMPANY |
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| EXECUTIVE |
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Name: |
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EXHIBIT A
WAIVER AND RELEASE OF CLAIMS AGREEMENT
[
](the “Executive”) hereby acknowledges that The J. M. Smucker Company, an Ohio corporation (the “Company”) is
offering the Executive certain payments in connection with the Executive’s termination of employment pursuant to the Change in Control Severance Agreement entered into between the Company and the Executive (the “Severance
Agreement”), in exchange for the Executive’s promises in this Waiver and Release of Claims Agreement (this “Agreement”).
Severance Payments
The Executive agrees
that the Executive will be entitled to receive the applicable severance payments under the Severance Agreement (the “Severance Payments”) only if the Executive accepts and does not revoke this Agreement, which requires the Executive
to release both known and unknown claims.
The Executive agrees that the Severance Payments constitute fair and adequate consideration for
the execution of this Agreement. The Executive further agrees that the Executive has been fully compensated for all wages and fringe benefits, including, but not limited to, paid and unpaid leave, due and owing, and that the Severance Payments are
in addition to payments and benefits to which the Executive is otherwise entitled.
Claims That Are Being Released
The Executive agrees that this Agreement constitutes a full and final release by the Executive and the Executive’s descendants,
dependents, heirs, executors, administrators, assigns, and successors, of any and all claims, charges, and complaints, whether known or unknown, that the Executive has or may have to date against the Company and any of its parents, subsidiaries, or
affiliated entities and their respective officers, directors, shareholders, partners, joint venturers, employees, consultants, insurers, agents, predecessors, successors, and assigns, arising out of or related to the Executive’s employment or
the termination thereof, or otherwise based upon acts or events that occurred on or before the date on which the Executive signs this Agreement. To the fullest extent allowed by law, the Executive hereby waives and releases any and all such claims,
charges, and complaints in return for the Severance Payments. This release of claims is intended to be as broad as the law allows, and includes, but is not limited to, rights arising out of alleged violations of any contracts, express or implied,
any covenant of good faith or fair dealing, express or implied, any tort or common law claims, any legal restrictions on the Company’s right to terminate employees, and any claims under any federal, state, municipal, local, or other
governmental statute, regulation, or ordinance, including, without limitation:
(i) claims of discrimination, harassment, or retaliation
under equal employment laws such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act,
the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Rehabilitation Act of 1973, and any and all other federal, state, municipal, local, or foreign equal
opportunity laws;
(ii) if applicable, claims of wrongful termination of employment; statutory, regulatory, and common law
“whistleblower” claims, and claims for wrongful termination in violation of public policy;
(iii) claims arising under the
Employee Retirement Income Security Act of 1974, except for any claims relating to vested benefits under the Company’s employee benefit plans;
(iv) claims of violation of wage and hour laws, including, but not limited to, claims for overtime pay, meal and rest period violations, and
recordkeeping violations; and
(v) claims of violation of federal, state, municipal, local, or foreign laws concerning leaves of absence,
such as the Family and Medical Leave Act.
Claims That Are Not Being Released
This release does not include any claims that may not be released as a matter of law, and this release does not waive claims or rights that
arise after the Executive signs this Agreement. Further, this release will not prevent the Executive from doing any of the following:
(i)
obtaining unemployment compensation, state disability insurance, or workers’ compensation benefits from the appropriate agency of the state in which the Executive lives and works, provided the Executive satisfies the legal requirements for such
benefits (nothing in this Agreement, however, guarantees or otherwise constitutes a representation of any kind that the Executive is entitled to such benefits);
(ii) asserting any right that is created or preserved by this Agreement, such as the Executive’s right to receive the Severance Payments;
(iii) asserting the Executive’s rights of indemnification and directors’ and officers’ liability insurance coverage, if
any, to which the Executive is entitled with regard to the Executive’s service as an officer and/or director of the Company or any of its parents, subsidiaries or affiliates;
(iv) filing a charge, giving testimony or participating in any investigation conducted by the Equal Employment Opportunity Commission (the
“EEOC”) or any duly authorized agency of the United States or any state (however, the Executive is hereby waiving the right to any personal monetary recovery or other personal relief should the EEOC (or any similarly authorized
agency) pursue any class or individual charges in part or entirely on the Executive’s behalf); or
(v) challenging or seeking
determination in good faith of the validity of this waiver under the Age Discrimination in Employment Act (nor does this release impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law).
Voluntary Agreement And Effective Date
The Executive understands and acknowledges that, by signing this Agreement, the Executive is agreeing to all of the provisions stated in this
Agreement, and has read and understood each provision.
The parties understand and agree that:
(i) The Executive will have a period of 21 calendar days in which to decide whether or not to sign this Agreement, and an additional period of
seven calendar days after signing in which to revoke this Agreement. If the Executive signs this Agreement before the end of such 21-day period, the Executive certifies and agrees that the decision is knowing and voluntary and is not induced by the
Company through (i) fraud, misrepresentation, or a threat to withdraw or alter the offer before the end of such 21-day period or (ii) an offer to provide different terms in exchange for signing this Agreement before the end of such 21-day
period.
(ii) In order to exercise this revocation right, the Executive must deliver written notice of revocation to the Company’s
General Counsel on or before the seventh calendar day after the Executive executes this Agreement. The Executive understands that, upon delivery of such notice, this Agreement will terminate and become null and void.
(iii) The terms of this Agreement will not take effect or become binding, and the Executive will not become entitled to receive the Severance
Payments, until that seven-day period has lapsed without revocation by the Executive. If the Executive elects not to sign this Agreement or revokes it within seven calendar days of signing, the Executive will not receive the Severance Payments.
(iv) All amounts payable hereunder will be paid in accordance with the applicable terms of the Severance Agreement.
Governing Law
This Agreement will be
governed by the substantive laws of the State of Ohio, without regard to conflicts of law, and by federal law where applicable.
If any
part of this Agreement is held to be invalid or unenforceable, the remaining provisions of this Agreement will not be affected in any way.
Consultation With Attorney
The Executive
is hereby encouraged and advised to confer with an attorney regarding this Agreement. By signing this Agreement, the Executive acknowledges that the Executive has consulted, or had an opportunity to consult with, an attorney or a representative of
the Executive’s choosing, if any, and that the Executive is not relying on any advice from the Company or its agents or attorneys in executing this Agreement.
This Agreement was provided to the Executive for consideration on [INSERT DATE THIS AGREEMENT
IS PROVIDED TO THE EXECUTIVE].
PLEASE READ THIS AGREEMENT CAREFULLY; IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
The Executive certifies that the Executive has read this Agreement and fully and completely understands and comprehends its meaning,
purpose, and effect. The Executive further states and confirms that the Executive has signed this Agreement knowingly and voluntarily and of the Executive’s own free will, and not as a result of any threat, intimidation or coercion on the part
of the Company or its representatives or agents.
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We
consent to the incorporation by reference in the registration statement (No. 333-197428) on Form S-3, and the registration statements (No. 333-170653; No. 333-139170; No. 333-139167; No. 333-137629; No. 333-116622; and
No. 333-98335) on Form S-8 of The J. M. Smucker Company of our report dated March 5, 2015, with respect to the consolidated balance sheets of Blue Acquisition Group, Inc. as of April 27, 2014, and April 28, 2013, and the related
consolidated statements of operations, comprehensive income (loss), temporary equity and stockholders’ equity and cash flows for the years ended April 27, 2014, April 28, 2013, and April 29, 2012, which report appears in the
Current Report on Form 8-K of The J. M. Smucker Company dated March 23, 2015.
/s/ KPMG LLP
|
| San Francisco, CA |
| March 23, 2015 |
Exhibit 99.1
The J. M. Smucker Company Completes Acquisition of Big Heart Pet Brands
ORRVILLE, Ohio, March 23, 2015 – The J. M. Smucker Company (NYSE: SJM) (“Company”) today announced it has completed the acquisition of Big
Heart Pet Brands in a cash and stock transaction valued at approximately $6.0 billion, which includes the assumption of approximately $2.5 billion of net debt that was paid off by the Company at closing. The Company previously announced the signing
of a definitive agreement to acquire Big Heart Pet Brands on February 3, 2015.
Big Heart Pet Brands, with nearly 2,500 employees, is a leading
producer, distributor, and marketer of premium-quality, branded pet food and pet snacks in the United States. Its portfolio of brands includes Meow Mix®, Milk-Bone®, Kibbles ‘n Bits®, 9Lives®, Natural Balance®, Pup-Peroni®, Gravy Train®, Nature’s Recipe®, Canine Carry Outs®, and Milo’s Kitchen®.
In connection with the closing of the transaction, Dave West, who served as the President and Chief Executive Officer of Big Heart Pet Brands, has joined the
Company as an executive officer, assuming the role of President, Big Heart Pet Food and Snacks. Mr. West has also been appointed to the Company’s Board of Directors.
“We are excited to have completed this transaction, which provides the Company an immediate and significant presence in the large and growing pet food
and snacks category,” said Richard Smucker, Chief Executive Officer. “Big Heart Pet Brands markets some of America’s best known pet brands and, with a broad product portfolio that includes the leading position in dog snacks, this
acquisition is a great strategic fit. Adding a third platform for growth, along with our existing food and beverage businesses, the transaction increases our center-of-the-store presence with consumers and retailers, while further enhancing
shareholder value. We are pleased to welcome the employees of Big Heart Pet Brands into the Smucker family and look forward to working with this talented team to grow the business together.”
The Company funded the non-equity portion of the acquisition through the combination of a $1.75 billion bank term loan and $3.65 billion of long-term bonds.
Proceeds of the new borrowings were also used to pay off the Company’s $1.1 billion of private placement notes.
Advisors
William Blair & Company, L.L.C. served as financial advisor to the Company and Wachtell, Lipton, Rosen & Katz served as its legal advisor.
About The J. M. Smucker Company
For more than 115
years, The J. M. Smucker Company has been committed to offering consumers quality products that bring families together to share memorable meals and moments. Today, Smucker is a leading marketer and manufacturer of consumer food and beverage
products and pet food and pet snacks in North America with annual net sales of approximately $8 billion. In consumer foods and beverages, its brands include Smucker’s®,
Folgers®, Jif®, Dunkin’ Donuts®, Crisco®, Pillsbury®, R.W. Knudsen Family®, Hungry Jack®, Café Bustelo®, Martha White®, truRoots®, Sahale Snacks®, Robin Hood®, and Bick’s®. In pet food and pet snacks, its brands include Meow Mix®, Milk-Bone®, Kibbles
‘n Bits®, Natural Balance®, and 9Lives®. The Company remains
rooted in the Basic Beliefs of Quality, People, Ethics, Growth, and Independence established by its founder and namesake more than a century ago. For more information about the Company, visit jmsmucker.com.
The J. M. Smucker Company is the owner of all trademarks referenced herein, except for the following, which are used under license: Pillsbury® is a trademark of The Pillsbury Company, LLC and Dunkin’ Donuts® is a registered trademark of DD IP Holder LLC.
Dunkin’ Donuts® brand is licensed to The J. M. Smucker Company for packaged coffee
products sold in retail channels such as grocery stores, mass merchandisers, club stores, and drug stores. This information does not pertain to Dunkin’ Donuts® coffee or other
products for sale in Dunkin’ Donuts® restaurants.
|
|
|
| Contacts: |
|
|
|
|
| The J. M. Smucker Company |
|
|
|
|
| (330) 682-3000 |
|
|
|
|
| Investors: |
|
Media: |
|
|
| Aaron Broholm |
|
Maribeth Burns |
|
|
| Director, Investor Relations |
|
Vice President, Corporate Communications |
Exhibit 99.2
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
Consolidated Financial Statements
As of April 27, 2014 and April 28, 2013 and for
the Fiscal Years Ended April 27, 2014, April 28, 2013 and April 29, 2012
(With Independent Auditors’ Report Thereon)
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
| |
|
Page |
|
| Independent Auditor’s Report —KPMG LLP |
|
|
1 |
|
| Consolidated Balance Sheets—April 27, 2014 and April 28, 2013 |
|
|
2 |
|
| Consolidated Statements of Operations—for fiscal years ended April 27, 2014, April 28, 2013, and April 29,
2012 |
|
|
3 |
|
| Consolidated Statements of Comprehensive Income (Loss) —for fiscal years ended April 27, 2014, April 28, 2013,
and April 29, 2012 |
|
|
4 |
|
| Consolidated Statements of Temporary Equity and Stockholders’ Equity – for fiscal years ended April 27,
2014, April 28, 2013, and April 29, 2012 |
|
|
5 |
|
| Consolidated Statements of Cash Flows—for fiscal years ended April 27, 2014, April 28, 2013, and April 29,
2012 |
|
|
6 |
|
| Notes to the Consolidated Financial Statements |
|
|
7 |
|
Independent Auditors’ Report
The Board of Directors and Stockholders
Blue Acquisition Group,
Inc.
We have audited the accompanying consolidated financial statements of Blue Acquisition Group, Inc. and its subsidiaries, which comprise the
consolidated balance sheets as of April 27, 2014 and April 28, 2013, and the related consolidated statements of operations, comprehensive income (loss), temporary equity and stockholders’ equity, and cash flows for each of the years
ended April 27, 2014, April 28, 2013 and April 29, 2012, and the related notes to the consolidated financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. generally accepted
accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures
selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly in all material respects, the financial position of Blue Acquisition
Group, Inc. and its subsidiaries as of April 27, 2014 and April 28, 2013, and the results of their operations and their cash flows for the three years ended April 27, 2014, April 28, 2013 and April 29, 2012 in
accordance with U.S. generally accepted accounting principles.
/s/ KPMG LLP
San Francisco, California
March 5, 2015
1
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
|
|
|
|
|
|
|
|
|
| |
|
April 27,
2014 |
|
|
April 28,
2013 |
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
112.8 |
|
|
$ |
581.4 |
|
| Trade accounts receivable, net of allowance |
|
|
127.2 |
|
|
|
96.9 |
|
| Inventories, net |
|
|
227.5 |
|
|
|
168.8 |
|
| Prepaid expenses and other current assets |
|
|
164.3 |
|
|
|
70.6 |
|
| Discontinued operations-assets |
|
|
— |
|
|
|
2,085.2 |
|
|
|
|
|
|
|
|
|
|
| Total current assets |
|
|
631.8 |
|
|
|
3,002.9 |
|
|
|
|
| Property, plant and equipment, net |
|
|
375.4 |
|
|
|
357.2 |
|
| Goodwill |
|
|
2,113.4 |
|
|
|
1,976.1 |
|
| Intangible assets, net |
|
|
2,155.2 |
|
|
|
1,919.8 |
|
| Other assets, net |
|
|
87.8 |
|
|
|
107.1 |
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
$ |
5,363.6 |
|
|
$ |
7,363.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses |
|
$ |
367.8 |
|
|
$ |
329.5 |
|
| Current portion of long-term debt |
|
|
17.3 |
|
|
|
74.5 |
|
| Discontinued operations-liabilities |
|
|
— |
|
|
|
346.4 |
|
|
|
|
|
|
|
|
|
|
| Total current liabilities |
|
|
385.1 |
|
|
|
750.4 |
|
|
|
|
| Long-term debt, net of discount |
|
|
2,603.0 |
|
|
|
3,902.7 |
|
| Deferred tax liabilities |
|
|
792.1 |
|
|
|
965.6 |
|
| Other non-current liabilities |
|
|
95.3 |
|
|
|
150.5 |
|
|
|
|
|
|
|
|
|
|
| Total liabilities |
|
|
3,875.5 |
|
|
|
5,769.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock, restricted common stock and stock options classified as temporary equity |
|
|
23.1 |
|
|
|
27.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders’ equity: |
|
|
|
|
|
|
|
|
| Common stock ($0.01 par value per share, shares authorized: |
|
|
|
|
|
|
|
|
| 1,000,000,000; 314,402,328 and 313,816,281 issued and outstanding, respectively) |
|
|
3.1 |
|
|
|
3.1 |
|
| Additional paid-in capital |
|
|
1,563.4 |
|
|
|
1,559.0 |
|
| Accumulated other comprehensive income (loss) |
|
|
8.4 |
|
|
|
(16.4 |
) |
| Retained earnings (accumulated deficit) |
|
|
(109.9 |
) |
|
|
20.3 |
|
|
|
|
|
|
|
|
|
|
| Total stockholders’ equity |
|
|
1,465.0 |
|
|
|
1,566.0 |
|
|
|
|
|
|
|
|
|
|
| Total liabilities, common stock, restricted common stock and stock options classified as temporary equity and stockholders’
equity |
|
$ |
5,363.6 |
|
|
$ |
7,363.1 |
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to the Consolidated Financial Statements.
2
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Net sales |
|
$ |
2,190.1 |
|
|
$ |
1,989.0 |
|
|
$ |
1,860.8 |
|
| Cost of products sold |
|
|
1,408.8 |
|
|
|
1,301.0 |
|
|
|
1,219.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
|
781.3 |
|
|
|
688.0 |
|
|
|
641.4 |
|
| Selling, general and administrative expense |
|
|
526.5 |
|
|
|
454.9 |
|
|
|
431.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
254.8 |
|
|
|
233.1 |
|
|
|
209.5 |
|
| Loss on partial debt extinguishment |
|
|
52.4 |
|
|
|
9.1 |
|
|
|
— |
|
| Interest expense |
|
|
219.2 |
|
|
|
248.1 |
|
|
|
250.3 |
|
| Other (income) expense, net |
|
|
(12.1 |
) |
|
|
(9.8 |
) |
|
|
49.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from continuing operations before income taxes |
|
|
(4.7 |
) |
|
|
(14.3 |
) |
|
|
(90.4 |
) |
| Provision (benefit) for income taxes |
|
|
3.1 |
|
|
|
(8.3 |
) |
|
|
(23.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from continuing operations |
|
|
(7.8 |
) |
|
|
(6.0 |
) |
|
|
(66.9 |
) |
| Income (loss) from discontinued operations before income taxes |
|
|
(75.1 |
) |
|
|
152.7 |
|
|
|
154.0 |
|
| Provision for income taxes |
|
|
47.3 |
|
|
|
54.5 |
|
|
|
54.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from discontinued operations |
|
|
(122.4 |
) |
|
|
98.2 |
|
|
|
99.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(130.2 |
) |
|
$ |
92.2 |
|
|
$ |
32.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to the Consolidated Financial Statements.
3
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Net income (loss) |
|
$ |
(130.2 |
) |
|
$ |
92.2 |
|
|
$ |
32.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign currency translation adjustments |
|
|
0.8 |
|
|
|
(0.6 |
) |
|
|
(0.6 |
) |
| Pension and other postretirement benefits adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
| Pension liability adjustment (net of applicable tax expense (benefit) of $9.4, $2.3, and $(11.1), respectively) |
|
|
15.1 |
|
|
|
3.6 |
|
|
|
(17.8 |
) |
| Gain (loss) on cash flow hedging instruments (net of applicable tax expense (benefit) of $5.5, $(4.1), and $0.0, respectively) |
|
|
8.9 |
|
|
|
(6.5 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total other comprehensive income (loss) |
|
|
24.8 |
|
|
|
(3.5 |
) |
|
|
(18.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Comprehensive income (loss) |
|
$ |
(105.4 |
) |
|
$ |
88.7 |
|
|
$ |
14.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to the Consolidated Financial Statements
4
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
(in millions, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Temporary
Equity |
|
|
Common Stock |
|
|
Additional
Paid-in
Capital |
|
|
Accumulated
Other
Comprehensive
Income (Loss) |
|
|
Retained
Earnings/
(Accumulated
Deficit) |
|
|
Total
Stockholders’
Equity |
|
| |
|
|
|
|
|
|
| |
|
|
Shares |
|
|
Amount |
|
|
|
|
|
| Balances at May 1, 2011 |
|
|
35.9 |
|
|
|
312,960,881 |
|
|
$ |
3.1 |
|
|
$ |
1,545.4 |
|
|
$ |
5.5 |
|
|
$ |
(104.5 |
) |
|
$ |
1,449.5 |
|
|
|
|
|
|
|
|
|
| Issuance of common stock |
|
|
— |
|
|
|
400,000 |
|
|
|
— |
|
|
|
2.0 |
|
|
|
— |
|
|
|
— |
|
|
|
2.0 |
|
| Net Income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
32.6 |
|
|
|
32.6 |
|
| Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(18.4 |
) |
|
|
— |
|
|
|
(18.4 |
) |
| Transfers between permanent and temporary equity and liabilities for employee held equity instruments |
|
|
(8.0 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2.0 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2.0 |
) |
| Stock option expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9.7 |
|
|
|
— |
|
|
|
— |
|
|
|
9.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances at April 29, 2012 |
|
|
27.9 |
|
|
|
313,360,881 |
|
|
|
3.1 |
|
|
|
1,555.1 |
|
|
|
(12.9 |
) |
|
|
(71.9 |
) |
|
|
1,473.4 |
|
| Net Income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
92.2 |
|
|
|
92.2 |
|
| Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3.5 |
) |
|
|
— |
|
|
|
(3.5 |
) |
| Transfers between permanent and temporary equity and liabilities for employee held equity instruments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3.4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3.4 |
) |
| Stock option expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5.0 |
|
|
|
— |
|
|
|
— |
|
|
|
5.0 |
|
| Restricted stock and amortization of unearned compensation |
|
|
— |
|
|
|
455,400 |
|
|
|
— |
|
|
|
2.3 |
|
|
|
— |
|
|
|
— |
|
|
|
2.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances at April 28, 2013 |
|
|
27.9 |
|
|
|
313,816,281 |
|
|
|
3.1 |
|
|
|
1,559.0 |
|
|
|
(16.4 |
) |
|
|
20.3 |
|
|
|
1,566.0 |
|
| Issuance of common stock |
|
|
— |
|
|
|
102,850 |
|
|
|
— |
|
|
|
0.7 |
|
|
|
— |
|
|
|
— |
|
|
|
0.7 |
|
| Net Loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(130.2 |
) |
|
|
(130.2 |
) |
| Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
24.8 |
|
|
|
— |
|
|
|
24.8 |
|
| Transfers between permanent and temporary equity and liabilities for employee held equity instruments |
|
|
(4.8 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6.9 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6.9 |
) |
| Stock compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8.2 |
|
|
|
— |
|
|
|
— |
|
|
|
8.2 |
|
| Restricted stock and amortization of unearned compensation |
|
|
— |
|
|
|
483,197 |
|
|
|
— |
|
|
|
2.4 |
|
|
|
— |
|
|
|
— |
|
|
|
2.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances at April 27, 2014 |
|
|
23.1 |
|
|
|
314,402,328 |
|
|
$ |
3.1 |
|
|
$ |
1,563.4 |
|
|
$ |
8.4 |
|
|
$ |
(109.9 |
) |
|
$ |
1,465.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to the Consolidated Financial Statements.
5
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS1
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(130.2 |
) |
|
$ |
92.2 |
|
|
$ |
32.6 |
|
|
|
|
|
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
127.5 |
|
|
|
154.5 |
|
|
|
149.8 |
|
| Deferred taxes |
|
|
(305.7 |
) |
|
|
(9.6 |
) |
|
|
15.5 |
|
| Write off of debt issuance costs and loss on debt refinancing/repricing |
|
|
37.1 |
|
|
|
9.1 |
|
|
|
— |
|
| Redemption premium on senior subordinated notes redeemed |
|
|
15.3 |
|
|
|
— |
|
|
|
— |
|
| Gain on disposition of Consumer Products Business |
|
|
(1.2 |
) |
|
|
— |
|
|
|
— |
|
| Loss on asset disposals |
|
|
7.7 |
|
|
|
5.6 |
|
|
|
3.6 |
|
| Stock compensation expense |
|
|
14.5 |
|
|
|
7.3 |
|
|
|
9.7 |
|
| Unrealized (gain) loss on derivative financial instruments |
|
|
(33.1 |
) |
|
|
(38.1 |
) |
|
|
53.4 |
|
| Impairment on assets held for sale |
|
|
193.8 |
|
|
|
— |
|
|
|
— |
|
| Other items, net |
|
|
(1.3 |
) |
|
|
(0.1 |
) |
|
|
0.2 |
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Trade accounts receivable, net |
|
|
(26.6 |
) |
|
|
(1.0 |
) |
|
|
6.7 |
|
| Inventories |
|
|
(219.1 |
) |
|
|
24.0 |
|
|
|
14.3 |
|
| Prepaid expenses and other current assets |
|
|
(31.8 |
) |
|
|
18.1 |
|
|
|
41.2 |
|
| Other assets, net |
|
|
(17.1 |
) |
|
|
(2.8 |
) |
|
|
— |
|
| Accounts payable and accrued expenses |
|
|
(37.4 |
) |
|
|
53.4 |
|
|
|
25.7 |
|
| Other non-current liabilities |
|
|
(1.5 |
) |
|
|
(6.3 |
) |
|
|
(12.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash provided by (used in) operating activities |
|
|
(409.1 |
) |
|
|
306.3 |
|
|
|
340.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Merger, net of cash acquired |
|
|
— |
|
|
|
— |
|
|
|
(41.0 |
) |
| Capital expenditures |
|
|
(79.6 |
) |
|
|
(108.0 |
) |
|
|
(81.8 |
) |
| Net costs from asset disposals |
|
|
(2.6 |
) |
|
|
— |
|
|
|
— |
|
| Cash used in business acquisition, net of cash acquired |
|
|
(334.6 |
) |
|
|
— |
|
|
|
— |
|
| Payment for asset acquisition |
|
|
— |
|
|
|
(12.0 |
) |
|
|
— |
|
| Net proceeds from sale of Consumer Products Business |
|
|
1,740.8 |
|
|
|
— |
|
|
|
— |
|
| Purchase of equity method investments |
|
|
(18.5 |
) |
|
|
— |
|
|
|
— |
|
| Other items, net |
|
|
— |
|
|
|
3.6 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash provided by (used in) investing activities |
|
|
1,305.5 |
|
|
|
(116.4 |
) |
|
|
(122.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Issuance of common stock |
|
|
0.7 |
|
|
|
— |
|
|
|
2.0 |
|
| Proceeds from short-term borrowings |
|
|
239.9 |
|
|
|
9.3 |
|
|
|
8.4 |
|
| Payments on short-term borrowings |
|
|
(240.9 |
) |
|
|
(7.9 |
) |
|
|
(13.7 |
) |
| Proceeds from long-term debt |
|
|
— |
|
|
|
100.0 |
|
|
|
— |
|
| Principal payments on long-term debt |
|
|
(1,355.5 |
) |
|
|
(97.8 |
) |
|
|
(20.3 |
) |
| Payments of debt-related costs |
|
|
(23.7 |
) |
|
|
(4.2 |
) |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash used in financing activities |
|
|
(1,379.5 |
) |
|
|
(0.6 |
) |
|
|
(23.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effect of exchange rate changes on cash and cash equivalents |
|
|
1.7 |
|
|
|
2.1 |
|
|
|
3.4 |
|
| Net change in cash and cash equivalents |
|
|
(481.4 |
) |
|
|
191.4 |
|
|
|
197.6 |
|
|
|
|
|
| Cash and cash equivalents at beginning of period |
|
|
594.2 |
|
|
|
402.8 |
|
|
|
205.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents at end of period |
|
$ |
112.8 |
|
|
$ |
594.2 |
|
|
$ |
402.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 |
The Company has combined cash flows from discontinued operations with cash flows from continuing operations within the operating, investing and financing categories. |
See accompanying Notes to the Consolidated Financial Statements
6
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
| Note 1. |
Business and Basis of Presentation |
Blue Acquisition Group, Inc. (together with its subsidiaries,
“the Company”) was incorporated in Delaware on November 19, 2010, in connection with the acquisition of Del Monte Foods Company (“DMFC”) on March 8, 2011 by an investor group led by funds affiliated with Kohlberg Kravis
Roberts & Co. L.P. (“KKR”), Vestar Capital Partners (“Vestar”) and Centerview Capital, L.P. (“Centerview,” and together with KKR and Vestar, the “Sponsors”). Under the terms of the merger agreement,
DMFC’s stockholders received $19.00 per share in cash. The aggregate purchase price was approximately $4.0 billion and was funded primarily through debt financings and equity contributions from affiliates of the Sponsors and other equity
investors. DMFC stockholders approved the transaction on March 7, 2011 and DMFC’s common stock ceased trading on the New York Stock Exchange before the opening of the market on March 9, 2011.
The acquisition (also referred to as the “Merger”) was effected by the merger of Blue Merger Sub Inc. (“Blue Sub”) with and into DMFC,
with DMFC being the surviving corporation. As a result of the Merger, DMFC became a wholly-owned subsidiary of the Company. Substantially all of the Company’s outstanding common stock is held by Blue Holdings I, L.P., an investment fund that is
owned in its entirety by funds affiliated with the Sponsors and related entities. Blue Holdings GP, LLC is the general partner of Blue Holdings I, L.P. Funds affiliated with the Sponsors and related entities own controlling interests in Blue
Holdings GP, LLC.
Del Monte Corporation (“DMC,” together with its consolidated subsidiaries, “Del Monte”) was a direct, wholly-owned
subsidiary of DMFC. On April 26, 2011, DMFC merged with and into DMC, with DMC being the surviving corporation. As a result of this merger, DMC became a direct wholly-owned subsidiary of the Company. In connection with the sale of the Consumer
Products Business (see “Discontinued Operations and Assets Held for Sale” below) on February 18, 2014, DMC changed its name to Big Heart Pet Brands (together with its consolidated subsidiaries, “Big Heart Pet”). As the
Company is a holding company with no direct operations, the consolidated financial results of the Company reflect that of Big Heart Pet. The term “Operating Subsidiary” is used herein to refer to DMC prior to the company name change in
February 2014 and to Big Heart Pet subsequent to the company name change in February 2014.
The Company operates on a 52 or 53-week fiscal year ending on
the Sunday closest to April 30. The results of operations for fiscal 2014, fiscal 2013, and fiscal 2012 each contain 52 weeks.
Big Heart Pet is the
largest U.S. standalone producer, distributor and marketer of premium quality, branded pet food and pet snacks.
The Company’s pet food and pet snacks
brands include Meow Mix®, Milk-Bone®, Kibbles ‘n Bits®, 9Lives®, Natural Balance®, Pup-Peroni®, Gravy
Train®, Nature’s Recipe®, Canine Carry Outs®, Milo’s Kitchen® and other brand names. The Company has one operating segment:
Pet Products, which manufactures,
markets and sells branded and private label dry and wet pet food and pet snacks. The former Consumer Products segment is now reported as discontinued operations. The Consumer Products segment manufactured, marketed and sold branded and private label
shelf-stable products, including fruit, vegetable, tomato and broth products with food brands that included Del Monte, Contadina, College Inn, S&W and other brand names. See “Discontinued Operations and Assets Held for
Sale” below for details on the divestiture.
As described in Note 5, on July 15, 2013, the Operating Subsidiary completed the acquisition of
Natural Balance Pet Foods, Inc. (“Natural Balance”), by obtaining 100% of the voting interest of Natural Balance. Natural Balance is a maker of premium pet products for dogs and cats sold throughout North America.
On July 11, 2013, the Operating Subsidiary purchased a minority equity interest in a co-packer for $14.6 million. The investment is accounted for under
the equity method and is stated at cost plus the Company’s share of undistributed earnings.
On September 16, 2013, the Operating Subsidiary
formed a joint venture with a supplier. Investments through April 27, 2014 totaled $3.9 million. The investment is accounted for under the equity method and is stated at cost plus the Company’s share of undistributed earnings.
7
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Discontinued Operations and Assets Held for Sale
On October 9, 2013, the Operating Subsidiary entered into a Purchase Agreement (the “Purchase Agreement”) with Del Monte Pacific Limited
(“DMPL”) and its subsidiary, Del Monte Foods Consumer Products, Inc. (now known as Del Monte Foods, Inc.), (the “Acquiror”). Pursuant to the terms of the Purchase Agreement, the Operating Subsidiary sold to the Acquiror the
interests of certain subsidiaries related to the Operating Subsidiary’s Consumer Products business (the “Consumer Products Business”) and generally all assets primarily related to the Consumer Products Business (the “Transferred
Assets”) for a purchase price of $1,675.0 million, subject to a post-closing working capital adjustment. The Acquiror assumed the related liabilities (other than certain specified excluded liabilities). The transaction closed on
February 18, 2014 and the Operating Subsidiary received gross proceeds equal to the purchase price plus an incremental preliminary working capital adjustment of approximately $110 million, subject to a true-up in accordance with the terms of
the Purchase Agreement. See Note 7 for use of the after tax net proceeds in connection with the sale. Following closing, the Operating Subsidiary had continuing involvement with the Acquiror under the terms of a transition services agreement and had
continuing cash flows with the discontinued operation for 12 months after the transaction close date. Management assessed the nature of its continuing involvement, which included providing continued information technology, accounting and
administrative service functions during the term of the agreement, and continuing cash flows and determined them to not be significant.
Accordingly, the
results of the Consumer Products Business have been reported as discontinued operations for all periods presented. Expenses allocated to discontinued operations are limited to selling, administrative and distribution expenses that were directly
attributable to the Consumer Products Business. Consequently, certain expenses that have historically been allocated to the Consumer Products Business are not included in discontinued operations. The Company has combined cash flows from discontinued
operations with cash flows from continuing operations within the operating, investing and financing categories in the Consolidated Statements of Cash Flows for all periods presented.
Any net proceeds not committed for reinvestment within 12 months of the transaction closing date were required to be used to repay debt. As such, interest
expense has not been allocated to discontinued operations.
Unless otherwise noted, all subsequent footnote disclosures represent continuing operations
with the exception of Note 4, which details the assets and liabilities of discontinued operations for the periods presented, as well as the results of operations for discontinued operations.
| Note 2. |
Significant Accounting Policies |
Trade Promotions: Accruals for trade promotions are recorded
primarily at the time a product is sold to the customer based on expected levels of performance. Settlement of these liabilities typically occurs in subsequent periods through an off-invoice allowance at the time of sale or through an authorized
process for deductions taken by a customer from amounts otherwise due to the Company. Deductions are offset against related trade promotion accruals. The original estimated costs of trade promotions are reasonably likely to change in the future.
Evaluations of the trade promotion liability are performed monthly and adjustments are made where appropriate to reflect changes in the Company’s estimates. Trade spending is recorded as a reduction to gross sales.
Goodwill and Intangibles with Indefinite Lives: The Company does not amortize goodwill and intangible assets with indefinite lives, but instead tests
for impairment at least annually. Additional impairment tests may be performed between annual tests if circumstances indicate that a potential impairment exists. The Company has designated the first day of the fourth fiscal quarter as the annual
impairment testing date, at which time the Company engages third-party valuation experts to assist in the valuation of its intangible assets with indefinite lives and reporting units that have goodwill assigned to them.
When conducting the annual impairment test for goodwill, the Company compares the estimated fair value of a reporting unit containing goodwill to its book
value. The estimated fair value is computed using two approaches: the income approach, which is the present value of expected cash flows, discounted at a risk-adjusted weighted-average cost of capital; and the market approach, which is based on
using market multiples of companies in similar lines of business. If the fair value of the reporting unit is determined to be more than its book value, no goodwill impairment is recognized.
8
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
If the fair value of the reporting unit is determined to be less than its book value, actual goodwill
impairment, if any, is computed using a second step of the impairment test. The second step requires the fair value of the reporting unit to be allocated to all the assets and liabilities of the reporting unit as if the reporting unit had been
acquired in a business combination at the date of the impairment test. The excess of the fair value of the reporting unit over the fair value of assets less liabilities is the implied value of goodwill and is used to determine the amount of
impairment.
For intangible assets with indefinite lives, estimated fair value is determined using the relief from royalty method, which is based upon the
estimated rent or royalty the Company would pay for the use of a brand name if the Company did not own it and discounted at a risk-adjusted weighted-average cost of capital.
In estimating discounted future cash flows, management uses historical financial information, as well as the Company’s operating plans and projections,
which include assumptions regarding sales trends and profitability, as well as macroeconomic factors. Considerable judgment is necessary in estimating future cash flows, market interest rates, discount rates, and other factors used in the income
approach, market approach or relief from royalty method used to value goodwill and intangible assets with indefinite lives. Different assumptions regarding future performance, discount rates or other factors could result in future impairment losses.
Retirement Benefits: The Company sponsors a qualified defined benefit pension plan and several unfunded defined benefit postretirement plans,
providing certain medical, dental and life insurance and other benefits to eligible retired, salaried, non-union hourly and union employees. Under the direction of the Company, third-party actuaries utilize statistical and other factors to
anticipate future events in calculating an estimate of the expense and liabilities related to these plans. The actuarial reports are used by the Company in estimating the expenses and liabilities related to these plans. The factors utilized by the
Company’s actuaries include assumptions about the discount rate, expected return on plan assets, the health care cost trend rate, withdrawal and mortality rates and the rate of increase in compensation levels. These assumptions may differ
materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter mortality of participants. These differences may impact the amount of retirement benefit expense recorded by the
Company in future periods. The funded status of the Company’s pension and other postretirement plans is recorded as an asset or a liability and all unrecognized gains or losses, net of tax, are recorded as a component of accumulated other
comprehensive income (loss) (“AOCI”) within stockholders’ equity.
Stock Compensation Expense: The Company expenses employee stock
option grants and other stock-based compensation over the vesting period, based on the fair value on the date the stock-based compensation was granted. The Company recognizes stock compensation expense for performance-based stock options over the
implied service periods when the Company believes it is probable that the performance targets, as defined in the stock agreements, will be achieved.
Redeemable Common Stock, Restricted Common Stock and Stock Options: The terms of certain issued common stock held by individuals and restricted common
stock and stock options allow the holders to redeem shares and options, under certain circumstances, outside of the Company’s control. Therefore, as the shares and options vest, they are reclassified to temporary equity on the Consolidated
Balance Sheets and are not included as a component of permanent stockholders’ equity. The amount of the reclassification (and corresponding book value of temporary equity) for common stock and restricted common stock is equal to the grant date
fair value and the amount of the reclassification (and corresponding book value of temporary equity) for stock options is equal to the intrinsic value on the grant or modification date as applicable. The Company has not adjusted the book value of
temporary equity to redemption value since the Company does not believe it is probable, as of all the fiscal periods presented, that the conditions that allow certain common stock, restricted common stock and stock options to become redeemable will
occur. As the conditions that allow the shares and options to become redeemable are not probable, the redeemable shares and options do not have a maturity date. In addition, as indicated in Note 10. “Stock Plans,” following the termination
of employment of an optionholder, shares received pursuant to the exercise of options generally remain subject to certain put and call rights which vary depending on the nature of the termination. As optionholder terminations occur, the underlying
equity instruments become liability-classified and the Company reclassifies the equity instruments to accrued liabilities. On the Consolidated Statement of Temporary Equity and Stockholders’ Equity, “Transfers between permanent and
temporary equity and liabilities for employee held equity instruments” includes reclassifications to accrued liabilities for employee held equity instruments that become liability-classified due to optionholder terminations.
9
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Cash Equivalents: The Company considers all highly liquid investments with an original maturity date
of three months or less to be cash equivalents.
Inventories: The cost of finished products inventories includes raw materials, direct labor,
certain freight and warehousing costs and indirect production and overhead costs. Inventories are stated at the lower of cost or market. The Company uses the first-in, first-out (“FIFO”) method to value its inventories.
Property, Plant and Equipment and Depreciation: Property, plant and equipment are stated at cost and are depreciated over their estimated useful lives,
using the straight-line method. Maintenance and repairs are expensed as incurred. Significant expenditures that increase useful lives are capitalized. The principal estimated useful lives generally are as follows:
|
|
|
| |
|
Useful lives |
| Land improvements |
|
5-40 years |
| Building and leasehold improvements |
|
10-50 years |
| Machinery and equipment |
|
10-20 years |
| Computers and software |
|
3-7 years |
Depreciation of plant and equipment and leasehold amortization was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Depreciation and amortization |
|
$ |
39.2 |
|
|
$ |
48.4 |
|
|
$ |
44.1 |
|
The Company’s capitalization of software development costs for internal use begins in the application development stage
and ends when the asset is placed into service. The Company amortizes such costs using the straight-line method over estimated useful lives. Including costs paid to third-party vendors, the Company capitalized the following related to systems
supporting the Company’s infrastructure (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Capitalized software development costs |
|
$ |
9.9 |
|
|
$ |
6.9 |
|
|
$ |
7.4 |
|
The Company had certain assets classified as held for sale for continuing operations with a net book value of $9.5 million as
of April 27, 2014. The Company did not have any assets classified as held for sale for continuing operations as of April 28, 2013.
Long-lived Assets: The Company reviews asset groups containing long-lived assets held and used (including intangible assets with finite lives) and
assets held for sale for impairment whenever events or changes in circumstances indicate that the book value of an asset may not be recoverable. If an evaluation of recoverability was required, the estimated undiscounted future cash flows associated
with the asset or asset group would be compared to the asset’s book value to determine if a write-down was required. If the undiscounted cash flows are less than the book value, an impairment loss is recorded to the extent that the book value
exceeds the fair value. If management has committed to a plan to dispose of long-lived assets, the assets to be disposed of are reported at the lower of book value or fair value less estimated costs to sell.
The Company’s intangible assets with estimable lives generally have lives ranging between 5 and 22 years and are amortized on a straight-line basis.
Deferred Debt Issuance Costs: The Company capitalizes costs associated with the issuance of debt instruments and amortizes these costs as interest
expense over the term of the debt agreements. Amortization expense for deferred charges was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Amortization expense |
|
$ |
19.8 |
|
|
$ |
23.2 |
|
|
$ |
24.3 |
|
10
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Deferred debt issuance costs are included in other assets in the Consolidated Balance Sheets. Refer to Note 7
for a discussion of debt issuance costs for certain periods.
Derivative Financial Instruments: The Company uses derivative financial instruments
for the purpose of managing risks associated with interest rates, commodity, transportation, foreign currency exchange rates and other input price exposures. The Company does not trade or use instruments with the objective of earning financial gains
on interest rate, foreign currency, commodity or other fluctuations alone, nor does it use instruments where there are not underlying exposures. All derivative instruments are recorded in the Consolidated Balance Sheets at fair value.
The Company utilizes hedging instruments whose change in fair value acts as an economic hedge but does not meet the requirements to receive hedge accounting
treatment (“economic hedge”). For derivatives designated as economic hedges, all changes in fair value are recognized in other (income) expense. In addition, the Company has utilized derivative contracts designated as a hedge of a
forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”). The effective portion of the change in the fair value of a derivative that is designated as a
cash flow hedge is recognized in other comprehensive income (loss) (“OCI”). The gain or loss included in OCI is subsequently reclassified into earnings in the Consolidated Statements of Operations as the hedged item in the same period that
the hedge transaction affected net income (loss). The ineffective portion of a change in fair value of a cash flow hedge is recognized in other (income) expense. The settlement of a cash flow hedging instrument is classified as an operating activity
in the Consolidated Statements of Cash Flows. As of April 27, 2014, the Company had both cash flow hedges and economic hedges.
Fair Value of
Financial Instruments: The Company has both fixed and floating rate debt. The Company uses Level 2 inputs to estimate the fair value of such debt.
The following table provides the book value and fair value of the Company’s fixed rate notes (“Senior Notes”) (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
April 27, 2014 |
|
|
April 28, 2013 |
|
| |
|
Book value |
|
|
Fair value |
|
|
Book value |
|
|
Fair value |
|
|
|
|
|
|
| Senior Notes |
|
$ |
900.0 |
|
|
$ |
938.3 |
|
|
$ |
1,300.0 |
|
|
$ |
1,381.3 |
|
The book value of the Company’s floating rate debt instruments approximates fair value. Fair value for both fixed and
floating rate debt was estimated based on quoted market prices from the trading desk of a nationally recognized investment bank. As the Senior Notes are only available to investors through certain brokerage firms, and as a result not actively
traded, the Company has classified this debt as Level 2 of the fair value hierarchy. See Note 9 for a discussion regarding the fair value hierarchy and the definition of Levels 1, 2 and 3.
Income Taxes: The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial statement book values of existing assets and liabilities and their respective tax bases, and for tax losses and tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in earnings in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be
realized. An uncertain tax position is recognized if it is determined that it is more likely than not to be sustained upon examination. The tax position is measured as the largest amount of benefit that is greater than fifty percent likely of being
realized upon ultimate settlement. The Company files a consolidated return.
Asset Retirement Obligations: Asset retirement obligations generally
apply to legal obligations associated with the retirement of tangible long-lived assets that result from the acquisition, construction or development and the normal operation of a long-lived asset. The Company assesses asset retirement obligations
on a periodic basis. If a reasonable estimate of fair value can be made, the fair value of a liability for an asset retirement obligation is recognized in the period in which it is incurred or a change in estimate occurs. Associated asset retirement
costs are capitalized as part of the book value of the long-lived asset. Over time the liability increases reflecting the accretion of the obligation from its present value to the amount the Company will pay to extinguish the liability and the
capitalized asset retirement costs are depreciated over the useful lives of the related assets. As of April 27, 2014 and April 28, 2013, the asset retirement obligation totaled $4.6 million and $4.3 million, respectively. In addition,
certain of the Company’s production facilities may contain asbestos that would have to be removed if such facilities were to be demolished or undergo a major renovation. The Company cannot reasonably estimate the fair value of the liability for
asbestos removal at its production facilities, and because
11
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
the timing of the settlement of any such liability is not currently determinable, has not recorded an asset retirement obligation for these matters.
Retained-Insurance Liabilities: The Company accrues for retained-insurance risks associated with the deductible portion of any potential liabilities
that might arise out of claims of employees, customers or other third parties for personal injury or property damage occurring in the course of the Company’s operations. A third-party actuary is engaged to assist the Company in estimating the
ultimate costs associated with certain retained insurance risks. Additionally, the Company’s estimate of retained-insurance liabilities is subject to change as new events or circumstances develop which might materially impact the ultimate cost
to settle these losses.
Environmental Remediation: The Company accrues for losses associated with environmental remediation obligations when such
losses are probable and the amounts of such losses are reasonably estimable. Accruals for estimated losses from environmental remediation obligations are recognized no later than the completion of the remedial feasibility study. Such accruals are
adjusted as further information develops or circumstances change.
Comprehensive Income (Loss): Comprehensive income (loss) is comprised of net
income (loss) and OCI. OCI is comprised of pension and other postretirement employee benefit adjustments, net of tax, currency translation adjustments and net unrealized gains or losses on cash flow hedging instruments, net of tax.
Revenue Recognition: The Company recognizes revenue from sales of products, and related costs of products sold, where persuasive evidence of an
arrangement exists, delivery has occurred, the seller’s price is fixed or determinable and collectability is reasonably assured. This generally occurs when the customer receives the product or at the time title passes to the customer. Customers
generally do not have the right to return product unless damaged or defective. Net sales is comprised of gross sales reduced by customer returns, consumer promotion costs relating to coupon redemption, trade promotions, performance allowances,
customer pick-up allowances and discounts.
Concentration of Credit Risk: A relatively limited number of customers account for a large
percentage of the Company’s total sales. One customer accounted for a substantial portion of the Company’s list sales, which approximates gross sales. The table below shows the percentage of list sales for the leading customer, as well as
the top ten customers for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Leading customer |
|
|
39.0 |
% |
|
|
43.7 |
% |
|
|
43.8 |
% |
| Top ten customers |
|
|
72.3 |
% |
|
|
74.0 |
% |
|
|
72.4 |
% |
The leading customer accounted for approximately 36.6% and 44.6% of trade accounts receivable as of April 27, 2014 and
April 28, 2013, respectively. The Company closely monitors the credit risk associated with its customers.
Coupon Redemption: Coupon
redemption costs are accrued in the period in which the coupons are offered based on estimates of redemption rates that are developed by management. Management’s estimates are based on recommendations from independent coupon redemption
clearing-houses, as well as historical information. Should actual redemption rates vary from amounts estimated, adjustments to accruals may be required. Coupon redemption costs are recorded as a reduction to gross sales.
Cost of Products Sold: Cost of products sold represents expenses incurred that are directly connected with bringing the products to a salable
condition. These costs include raw materials, packaging, labor, certain transportation and warehousing costs, as well as overhead expenses.
Foreign
Currency Transactions: Gains and losses from foreign currency transactions (transactions denominated in a currency other than the functional currency) are included in other (income) expense.
12
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Advertising Expense: Costs associated with advertising are generally expensed as incurred and included
in selling, general and administrative expense. Marketing expense, which includes advertising expense, was as follows for the periods indicated (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Marketing expense |
|
$ |
154.4 |
|
|
$ |
121.3 |
|
|
$ |
99.0 |
|
Research and Development: Research and development costs are expensed as incurred and are included as a component of
selling, general and administrative expense. Research and development costs were as follows for the periods indicated (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Research and development costs |
|
$ |
25.8 |
|
|
$ |
21.7 |
|
|
$ |
18.6 |
|
Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its
subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation. The Company accounts for its investments in joint ventures under the equity method of accounting, under which the investment in the joint venture is
adjusted for the Company’s share of the undistributed profit or loss of the joint venture.
Use of Estimates: The preparation of the
consolidated financial statements, in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent
liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Recently Issued Accounting Standards
In February 2013,
the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) related to comprehensive income. The amendments require an entity to provide information about the amounts reclassified out of
accumulated other comprehensive income by component. This new accounting pronouncement is effective for fiscal years and interim periods within those years, beginning after December 15, 2012, with early adoption permitted. Accordingly, the
Company has included the enhanced disclosure in Note 12.
In May 2014, the FASB issued an ASU related to revenue from contracts with customers. The new
standard provides a five-step approach to be applied to all contracts with customers. The ASU also requires expanded disclosures about revenue recognition. For the Company, the ASU is effective for annual reporting periods beginning after
December 15, 2016, including interim periods. Early adoption is not permitted. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.
In August 2014, the FASB issued an ASU which provides guidance on determining when and how to disclose going-concern uncertainties in financial statements.
The new accounting standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. This new ASU is effective for
annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating this guidance and the impact it may have on its interim and annual consolidated financial
statements.
In January 2015, the FASB issued an ASU which provides guidance on the elimination of extraordinary items under GAAP. This ASU is effective
for annual periods ending after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating this guidance and the impact it may have on its interim and annual consolidated
financial statements.
In February 2015, the FASB issued an ASU which provides consolidation guidance and changes the way reporting enterprises evaluate
consolidation for limited partnerships, investment companies and similar entities, as well as variable interest entities. The
13
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2015. The Company is currently evaluating this guidance and the impact it may have on its interim
and annual consolidated financial statements.
| Note 3. |
Supplemental Financial Statement Information |
|
|
|
|
|
|
|
|
|
| |
|
April 27,
2014 |
|
|
April 28,
2013 |
|
| |
|
(in millions) |
|
| Trade accounts receivable, net of allowance: |
|
|
|
|
|
|
|
|
| Trade |
|
$ |
127.2 |
|
|
$ |
96.9 |
|
| Allowance for doubtful accounts |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
127.2 |
|
|
$ |
96.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Inventories, net: |
|
|
|
|
|
|
|
|
| Finished products |
|
$ |
191.5 |
|
|
$ |
138.6 |
|
| Raw materials and in-process materials |
|
|
24.5 |
|
|
|
18.8 |
|
| Packaging materials and other |
|
|
11.5 |
|
|
|
11.4 |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
227.5 |
|
|
$ |
168.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Prepaid expenses and other current assets: |
|
|
|
|
|
|
|
|
| Prepaid expenses |
|
$ |
93.4 |
|
|
$ |
30.0 |
|
| Other current assets |
|
|
70.9 |
|
|
|
40.6 |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
164.3 |
|
|
$ |
70.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment, net: |
|
|
|
|
|
|
|
|
| Land and land improvements |
|
$ |
12.4 |
|
|
$ |
12.4 |
|
| Buildings and leasehold improvements |
|
|
123.3 |
|
|
|
122.1 |
|
| Machinery and equipment |
|
|
256.8 |
|
|
|
222.9 |
|
| Computers and software |
|
|
58.8 |
|
|
|
47.2 |
|
| Construction in progress |
|
|
35.8 |
|
|
|
33.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
487.1 |
|
|
|
437.7 |
|
| Accumulated depreciation |
|
|
(111.7 |
) |
|
|
(80.5 |
) |
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
375.4 |
|
|
$ |
357.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses: |
|
|
|
|
|
|
|
|
| Accounts payable-trade |
|
$ |
175.9 |
|
|
$ |
153.8 |
|
| Marketing, advertising and trade promotion |
|
|
67.6 |
|
|
|
35.2 |
|
| Accrued benefits, payroll and related costs |
|
|
37.3 |
|
|
|
45.6 |
|
| Accrued interest |
|
|
21.2 |
|
|
|
33.7 |
|
| Current portion of pension liability |
|
|
8.5 |
|
|
|
10.0 |
|
| Other current liabilities |
|
|
57.3 |
|
|
|
51.2 |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
367.8 |
|
|
$ |
329.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other non-current liabilities: |
|
|
|
|
|
|
|
|
| Accrued postretirement benefits |
|
$ |
29.8 |
|
|
$ |
55.6 |
|
| Pension liability |
|
|
17.1 |
|
|
|
25.7 |
|
| Long-term hedge payable |
|
|
9.8 |
|
|
|
33.5 |
|
| Other non-current liabilities |
|
|
38.6 |
|
|
|
35.7 |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
95.3 |
|
|
$ |
150.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated other comprehensive income (loss)1: |
|
|
|
|
|
|
|
|
| Foreign currency translation adjustments |
|
$ |
— |
|
|
$ |
(0.8 |
) |
| Pension and other postretirement benefits adjustments, net of tax |
|
|
6.0 |
|
|
|
(9.1 |
) |
| Income (loss) on cash flow hedging instruments, net of tax |
|
|
2.4 |
|
|
|
(6.5 |
) |
|
|
|
|
|
|
|
|
|
| Total accumulated other comprehensive income (loss) |
|
$ |
8.4 |
|
|
$ |
(16.4 |
) |
|
|
|
|
|
|
|
|
|
| 1 |
Including discontinued operations. |
14
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
| Note 4. |
Discontinued Operations |
Net sales from discontinued operations for fiscal 2014 (through the sale date),
fiscal 2013, and fiscal 2012 were $1,330.7 million, $1,830.4 million, and $1,815.4 million, respectively. Income (loss) from discontinued operations before income taxes for fiscal 2014, fiscal 2013, and fiscal 2012 was $(75.1) million, $152.7
million, and $154.0 million, respectively. Depreciation and amortization expense from discontinued operations for fiscal 2014, fiscal 2013, and fiscal 2012 was $22.2 million, $43.9 million and $42.5 million, respectively. Assets and liabilities of
discontinued operations for the disposal group sold on February 18, 2014 included the following (in millions):
|
|
|
|
|
| |
|
February 18,
2014 |
|
| Cash and cash equivalents |
|
$ |
3.9 |
|
| Trade accounts receivable, net of allowance |
|
|
101.5 |
|
| Inventories, net |
|
|
742.1 |
|
| Prepaid expenses and other assets |
|
|
73.3 |
|
| Property, plant and equipment, net |
|
|
339.1 |
|
| Goodwill |
|
|
143.6 |
|
| Intangible assets, net |
|
|
669.6 |
|
|
|
|
|
|
| Total discontinued operations-assets |
|
$ |
2,073.1 |
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses |
|
$ |
155.3 |
|
| Short-term borrowings |
|
|
2.2 |
|
| Pension and other post-retirement liabilities |
|
|
129.8 |
|
| Other liabilities |
|
|
43.3 |
|
|
|
|
|
|
| Total discontinued operations-liabilities |
|
$ |
330.6 |
|
|
|
|
|
|
As of April 27, 2014, the Company had recorded a gross receivable of $16.3 million for the working capital adjustment, in
accordance with the Purchase Agreement. Subsequent to fiscal year end, the Operating Subsidiary received a Notice of Disagreement from the Acquiror disputing the $16.3 million working capital adjustment presented by the Operating Subsidiary as well
as the incremental preliminary working capital adjustment of approximately $110 million paid by the Acquiror at closing on February 18, 2014. The Purchase Agreement specifies that such working capital disputes are to be submitted to and
resolved by a mutually agreed upon independent certified public accounting firm in the United States of national recognition. The Company believes that the working capital adjustment presented to the Acquiror is appropriate, is in accordance with
the terms of the Purchase Agreement and plans to vigorously defend its position. However, the Company cannot currently predict the ultimate outcome of this dispute.
15
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Assets and liabilities of discontinued operations classified as held for sale as of the date indicated are
reflected at fair value less costs to sell and include the following (in millions):
|
|
|
|
|
| |
|
April 28,
2013 |
|
| Cash and cash equivalents |
|
$ |
12.8 |
|
| Trade accounts receivable, net of allowance |
|
|
94.8 |
|
| Inventories, net |
|
|
553.3 |
|
| Prepaid expenses and other assets |
|
|
69.5 |
|
| Property, plant and equipment, net |
|
|
406.7 |
|
| Goodwill |
|
|
143.6 |
|
| Intangible assets, net |
|
|
804.5 |
|
|
|
|
|
|
| Total discontinued operations-assets |
|
$ |
2,085.2 |
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses |
|
$ |
197.7 |
|
| Short-term borrowings |
|
|
3.2 |
|
| Pension and other post-retirement liabilities |
|
|
96.8 |
|
| Other liabilities |
|
|
48.7 |
|
|
|
|
|
|
| Total discontinued operations-liabilities |
|
$ |
346.4 |
|
|
|
|
|
|
Income (loss) from discontinued operations during the fiscal year ended April 27, 2014 reflects a non-cash impairment
charge of $193.8 million before income taxes, recognized in the second quarter of fiscal 2014, in the Consolidated Statements of Operations. Income (loss) from discontinued operations before income taxes during the fiscal year ended April 27,
2014 reflects a gain recognized on sale of the Consumer Products Business of $1.2 million, exclusive of the non-cash impairment charge discussed above.
Deferred tax assets and liabilities, which result in future taxable or deductible amounts for the assets and liabilities related to the Consumer Products
Business’ domestic operations, were not allocated to discontinued operations in accordance with GAAP.
Under the Purchase Agreement, and as defined
therein, the Acquiror assumed all known or potential future legal liabilities related to the Consumer Products Business at the closing date of February 18, 2014.
| Note 5. |
Natural Balance Acquisition |
On July 15, 2013, the Operating Subsidiary completed the acquisition
of Natural Balance, a California corporation and maker of premium pet products for dogs and cats sold throughout North America. The total cost of the Natural Balance acquisition as of April 27, 2014, was $331.4 million and included an initial
$341.1 million cash payment (including $26.2 million paid into an escrow account) and contingent consideration of $0.3 million, reduced by an estimated working capital adjustment and cash received from escrow. The total cost of the acquisition was
subject to a post-closing working capital adjustment which was initially due from the Operating Subsidiary 90 days after closing (see discussion below). Final agreement of the working capital adjustment was reached subsequent to fiscal year end, and
resulted in a net credit to the consolidated statements of operations of $0.9 million in fiscal 2015.
The acquisition was accounted for under the
acquisition method. The purchase price was allocated to the identifiable assets and liabilities, including brand names, based on estimated fair value, with the remaining purchase price recorded as goodwill. The Company utilized an independent
valuation firm to assist in estimating the fair value of Natural Balance’s real estate, machinery and equipment, and identifiable intangible assets.
16
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
As of April 27, 2014, the Company had recorded an adjustment to certain working capital accounts as of
the acquisition date and a corresponding receivable for the working capital adjustment, as referred to above. The Company’s allocation of the purchase price to the net tangible and intangible assets acquired and liabilities assumed, including
the working capital adjustments referred to above, is as follows (in millions):
|
|
|
|
|
| |
|
July 15,
2013 |
|
| Cash and cash equivalents |
|
$ |
3.9 |
|
| Trade accounts receivable |
|
|
10.9 |
|
| Inventories |
|
|
24.8 |
|
| Prepaid expenses and other current assets |
|
|
0.4 |
|
| Property, plant and equipment |
|
|
4.9 |
|
| Goodwill |
|
|
137.3 |
|
| Identifiable intangible assets |
|
|
280.7 |
|
| Deferred tax assets |
|
|
2.6 |
|
| Other assets |
|
|
1.9 |
|
|
|
|
|
|
| Total assets acquired |
|
|
467.4 |
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses |
|
|
20.7 |
|
| Other current liabilities |
|
|
3.0 |
|
| Deferred tax liabilities |
|
|
107.4 |
|
| Other non-current liabilities |
|
|
4.6 |
|
| Contingent consideration |
|
|
0.3 |
|
|
|
|
|
|
| Total liabilities assumed |
|
|
136.0 |
|
|
|
|
|
|
| Net assets acquired |
|
$ |
331.4 |
|
|
|
|
|
|
The acquisition of Natural Balance includes a contingent consideration arrangement that requires additional cash to be paid by
the Company based on the future net sales of Natural Balance over a one year period. The range of the undiscounted amounts the Company could pay under the contingent consideration agreement is $0.0 million to $17.5 million, and is based on net sales
measured acquisition date was $0.3 million and was based on the purchase agreement. The fair value of the contingent consideration on the acquisition date was estimated by applying the income approach. As of April 27, 2014, the Company recorded
a fair value adjustment to contingent consideration of $2.8 million, which is included in selling, general and administrative expense in fiscal 2014. Subsequent to fiscal year end, the Company recorded a fair value adjustment of ($0.6) million, for
a net fair value of $2.2 million as of October 26, 2014. The Company has classified the contingent consideration as Level 3 of the fair value hierarchy as it is based on unobservable inputs. Significant inputs and assumptions are
management’s estimate of net sales using probability weighted estimates and the discount rate used to calculate the present value of the liability. Significant changes in any Level 3 input or assumption would result in increases or decreases to
fair value measurements for contingent consideration. See Note 9 for a discussion regarding the fair value hierarchy and the definition of Levels 1, 2 and 3.
Goodwill is not deductible for tax purposes. The Operating Subsidiary executed the acquisition of Natural Balance with the objective of complementing its
substantial pet products portfolio and expanding sales in the high growth pet specialty channel.
17
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
The acquired business contributed net sales of $211.7 million from the acquisition date to April 27,
2014. The following unaudited pro forma financial information presents the combined results of operations of the Company, including Natural Balance, as if the acquisition had occurred as of the beginning of the periods presented. The unaudited pro
forma financial information is not intended to represent or be indicative of the Company’s consolidated financial results of operations that would have been reported had the business combination been completed as of the beginning of the periods
presented and should not be taken as indicative of the Company’s future consolidated results of operations (in millions):
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
|
|
| Net sales |
|
$ |
2,240.3 |
|
|
$ |
2,233.8 |
|
| Loss from continuing operations before income taxes |
|
|
(3.9 |
) |
|
|
(16.6 |
) |
| Loss from continuing operations |
|
|
(7.3 |
) |
|
|
(7.4 |
) |
| Note 6. |
Goodwill and Intangible Assets |
The following table presents the Company’s goodwill and intangible
assets (in millions):
|
|
|
|
|
|
|
|
|
| |
|
April 27,
2014 |
|
|
April 28,
2013 |
|
|
|
|
| Goodwill |
|
$ |
2,113.4 |
|
|
$ |
1,976.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-amortizable intangible assets: |
|
|
|
|
|
|
|
|
| Trademarks |
|
$ |
1,389.9 |
|
|
$ |
1,266.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortizable intangible assets: |
|
|
|
|
|
|
|
|
| Trademarks |
|
|
39.3 |
|
|
|
39.3 |
|
| Customer relationships |
|
|
852.7 |
|
|
|
695.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
892.0 |
|
|
|
734.6 |
|
| Accumulated amortization |
|
|
(126.7 |
) |
|
|
(81.4 |
) |
|
|
|
|
|
|
|
|
|
| Amortizable intangible assets, net |
|
|
765.3 |
|
|
|
653.2 |
|
|
|
|
|
|
|
|
|
|
| Total intangible assets, net |
|
$ |
2,155.2 |
|
|
$ |
1,919.8 |
|
|
|
|
|
|
|
|
|
|
During the fiscal year ended April 27, 2014, the Company’s goodwill and intangible assets increased by a total of
$418.0 million, with a $123.3 million increase for non-amortizable trademarks, a $157.4 million increase for customer relationships, and a $137.3 million increase for goodwill, due to the Natural Balance acquisition (see Note 5).
Amortization expense for the periods indicated below was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Amortization expense |
|
$ |
45.3 |
|
|
$ |
38.0 |
|
|
$ |
38.0 |
|
18
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
The following table presents expected amortization of intangible assets as of April 27, 2014, for each
of the five succeeding fiscal years (in millions):
|
|
|
|
|
| 2015 |
|
$ |
47.3 |
|
| 2016 |
|
|
47.1 |
|
| 2017 |
|
|
46.7 |
|
| 2018 |
|
|
46.7 |
|
| 2019 |
|
|
46.7 |
|
| Thereafter |
|
|
530.8 |
|
As of April 27, 2014, the weighted-average life of the Company’s amortizable intangible assets was 19.3 years.
| Note 7. |
Short-Term Borrowings and Long-Term Debt |
The Company’s long term debt consists of the following,
as of the dates indicated (in millions):
|
|
|
|
|
|
|
|
|
| |
|
April 27,
2014 |
|
|
April 28,
2013 |
|
|
|
|
| Long-term debt: |
|
|
|
|
|
|
|
|
| Term Loan Facility |
|
$ |
1,726.4 |
|
|
$ |
2,681.9 |
|
| Senior Notes |
|
|
900.0 |
|
|
|
1,300.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,626.4 |
|
|
|
3,981.9 |
|
|
|
|
| Less unamortized discount |
|
|
6.1 |
|
|
|
4.7 |
|
| Less current portion |
|
|
17.3 |
|
|
|
74.5 |
|
|
|
|
|
|
|
|
|
|
| Total long-term debt |
|
$ |
2,603.0 |
|
|
$ |
3,902.7 |
|
|
|
|
|
|
|
|
|
|
Senior Secured Term Loan Credit Agreement
The Operating Subsidiary is a party to a senior secured term loan credit agreement (the “Senior Secured Term Loan Credit Agreement”) with the lenders
party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the other agents named therein, that was initially dated March 8, 2011 and provided for a $2,700.0 million senior secured term loan B facility (with all
related loan documents, as amended from time to time, the “Term Loan Facility”) with an original term of seven years.
On February 24,
2014, the Operating Subsidiary repaid $881.0 million of the Term Loan Facility from the after-tax net proceeds from the sale of the Consumer Products Business and entered into an amendment to the Senior Secured Term Loan Credit Agreement. The
amendment, among other things, (1) lowered the LIBOR rate floor on term loans under the credit agreement from 1.00% to 0.75% and the base rate floor from 2.00% to 1.75%; (2) established the applicable interest margin at 2.75% on LIBOR rate
loans and 1.75% on base rate loans; and (3) extended the maturity date of the initial term loans to March 8, 2020 from March 8, 2018.
Interest Rates. Loans under the amended Term Loan Facility bear interest at a rate equal to an applicable margin, plus, at the Operating
Subsidiary’s option, either (i) a LIBOR rate (with a floor of 0.75%) or (ii) a base rate (with a floor of 1.75%) equal to the highest of (a) the federal funds rate plus 0.50%, (b) JPMorgan Chase Bank, N.A.’s “prime
rate” and (c) the one-month LIBOR rate plus 1.00%. As of April 27, 2014, the applicable margin with respect to LIBOR borrowings was 2.75% and with respect to base rate borrowings is 1.75%.
Principal Payments. The amended Term Loan Facility generally requires quarterly scheduled principal payments of 0.25% of the outstanding principal per
quarter from June 30, 2014 to December 31, 2019. The balance is due in full on the maturity date of March 8, 2020. Scheduled principal payments with respect to the Term Loan Facility are subject to reduction following any mandatory or
voluntary prepayments on terms and conditions set forth in the Senior Secured Term Loan Credit Agreement. On June 27, 2013, the Company made a payment of $74.5 million representing the annual excess cash flow payment due for the fiscal year
ended April 28, 2013. As a result of the amendment to the Senior Secured Term Loan Credit Agreement in February 2014, no annual excess cash flow payment will be due for fiscal 2014. As of April 27, 2014 the amount of outstanding loans
under the Term Loan Facility was $1,726.4 million and the blended interest rate payable was 3.50%, or 4.96% after giving effect to the interest rate swaps. See Note 8 for a discussion of the Company’s interest rate swaps.
19
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
The Senior Secured Term Loan Credit Agreement also requires the Operating Subsidiary to prepay outstanding
loans under the Term Loan Facility, subject to certain exceptions, with, among other things:
| |
• |
|
50% (which percentage will be reduced to 25% if the Operating Subsidiary’s leverage ratio is 5.5x or less and to -% if the Operating Subsidiary’s leverage ratio is 4.5x or less) of the Operating
Subsidiary’s annual excess cash flow, as defined in the Senior Secured Term Loan Credit Agreement; |
| |
• |
|
100% of the net cash proceeds of certain casualty events and non-ordinary course asset sales or other dispositions of property for a purchase price above $10 million, in each case, subject to the Operating
Subsidiary’s right to reinvest the proceeds; and |
| |
• |
|
100% of the net cash proceeds of any incurrence of debt, other than proceeds from the debt permitted under the Senior Secured Term Loan Credit Agreement. |
Ability to Incur Additional Indebtedness. The Operating Subsidiary has the right to request an additional $500.0 million plus an additional amount of
secured indebtedness under the Term Loan Facility. Lenders under this facility are under no obligation to provide any such additional loans, and any such borrowings will be subject to customary conditions precedent, including satisfaction of a
prescribed leverage ratio, subject to the identification of willing lenders and other customary conditions precedent.
Senior Secured Asset-Based
Revolving Credit Agreement
The Operating Subsidiary has historically maintained a revolver for flexibility to fund seasonal working capital needs and
for other general corporate purposes. Following the sale of the Consumer Products Business during fiscal 2014, the Operating Subsidiary no longer expects to have material changes in working capital needs due to seasonality. On March 6, 2014,
the Operating Subsidiary refinanced its credit agreement (the “Senior Secured Asset-Based Revolving Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and other lenders and agents parties thereto, that provides for
a new $225.0 million facility (with all related loan documents, and as amended from time to time, the “ABL Facility”) with a term of five years.
Interest Rates. Borrowings under the ABL Facility will bear interest at an initial interest rate equal to an applicable margin, plus, at the Operating
Subsidiary’s option, either (i) a LIBOR rate, or (ii) a base rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) JPMorgan Chase Bank, N.A.’s “prime rate” and (c) the one-month LIBOR
rate plus 1.00%. The applicable margin with respect to LIBOR borrowings is currently 1.50% (and may increase to 1.75% depending on average excess availability) and with respect to base rate borrowings is currently 0.50% (and may increase to 0.75%
depending on average excess availability).
Commitment Fees. In addition to paying interest on outstanding principal under the ABL Facility, the
Operating Subsidiary is required to pay a commitment fee at a rate of 0.25% per annum in respect of the unutilized commitments thereunder. The Operating Subsidiary must also pay customary letter of credit fees and fronting fees for each letter
of credit issued.
Availability under the ABL Facility. Availability under the ABL Facility is subject to a borrowing base. The borrowing base,
determined at the time of calculation, is an amount equal to: (a) 85% of eligible accounts receivable and (b) 85% of the net orderly liquidation value of eligible inventory (provided that net orderly liquidation value cannot exceed the net
book value), of the borrowers under the facility at such time, less customary reserves. The ABL Facility will mature, and the commitments thereunder will terminate, on March 6, 2019. As of April 27, 2014, there were no loans outstanding
under the ABL Facility, the amount of letters of credit issued under the ABL Facility was $33.4 million and the net availability under the ABL facility was $161.6 million.
The ABL Facility includes a sub-limit for letters of credit and for borrowings on same-day notice, referred to as “swingline loans.” The Operating
Subsidiary is the lead borrower under the ABL Facility and other domestic subsidiaries may be designated as borrowers on a joint and several basis.
Availability to Incur Additional Indebtedness. The commitments under the ABL Facility may be increased, subject only to the consent of the new or
existing lenders providing such increases, such that the aggregate principal amount of commitments does not exceed $325 million. The lenders under this facility are under no obligation to provide any such additional commitments, and any increase in
20
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
commitments will be subject to customary conditions precedent. Notwithstanding any such increase in the facility size, the ability to borrow under the facility will remain limited at all times by
the borrowing base (to the extent the borrowing base is less than the commitments).
Guarantee of Obligations under the Senior Secured Term Loan Credit
Agreement and Senior Secured Asset-Based Revolving Credit Agreement
All obligations of the Operating Subsidiary under the Senior Secured Term Loan
Credit Agreement and Senior Secured Asset-Based Revolving Credit Agreement are unconditionally guaranteed by the Company and by substantially all existing and future, direct and indirect, wholly-owned material restricted domestic subsidiaries of the
Operating Subsidiary, subject to certain exceptions. Subsequent to the July acquisition described above, Natural Balance became a guarantor subsidiary under the debt agreements.
Senior Notes Due 2019
The Operating Subsidiary has
outstanding senior notes with an aggregate principal amount of $900.0 million due February 15, 2019 and a stated interest rate of 7.625% (the “Senior Notes”). The indenture governing the Senior Notes is hereinafter referred to as the
“Senior Notes Indenture.” On March 13, 2014, the Operating Subsidiary used a portion of the net proceeds from the sale of the Consumer Products Business to redeem $400.0 million of the Senior Notes at a redemption price equal to
103.813% of their aggregate principal amount plus accrued and unpaid interest to the redemption date, as announced on February 11, 2014.
Interest
Rate. Interest on the Senior Notes is payable semi-annually on February 15 and August 15 of each year commencing August 15, 2011.
Guarantee. The Senior Notes are required to be fully and unconditionally guaranteed by each of the Operating Subsidiary’s existing and future
domestic restricted subsidiaries that guarantee its obligations under the Term Loan Facility and ABL Facility.
Redemption Rights. The Operating
Subsidiary has the option of redeeming all or a part of the Senior Notes at a premium ranging from 103.813% to 101.906% of the aggregate principal amount. Beginning on February 15, 2016, the Operating Subsidiary may redeem all or a part of the
Senior Notes at face value. Any redemption as described above is subject to the concurrent payment of accrued and unpaid interest, if any, upon redemption.
Security Interests
Indebtedness under the Term Loan
Facility is generally secured by a first priority lien on substantially all of the Operating Subsidiary’s assets other than inventories and accounts receivable, and by a second priority lien with respect to inventories and accounts receivable.
The ABL Facility is generally secured by a first priority lien on the Operating Subsidiary’s inventories and accounts receivable and by a second priority lien on substantially all of the Operating Subsidiary’s other assets. The Senior
Notes are the Operating Subsidiary’s senior unsecured obligations and rank senior in right of payment to any future indebtedness and other obligations that expressly provide for their subordination to the Senior Notes; rank equally in right of
payment to all of the existing and future unsecured indebtedness; are effectively subordinated to all of the existing and future secured debt (including obligations under the Term Loan Facility and ABL Facility described above) to the extent of the
value of the collateral securing such debt; and are structurally subordinated to all existing and future liabilities, including trade payables, of the non-guarantor subsidiaries, to the extent of the assets of those subsidiaries.
Deferred Debt Issuance and Debt Extinguishment Costs
During fiscal 2014, the Company wrote off certain deferred debt issuance costs of $32.7 million and unamortized discount of $1.5 million, primarily in
connection with the amendment, refinancing and redemption described above, as well as the excess cash flow payment made on June 27, 2013.
In
connection with the Operating Subsidiary entering into the amendment to the Senior Secured Term Loan Credit Agreement and a new Senior Secured Asset-Based Revolving Credit Agreement, the Company capitalized $1.2 million and expensed $2.9 million of
21
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
debt issuance costs. The capitalized costs are being amortized as interest expense over the term of the related debt instrument. In connection with the tender offer for the Senior Notes, the
Company recognized $15.3 million of expense (included in loss on partial debt extinguishment) which represents the redemption premium.
Maturities
As of April 27, 2014, mandatory payments of long-term debt (representing debt under the Term Loan Facility and the Senior Notes) are as follows
(in millions)1:
|
|
|
|
|
| 2015 |
|
$ |
17.3 |
|
| 2016 |
|
|
17.3 |
|
| 2017 |
|
|
17.3 |
|
| 2018 |
|
|
17.3 |
|
| 2019 |
|
|
917.3 |
|
| Thereafter |
|
|
1,639.9 |
|
| 1 |
Does not reflect any excess cash flow or other principal prepayments beyond fiscal 2015 that may be required under the terms of the amended Senior Secured Term Loan Credit Agreement, as described above.
|
Restrictive and Financial Covenants
The Term Loan Facility, ABL Facility and the Senior Notes Indenture contain restrictive covenants that limit the Operating Subsidiary’s ability and the
ability of its subsidiaries to take certain actions.
Term Loan Facility and ABL Facility Restrictive Covenants. The restrictive covenants in the
Senior Secured Term Loan Credit Agreement and the Senior Secured Asset-Based Revolving Credit Agreement include covenants limiting the Operating Subsidiary’s ability, and the ability of its restricted subsidiaries, to incur additional
indebtedness, create liens, engage in mergers or consolidations, sell or transfer assets, pay dividends and distributions or repurchase its capital stock, make investments, loans or advances, prepay certain indebtedness, engage in certain
transactions with affiliates, amend agreements governing certain subordinated indebtedness adverse to the lenders, and change its lines of business.
Senior Notes Indenture Restrictive Covenants. The restrictive covenants in the Senior Notes Indenture include covenants limiting the Operating
Subsidiary’s ability and the ability of its restricted subsidiaries to incur additional indebtedness or issue certain types of preferred stock, create liens, engage in mergers or consolidations, sell or transfer assets, pay dividends and
distributions, repurchase its capital stock, make investments, prepay certain indebtedness, and engage in certain transactions with affiliates, as well as limiting the ability of the Operating Subsidiary’s restricted subsidiaries to create
restrictions on payments to the Operating Subsidiary.
Financial Maintenance Covenants. The Term Loan Facility, ABL Facility and Senior Notes
Indenture generally do not require that the Operating Subsidiary comply with financial maintenance covenants. The ABL Facility, however, contains a financial covenant that applies if availability under the ABL Facility falls below a certain level.
Effect of Restrictive and Financial Covenants. The restrictive and financial covenants in the Senior Secured Term Loan Credit Agreement, the
Senior Secured Asset-Based Revolving Credit Agreement and Senior Notes Indenture may adversely affect the Operating Subsidiary’s ability to finance its future operations or capital needs or engage in other business activities that may be in its
interest, such as acquisitions.
22
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Supplemental Disclosure of Cash Flow Information
The Company’s cash interest payments were as follows for the periods indicated (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Cash interest payments |
|
$ |
210.9 |
|
|
$ |
219.3 |
|
|
$ |
223.7 |
|
Cash interest paid during periods presented does not include cash paid to interest rate swap counterparties.
| Note 8. |
Derivative Financial Instruments |
The Operating Subsidiary uses interest rate swaps, commodity swaps,
futures, option and swaption (an option on a swap) contracts, as well as forward foreign currency contracts, to hedge market risks relating to possible adverse changes in interest rates, commodity, transportation, foreign currency exchange rates and
other input price exposures. The Operating Subsidiary continually monitors its positions and the credit ratings of the counterparties involved to mitigate the amount of credit exposure to any one party.
The Company designates each derivative contract as one of the following: (1) a hedge of a forecasted transaction or of the variability of cash flows to
be received or paid related to a recognized asset or liability (“cash flow hedge”) or (2) a hedging instrument whose change in fair value is recognized to act as an economic hedge but does not meet the requirements to receive hedge
accounting treatment (“economic hedge”). As of April 27, 2014, the Operating Subsidiary had both cash flow and economic hedges.
Interest Rates: The Operating Subsidiary’s debt primarily consists of floating rate term loans and fixed rate notes. The Operating Subsidiary
historically maintained its floating rate revolver for flexibility to fund seasonal working capital needs and for other uses of cash. Following the sale of the Consumer Products Business during fiscal 2014, the Operating Subsidiary no longer expects
to have material changes in working capital due to seasonality. Interest expense on the Operating Subsidiary’s floating rate debt is typically calculated based on a fixed spread over a reference rate, such as LIBOR (also known as the Eurodollar
rate). Therefore, fluctuations in market interest rates will cause interest expense increases or decreases on a given amount of floating rate debt.
Swaps
are recorded as an asset or liability in the Consolidated Balance Sheets at fair value. The Company currently accounts for these interest rate swaps as economic hedges and any gains and losses are recorded directly in earnings.
The Operating Subsidiary from time to time manages a portion of its interest rate risk related to floating rate debt by entering into interest rate swaps in
which the Operating Subsidiary receives floating rate payments and makes fixed rate payments. As of April 27, 2014, the following economic hedge swaps were outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Contract date |
|
Notional amount
(in millions) |
|
|
Fixed LIBOR rate |
|
|
Effective date |
|
Maturity date |
| April 12, 2011 |
|
$ |
900.0 |
|
|
|
3.029 |
% |
|
September 4, 2012 |
|
September 1, 2015 |
On August 13, 2010, the Operating Subsidiary entered into interest rate swaps with a total notional amount of $300.0
million as the fixed rate payer and an effective date of February 1, 2011. The interest rate swaps fixed LIBOR at 1.368% for the term of the swaps and expired during fiscal 2014 on February 3, 2014.
The fair values of the Operating Subsidiary’s interest rate swaps were recorded as current liabilities of $25.4 million and non-current liabilities of
$9.8 million at April 27, 2014. The fair values of the Operating Subsidiary’s interest rate swaps were recorded as current liabilities of $28.4 million and non-current liabilities of $33.5 million at April 28, 2013.
Commodities: Certain commodities such as soybean meal, corn, wheat, soybean oil, diesel fuel and natural gas (collectively, “commodity
contracts”) are used in the production and transportation of the Operating Subsidiary’s products. Generally these commodities are purchased based upon market prices that are established with the vendor as part of the purchase process. The
Operating Subsidiary uses futures, swaps, and swaption or option contracts, as deemed appropriate; to reduce the effect of price fluctuations on anticipated purchases. These contracts may have a term of up to 36 months. The Company accounts for
these commodities derivatives as either economic or cash flow hedges. Changes in the value of economic hedges are recorded directly in
23
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
earnings. For cash flow hedges, the effective portion of derivative gains and losses is deferred in equity and recognized as part of cost of products sold in the appropriate period and the
ineffective portion is recognized as other (income) expense, net.
The fair values of the Operating Subsidiary’s commodities hedges were recorded as
current assets of $9.4 million as of April 27, 2014. The fair values of the Operating Subsidiary’s commodities hedges were recorded as current assets of $3.0 million and current liabilities of $9.7 million at April 28, 2013. The
notional amounts of the Operating Subsidiary’s commodity contracts as of the dates indicated were as follows (in millions):
|
|
|
|
|
|
|
|
|
| |
|
April 27,
2014 |
|
|
April 28,
2013 |
|
|
|
|
| Commodity contracts |
|
$ |
124.8 |
|
|
$ |
213.4 |
|
Foreign Currency: From time to time, the Operating Subsidiary manages its exposure to fluctuations in foreign currency
exchange rates by entering into forward contracts to cover a portion of its projected expenditures paid in local currency. These contracts may have a term of up to 24 months. The Company accounted for these contracts as either economic hedges or
cash flow hedges. Changes in the value of the economic hedges are recorded directly in earnings. For cash flow hedges, the effective portion of derivative gains and losses is deferred in equity and recognized as part of cost of products sold in the
appropriate period and the ineffective portion is recognized as other (income) expense. The Operating Subsidiary did not have any outstanding foreign currency hedges as of April 27, 2014 because the Operating Subsidiary did not believe it was
in its best interest at the time. Subsequent to fiscal year end, the Operating Subsidiary entered into various foreign currency derivative contracts for a notional amount of $13.4 million as of October 26, 2014. All of the foreign currency
derivative contracts held as of October 26, 2014 are scheduled to mature prior to the end of fiscal 2016. The Operating Subsidiary did not have any outstanding foreign currency hedges in continuing operations as of April 28, 2013.
Fair Value of Derivative Instruments
The fair
value of derivative instruments recorded in the Consolidated Balance Sheets as of April 27, 2014 was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Asset derivatives |
|
|
Liability derivatives |
|
| Derivatives in economic hedging relationships |
|
Balance Sheet
location |
|
Fair value |
|
|
Balance Sheet
location |
|
Fair value |
|
| Interest rate contracts |
|
Other non-current assets |
|
$ |
— |
|
|
Other non-current liabilities |
|
$ |
9.8 |
|
| Interest rate contracts |
|
Prepaid expenses and other current assets |
|
|
— |
|
|
Accounts payable and accrued expenses |
|
|
25.4 |
|
| Commodity and other contracts |
|
Prepaid expenses and other current assets |
|
|
9.4 |
(1) |
|
Accounts payable and accrued expenses |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
$ |
9.4 |
|
|
|
|
$ |
35.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Includes $7.6 million of commodity contracts (asset derivatives) designated as cash flow hedges. |
24
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
The fair value of derivative instruments recorded in the Consolidated Balance Sheets as of April 28,
2013 was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Asset derivatives |
|
|
Liability derivatives |
|
| Derivatives in economic hedging relationships |
|
Balance Sheet
location |
|
Fair value |
|
|
Balance Sheet
location |
|
Fair value |
|
| Interest rate contracts |
|
Other non-current assets |
|
$ |
— |
|
|
Other non-current liabilities |
|
$ |
33.5 |
|
| Interest rate contracts |
|
Prepaid expenses and other current assets |
|
|
— |
|
|
Accounts payable and accrued expenses |
|
|
28.4 |
|
| Commodity and other contracts |
|
Prepaid expenses and other current assets |
|
|
3.0 |
(1) |
|
Accounts payable and accrued expenses |
|
|
9.7 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
$ |
3.0 |
|
|
|
|
$ |
71.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Includes $0.2 million of commodity contracts (asset derivatives) designated as cash flow hedges. |
| (2) |
Represents commodity contracts (liability derivatives) designated as cash flow hedges. |
The effect of economic hedges on other (income) expense, net in the Consolidated Statements of Operations for the periods indicated below was as follows (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Interest rate contracts |
|
$ |
2.0 |
|
|
$ |
12.3 |
|
|
$ |
52.1 |
|
| Commodity and other contracts |
|
|
(12.9 |
) |
|
|
(23.0 |
) |
|
|
(1.2 |
) |
| Foreign currency exchange contracts |
|
|
— |
|
|
|
— |
|
|
|
(1.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Included in other (income) expense, net |
|
$ |
(10.9 |
) |
|
$ |
(10.7 |
) |
|
$ |
49.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effect of derivative instruments designated as cash flow hedges recorded for fiscal 2014, in the Consolidated Statements
of Operations was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Derivatives in cash flow hedging relationships |
|
(Gain) loss
recognized in
AOCI |
|
|
Location of (gain) loss
reclassified from AOCI |
|
(Gain) loss
reclassified from
AOCI into income |
|
|
Location of (gain) loss
recognized in income
(ineffective portion and
amount excluded from
effectiveness testing) |
|
(Gain) loss
recognized in
income (ineffective
portion and amount
excluded
from
effectiveness testing) |
|
| Commodity and other contracts |
|
$ |
(14.2 |
) |
|
Cost of products sold |
|
$ |
7.7 |
|
|
Other (income) expense, net |
|
$ |
(4.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effect of derivative instruments designated as cash flow hedges recorded for fiscal 2013, in the Consolidated Statements
of Operations was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Derivatives in cash flow hedging relationships |
|
(Gain) loss
recognized in
AOCI |
|
|
Location of (gain) loss
reclassified from AOCI |
|
(Gain) loss
reclassified from
AOCI into income |
|
|
Location of (gain) loss
recognized in income
(ineffective portion and
amount excluded from
effectiveness testing) |
|
(Gain) loss
recognized in
income (ineffective
portion and amount
excluded
from
effectiveness testing) |
|
| Commodity and other contracts |
|
$ |
10.6 |
|
|
Cost of products sold |
|
$ |
— |
|
|
Other (income) expense, net |
|
$ |
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company did not have cash flow hedges during fiscal 2012.
At April 27, 2014, $6.5 million is expected to be reclassified from AOCI to cost of products sold within the next 12 months.
25
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
| Note 9. |
Fair Value Measurements |
A three-tier fair value hierarchy is utilized to prioritize the inputs used in
measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels are defined as follows:
| |
• |
|
Level 1 Inputs—unadjusted quoted prices in active markets for identical assets or liabilities; |
| |
• |
|
Level 2 Inputs—quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for
substantially the full term of the financial instrument; and |
| |
• |
|
Level 3 Inputs—unobservable inputs reflecting the Company’s own assumptions in measuring the asset or liability at fair value. |
The Operating Subsidiary uses interest rate swaps, commodity contracts and forward foreign currency contracts to hedge market risks relating to possible
adverse changes in interest rates, commodity prices, diesel fuel prices and foreign exchange rates.
The following table provides the fair values
hierarchy for financial assets and liabilities measured on a recurring basis (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
| Description |
|
April 27,
2014 |
|
|
April 28,
2013 |
|
|
April 27,
2014 |
|
|
April 28,
2013 |
|
|
April 27,
2014 |
|
|
April 28,
2013 |
|
|
|
|
|
|
|
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commodity and other contracts |
|
$ |
7.5 |
|
|
$ |
2.1 |
|
|
$ |
1.9 |
|
|
$ |
0.9 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
7.5 |
|
|
|
2.1 |
|
|
|
1.9 |
|
|
|
0.9 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest rate contracts |
|
|
— |
|
|
|
— |
|
|
|
35.2 |
|
|
|
61.9 |
|
|
|
— |
|
|
|
— |
|
| Commodity and other contracts |
|
|
— |
|
|
|
4.3 |
|
|
|
— |
|
|
|
5.4 |
|
|
|
— |
|
|
|
— |
|
| Contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3.1 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
— |
|
|
$ |
4.3 |
|
|
$ |
35.2 |
|
|
$ |
67.3 |
|
|
$ |
3.1 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s determination of the fair value of its interest rate swaps was calculated using a discounted cash flow
analysis based on the terms of the swap contracts and the observable interest rate curve. Futures and options contracts are traded on regulated exchanges such as the Chicago Board of Trade, Kansas City Board of Trade and the New York Mercantile
Exchange. The Company values these contracts based on the daily settlement prices published by the exchanges on which the contracts are traded. The commodities swap and swaption contracts are traded over-the-counter and are valued based on the
Chicago Board of Trade quoted prices for similar instruments in active markets or corroborated by observable market data available from the Energy Information Administration. The Company measures the fair value of foreign currency forward contracts
using an income approach based on forward rates (obtained from market quotes for futures contracts with similar terms) less the contract rate multiplied by the notional amount. There were no foreign currency forward contracts outstanding as of
April 27, 2014 and April 28, 2013.
The fair values of the Operating Subsidiary’s fixed rate notes and floating rate debt are disclosed in
Note 2. The fair values of the plan assets of the Operating Subsidiary’s defined benefit pension plan are disclosed in Note 11.
The 2011 Stock Incentive Plan for Key Employees of Blue Acquisition Group, Inc. and its
Affiliates was adopted by the Board of Directors of the Company (the “Board”) effective February 16, 2011 (the “2011 Plan”). The 2011 Plan provided for the grant of stock options and other stock based awards to key service
providers of the Company and its affiliates, including the Operating Subsidiary.
26
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
18,777,653 shares of common stock of the Company were initially reserved for grant under the plan, with such
number to be automatically increased in the event the Board and the Operating Subsidiary’s Chief Executive Officer (“CEO”) make grant allocations that exceed such amount.
During fiscal 2014, the Company granted 1,690,000 stock options. Under the automatic increase provisions of the 2011 Plan, 325,000 of additional shares of
common stock of the Company were authorized for grant. As of April 27, 2014, 6,727,228 shares of common stock were available for future grant subject to the automatic increase provision described above.
During fiscal 2013, the Company granted 3,975,000 stock options. Under the automatic increase provisions of the 2011 Plan, 2,862,319 of additional shares of
common stock of the Company were authorized for grant.
Generally, options granted under the 2011 Plan that are subject to service-based or
performance-based vesting vest annually over four or five years and the term may not be more than ten years from the date of its grant. Following the termination of employment of an optionholder, shares received pursuant to the exercise of options
generally remain subject to certain put and call rights which vary depending on the nature of the termination. In addition, in the event of certain change in control transactions, any outstanding portion of service-based options will become vested
and exercisable, and, in the event of a certain change in control transaction pursuant to an event wherein the Sponsors realize a cash return on their interests in the Company greater than a predetermined target, all or portion of options subject to
performance-based vesting will vest.
Performance-based stock options
There are two types of options subject to performance-based vesting under the 2011 Plan. The first type generally vests in annual tranches at the end of each
of the four subsequent fiscal years if the Company achieves a pre-determined EBITDA-related financial target (“EBITDA Performance Options”) with respect to such fiscal year. The second type are options with vesting subject only to
market-based vesting conditions (“Exit Return Performance Options”), where upon the occurrence of an event or transaction pursuant to which the Sponsors realize a cash return on their interests in the Company greater than a predetermined
threshold, the options will vest depending on the extent to which the realized return exceeds such threshold.
During fiscal 2014, the Company granted
422,500 EBITDA Performance Options with a weighted-average grant date fair value of $2.57 per share to employees of the Operating Subsidiary. During fiscal 2014, the Company modified the outstanding EBITDA Performance options to revise the
EBITDA-related financial targets for fiscal 2014 due to the sale of the Consumer Products Business and the acquisition of Natural Balance. No incremental expense was recorded as a result of the modification. During fiscal 2013, the Company granted
993,750 EBITDA Performance Options with a weighted-average grant date fair value of $1.98 per share to employees of the Operating Subsidiary.
The fair
value for performance-based stock options granted was estimated at the date of grant using a Black-Scholes option pricing model. This model estimates the fair value of the options based on a number of assumptions, such as expected option life,
interest rates, the current fair market value and expected volatility of common stock and expected dividends. The expected term of options granted was based on the “simplified” method. Expected stock price volatility was determined based
on the historical volatilities of comparable companies over a historical period that matches the expected life of the options. The risk-free interest rate was based on the expected U.S. Treasury rate over the expected life. The dividend yield was
based on the expectation that no dividends will be paid. The following table presents the weighted-average assumptions for performance-based stock options granted for the periods indicated:
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
|
|
| Expected life (in years) |
|
|
5.9 |
|
|
|
5.4 |
|
| Expected volatility |
|
|
45.0 |
% |
|
|
45.0 |
% |
| Risk-free interest rate |
|
|
1.03 |
% |
|
|
0.9 |
% |
| Dividend yield |
|
|
0.0 |
% |
|
|
0.0 |
% |
27
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
During fiscal 2014 and fiscal 2013, the Company also granted 422,500 and 993,750 Exit Return Performance
options, respectively. As the performance conditions associated with the Exit Return Performance Options are not probable of being achieved until the consummation of a liquidity event, the grant date fair value of these options is measured, but no
stock compensation expense will be recognized until a liquidity event occurs and the target threshold is met.
Service-based stock options
The following table presents the service-based stock options granted and the weighted-average grant date fair value for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Options granted |
|
|
845,000 |
|
|
|
1,987,500 |
|
|
|
9,010,000 |
|
| Weighted-average grant date fair value |
|
$ |
2.57 |
|
|
$ |
2.16 |
|
|
$ |
2.21 |
|
Options granted under the 2011 Plan that are subject to service-based vesting are generally subject to partial accelerated
vesting upon certain terminations of employment of the optionholder. In the event of the termination of an optionholder’s employment due to death or disability or, in the event of the termination of an optionholder’s employment by the
Operating Subsidiary without cause or by the optionholder for good reason after March 8, 2013, that portion of the service-based stock options that would have become vested upon the next annual vesting date will vest as of the employment
termination date.
The fair value for service-based stock options granted was estimated at the date of grant using a Black-Scholes option pricing model
with assumptions determined in the same manner as performance-based stock options described above. The following table presents the weighted-average assumptions for service-based stock options granted for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Expected life (in years) |
|
|
5.9 |
|
|
|
5.9 |
|
|
|
6.5 |
|
| Expected volatility |
|
|
45.0 |
% |
|
|
45.0 |
% |
|
|
45.0 |
% |
| Risk-free interest rate |
|
|
1.03 |
% |
|
|
1.03 |
% |
|
|
1.61 |
% |
| Dividend yield |
|
|
0.0 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
Rollover stock options
Certain options granted under the 2011 Plan were issued in exchange for options to purchase DMFC’s common stock granted under DMFC’s previous equity
plans (the “Rollover Options”). There was a total of 9,385,492 Rollover Options granted with a fair value of $3.75 per share. During fiscal 2014, 701,867 Rollover Options were cancelled and repurchased in connection with executive
departures and 5,444,483 remain outstanding as of April 27, 2014. During fiscal 2013 and fiscal 2012, 573,015 and 2,666,127, respectively, Rollover Options were cancelled and repurchased in connection with executive departures. The Company did
not incur any expense in connection with the issuance of the Rollover Options because they were granted in exchange for options of equal value. The Rollover Options are fully vested, and generally remain subject to their original terms under
DMFC’s previous equity plans, with applicable adjustments to convert the exercise price and number of shares of such options. Further, Rollover Options do not count toward the shares of common stock available for grant under the 2011 Plan.
Stock option activity and related information during the periods indicated was as follows:
28
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Options
Outstanding |
|
|
Weighted-
Average
Exercise
Price |
|
|
Options
Exercisable |
|
|
Weighted-
Average
Exercise
Price |
|
| Balance at May 1, 2011 |
|
|
15,647,164 |
|
|
$ |
2.75 |
|
|
|
9,385,492 |
|
|
$ |
1.25 |
|
| Granted |
|
|
18,020,000 |
|
|
|
5.55 |
|
|
|
|
|
|
|
|
|
| Forfeited |
|
|
(1,821,329 |
) |
|
|
5.00 |
|
|
|
|
|
|
|
|
|
| Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
| Cancelled |
|
|
(2,666,127 |
) |
|
|
1.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at April 29, 2012 |
|
|
29,179,708 |
|
|
|
4.48 |
|
|
|
8,825,417 |
|
|
|
2.26 |
|
| Granted |
|
|
3,975,000 |
|
|
|
5.00 |
|
|
|
|
|
|
|
|
|
| Forfeited |
|
|
(4,440,404 |
) |
|
|
5.00 |
|
|
|
|
|
|
|
|
|
| Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
| Cancelled |
|
|
(573,015 |
) |
|
|
1.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at April 28, 2013 |
|
|
28,141,289 |
|
|
|
4.54 |
|
|
|
12,163,876 |
|
|
|
3.32 |
|
| Granted |
|
|
1,690,000 |
|
|
|
5.96 |
|
|
|
|
|
|
|
|
|
| Forfeited |
|
|
(5,077,715 |
) |
|
|
5.18 |
|
|
|
|
|
|
|
|
|
| Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
| Cancelled |
|
|
(701,867 |
) |
|
|
1.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at April 27, 2014 |
|
|
24,051,707 |
|
|
$ |
4.60 |
|
|
|
13,832,001 |
|
|
$ |
3.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options forfeited represent the number of unvested options that were forfeited in connection with the termination of
employment of the optionholders. Options cancelled represent the number of vested options that were subject to repurchase and cancellation by the Company in connection with the termination of employment of the optionholders. The weighted-average
exercise price is generally equivalent to the fair value of common stock per share.
As of April 27, 2014, there was approximately $14.6 million of
unrecognized stock compensation cost, which is expected to be recognized over a weighted-average period of 1.9 years. As of April 27, 2014, the weighted-average remaining contractual life of options outstanding was 6.6 years.
Restricted common stock
During fiscal 2012, the Company
granted 1,366,199 shares of restricted common stock with a fair value and purchase price of $5.00 per share. The restricted shares generally vest over three years from the employee’s anniversary date of hire. During fiscal 2012, the Company
also granted 400,000 shares of restricted common stock with a fair value and purchase price of $5.00 per share which were immediately vested.
29
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
| Note 11. |
Retirement Benefits |
Defined Benefit Plans. The Operating Subsidiary sponsors a qualified defined
benefit pension plan (“pension benefits” or “pension plan”) and several unfunded defined benefit postretirement plans (“other benefits” or “postretirement plans”) providing certain medical, dental and life
insurance benefits to eligible retired, salaried, non-union hourly and union employees. The details of such plans, including discontinued operations, are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Pension benefits |
|
|
Other benefits |
|
| |
|
April 27,
2014 |
|
|
April 28,
2013 |
|
|
April 27,
2014 |
|
|
April 28,
2013 |
|
| Change in benefit obligation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Benefit obligation at beginning of period |
|
$ |
499.6 |
|
|
$ |
466.4 |
|
|
$ |
138.3 |
|
|
$ |
157.9 |
|
| Service cost |
|
|
12.1 |
|
|
|
13.5 |
|
|
|
1.0 |
|
|
|
1.5 |
|
| Interest cost |
|
|
16.0 |
|
|
|
20.4 |
|
|
|
4.9 |
|
|
|
7.6 |
|
| Actuarial (gain) loss |
|
|
(23.2 |
) |
|
|
33.7 |
|
|
|
(15.1 |
) |
|
|
(24.4 |
) |
| Benefits paid |
|
|
(37.1 |
) |
|
|
(34.4 |
) |
|
|
(4.3 |
) |
|
|
(4.3 |
) |
| Obligation transferred to Acquiror |
|
|
(341.5 |
) |
|
|
— |
|
|
|
(93.7 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Benefit obligation at end of period |
|
$ |
125.9 |
|
|
$ |
499.6 |
|
|
$ |
31.1 |
|
|
$ |
138.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated benefit obligation |
|
$ |
121.4 |
|
|
$ |
484.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Change in plan assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fair value of plan assets at beginning of period |
|
$ |
487.1 |
|
|
$ |
460.5 |
|
|
$ |
— |
|
|
$ |
— |
|
| Actual gain on plan assets |
|
|
32.1 |
|
|
|
46.0 |
|
|
|
— |
|
|
|
— |
|
| Employer contributions |
|
|
10.0 |
|
|
|
15.0 |
|
|
|
4.3 |
|
|
|
4.3 |
|
| Benefits paid |
|
|
(37.1 |
) |
|
|
(34.4 |
) |
|
|
(4.3 |
) |
|
|
(4.3 |
) |
| Plan assets transferred to Acquiror1 |
|
|
(356.2 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fair value of plan assets at end of period |
|
$ |
135.9 |
|
|
$ |
487.1 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Funded status at end of period |
|
$ |
10.0 |
|
|
$ |
(12.5 |
) |
|
$ |
(31.1 |
) |
|
$ |
(138.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amounts recognized in the Consolidated Balance Sheets consist of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other non-current assets |
|
$ |
10.0 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Accounts payable and accrued expenses |
|
|
— |
|
|
|
(15.0 |
) |
|
|
(1.3 |
) |
|
|
(6.1 |
) |
| Other non-current liabilities |
|
|
— |
|
|
|
2.5 |
|
|
|
(29.8 |
) |
|
|
(132.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
10.0 |
|
|
$ |
(12.5 |
) |
|
$ |
(31.1 |
) |
|
$ |
(138.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amounts recognized in accumulated other comprehensive income/(loss) consist of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Actuarial net gain (loss) |
|
$ |
(0.1 |
) |
|
$ |
(43.4 |
) |
|
$ |
11.5 |
|
|
$ |
29.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
(0.1 |
) |
|
$ |
(43.4 |
) |
|
$ |
11.5 |
|
|
$ |
29.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 |
The plans assets transferred to the Acquiror are an estimate which could differ from actual results. Please refer to discussion below regarding requirements under the Employee Retirement Income Security Act of 1974.
|
30
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
The components of net periodic benefit cost for the pension benefits and other benefits for the periods
indicated, including discontinued operations, are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Pension benefits |
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Components of net periodic benefit cost: |
|
|
|
|
|
|
|
|
|
|
|
|
| Service cost for benefits earned during the period |
|
$ |
12.1 |
|
|
$ |
13.5 |
|
|
$ |
13.6 |
|
| Interest cost on projected benefit obligation |
|
|
16.0 |
|
|
|
20.4 |
|
|
|
23.0 |
|
| Expected return on plan assets |
|
|
(29.0 |
) |
|
|
(32.4 |
) |
|
|
(32.7 |
) |
| Amortization of loss/(gain) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Settlement loss, net of curtailment gain |
|
|
31.8 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net periodic benefit cost |
|
$ |
30.9 |
|
|
$ |
1.5 |
|
|
$ |
3.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other benefits |
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Components of net periodic benefit cost: |
|
|
|
|
|
|
|
|
|
|
|
|
| Service cost for benefits earned during the period |
|
$ |
1.0 |
|
|
$ |
1.5 |
|
|
$ |
1.5 |
|
| Interest cost on projected benefit obligation |
|
|
4.9 |
|
|
|
7.6 |
|
|
|
8.4 |
|
| Expected return on plan assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Amortization of gain |
|
|
(2.3 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
| Settlement gain |
|
|
(30.3 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net periodic benefit cost (credit) |
|
$ |
(26.7 |
) |
|
$ |
9.1 |
|
|
$ |
9.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For fiscal 2015, pension benefits expense for continuing operations is expected to be approximately $3.9 million. As of
April 27, 2014, other benefits expense for fiscal 2015 was estimated to be approximately a net credit of $0.1 million as the net amortization gain exceeds service and interest costs. These estimates incorporate the Company’s fiscal 2015
assumptions. Actual future pension benefit and other benefit expense amounts may vary depending upon the accuracy of original assumptions and future assumptions. See “Plan Amendment” below.
Plan Amendment
In December 2014, the Operating
Subsidiary amended its retiree medical defined benefit plan, with respect to Medicare-eligible retirees, to convert from a premium based plan to a healthcare exchange effective January 1, 2015. The change resulted in a decrease to the projected
benefit obligation and a corresponding gain of $18.9 million, which will be amortized over five years. As a result, the Company will recognize approximately a $1.3 million benefit to the consolidated statements of operations in fiscal 2015. The
remeasurement of the plan obligations as of January 1, 2015 utilized a discount rate of 4.30%, as well as the RP-2014 mortality table with collar adjustment and generational projection based on MP-2014 (issued October 2014).
Sale of the Consumer Products Business
Following the
sale of the Consumer Products Business, the Operating Subsidiary transferred a significant amount of the plan obligations and plan assets for the pension benefits and other benefits, as well as the related components of net periodic benefit costs,
for the transferred employees and retirees of the Consumer Products Business to the Acquiror. The Operating Subsidiary completed the transfer of plan assets in February 2015. Plan assets for pension benefits were allocated to the Acquiror in
accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”) Section 4044. The final transfer amount was adjusted to reflect actual investment income or losses less pension payments made by the Operating Subsidiary on
the Acquirors’ behalf, from the sale date to the actual transfer date, in accordance with the Purchase Agreement.
31
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Assumptions
Since the pension plan and other benefits liabilities are measured on a discounted basis, the discount rate is a significant assumption. The discount rate was
determined based on an analysis of interest rates for high-quality, long-term corporate debt at each measurement date. In order to appropriately match the bond maturities with expected future cash payments, the Operating Subsidiary utilizes
differing bond portfolios to estimate the discount rates for the pension plan and for the other benefits. The discount rate used to determine the pension plan and other benefits projected benefit obligation as of the balance sheet date is the rate
in effect at the measurement date. The same rate is also used to determine the pension plan and other benefits expense for the following fiscal year. The long-term rate of return for the pension plan’s assets is based on the Operating
Subsidiary’s historical experience, the pension plan’s investment guidelines and the Operating Subsidiary’s expectations for long-term rates of return. The pension plan’s investment guidelines are established based upon an
evaluation of market conditions, tolerance for risk and cash requirements for benefit payments.
The following table presents the weighted-average
assumptions used to determine the projected benefit obligations for pension benefits and other benefits:
|
|
|
|
|
|
|
|
|
| |
|
April 27,
2014 |
|
|
April 28,
2013 |
|
| Pension benefits |
|
|
|
|
|
|
|
|
| Discount rate |
|
|
4.60 |
% |
|
|
3.90 |
% |
| Rate of increase in compensation levels |
|
|
3.94 |
% |
|
|
3.69 |
% |
| Other benefits |
|
|
|
|
|
|
|
|
| Discount rate |
|
|
4.85 |
% |
|
|
4.25 |
% |
The weighted-average assumptions for pension benefits and other benefits reflect a weighted-average assumption for the prior
year as reported and an interim measurement in fiscal 2014 following the sale of Consumer Products Business.
The following table presents the
weighted-average assumptions used to determine the net periodic benefit cost for pension benefits and other benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Pension benefits |
|
|
|
|
|
|
|
|
|
|
|
|
| Discount rate |
|
|
4.07 |
% |
|
|
4.60 |
% |
|
|
5.50 |
% |
| Rate of increase in compensation levels |
|
|
3.69 |
% |
|
|
3.68 |
% |
|
|
4.69 |
% |
| Long-term rate of return on plan assets |
|
|
7.20 |
% |
|
|
7.25 |
% |
|
|
7.50 |
% |
| Other benefits |
|
|
|
|
|
|
|
|
|
|
|
|
| Discount rate |
|
|
4.41 |
% |
|
|
4.90 |
% |
|
|
5.75 |
% |
The weighted-average asset allocation of the pension plan assets and weighted-average target allocation as of the measurement
date for fiscal 2014 and fiscal 2013 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
April 27,
2014 |
|
|
April 28,
2013 |
|
|
Target Allocation
Range |
|
| Equity securities |
|
|
44 |
% |
|
|
47 |
% |
|
|
31-51 |
% |
| Debt securities |
|
|
48 |
% |
|
|
52 |
% |
|
|
47-64 |
% |
| Other |
|
|
8 |
% |
|
|
1 |
% |
|
|
2-9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Sensitivity of Assumptions
For measurement purposes, an annual rate of increase in the per capita cost of covered health care benefits was assumed as indicated below:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Plan |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Preferred provider organization and associated indemnity plans |
|
|
7.80 |
% |
|
|
8.10 |
% |
|
|
8.40 |
% |
| Health maintenance organization plans |
|
|
8.30 |
% |
|
|
8.70 |
% |
|
|
9.10 |
% |
| Dental and vision plans |
|
|
5.00 |
% |
|
|
5.00 |
% |
|
|
5.00 |
% |
The rate of increase is assumed to decline gradually to 4.0% for the preferred provider organization and associated indemnity
plans, as well as for the health maintenance organization plans.
The health care cost trend rate assumption has a significant effect on the amounts
reported. The following table presents the impact of a 1% increase or decrease of the health care cost trend rate on the projected benefit obligation and the aggregate of the service and interest cost components of net periodic benefit cost of other
benefits, for continuing operations, as of April 27, 2014 and for the year then ended, respectively (in millions):
|
|
|
|
|
|
|
|
|
| |
|
1% Increase |
|
|
1% Decrease |
|
| Projected benefit obligation at April 27, 2014 increase/(decrease) |
|
$ |
4.2 |
|
|
$ |
(3.5 |
) |
| Aggregate of service and interest rate cost components of net periodic benefit cost for fiscal 2014 increase/(decrease) |
|
|
0.9 |
|
|
|
(0.7 |
) |
No amounts will be amortized from AOCI into net periodic benefit cost over the next fiscal year for the pension plan.
Amortization of net gain of $1.7 million will be recognized for other benefit plans before considering the effect of the plan amendment discussed above.
Contributions
The Operating Subsidiary made
contributions to the pension plan of $10.0 million for fiscal 2014. The Operating Subsidiary currently meets and plans to continue to meet the minimum funding levels required under the Pension Protection Act of 2006 (the “Act”). The Act
imposes certain consequences on the Operating Subsidiary’s pension plan if it does not meet the minimum funding levels. The Operating Subsidiary has made contributions in excess of its required minimum amounts for fiscal 2014, fiscal 2013, and
fiscal 2012 and is more than 100% funded as of April 27, 2014. Due to uncertainties of future funding levels, as well as plan financial returns, the Company cannot predict whether the Operating Subsidiary will continue to achieve specified plan
funding thresholds or remain fully funded. In light of the merger discussed in Note 19, the Operating Subsidiary is currently evaluating whether to make a contribution in fiscal 2015.
Future Benefit Payments
As of April 27, 2014 the
projected future benefit payments for continuing operations are as follows (in millions):
|
|
|
|
|
|
|
|
|
| |
|
Pension
benefits |
|
|
Other
benefits |
|
| 2015 |
|
$ |
11.3 |
|
|
$ |
1.3 |
|
| 2016 |
|
|
10.6 |
|
|
|
1.4 |
|
| 2017 |
|
|
10.7 |
|
|
|
1.4 |
|
| 2018 |
|
|
11.1 |
|
|
|
1.5 |
|
| 2019 |
|
|
11.4 |
|
|
|
1.6 |
|
| Years 2020-2024 |
|
|
61.9 |
|
|
|
9.4 |
|
33
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Fair Value Hierarchy of Plan Assets
Plan assets: The Company has adopted the fair value provisions (as described in Note 9) for the plan assets of the Operating Subsidiary’s pension
plan. The Company categorizes plan assets within a three level fair value hierarchy.
The following is a description of the valuation methodologies used
for assets measured at fair value:
Investments stated at fair value as determined by quoted market prices (Level 1) include:
Interest bearing cash: valued based on cost, which approximates fair value;
Mutual funds: valued at quoted market prices on the last business day of the fiscal year;
Corporate stock: valued at the last reported sales price on the last business day of the fiscal year; and
Government securities: securities traded on a national securities exchange are valued at the last reported sales price on the last
business day of the fiscal year.
Investments stated at estimated fair value using significant observable inputs (Level 2) include:
Common collective trust funds: valued based on the net asset value of the fund and is redeemable daily;
Corporate debt securities: valued based on yields currently available on comparable securities of issuers with similar credit ratings;
Government securities: securities traded in the over-the-counter market and listed securities for which no sale was reported on the
last business day of the fiscal year are valued at the average of the last reported bid and ask price; and
Investments stated at estimated fair value
using significant unobservable inputs (Level 3) include:
Limited partnership interests: valued at their estimated fair value based
on audited financial statements of the partnerships. The plan held investments in a private limited partnership with unobservable inputs (Level 3).
Investments are valued at estimated fair value based on audited financial statements received from the general partner. The general partner annually engages
an independent appraiser to value the investments of the limited partnership.
The following table sets forth by level within the fair value hierarchy of
the plan’s assets at fair value as of April 27, 2014 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Investments at Fair Value |
|
|
|
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Plan investments in Master Trust: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing cash |
|
$ |
10.0 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
10.0 |
|
| Common collective trust funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fixed income |
|
|
— |
|
|
|
84.7 |
|
|
|
— |
|
|
|
84.7 |
|
| Equity index funds |
|
|
— |
|
|
|
39.4 |
|
|
|
— |
|
|
|
39.4 |
|
| Equity fund |
|
|
— |
|
|
|
16.5 |
|
|
|
— |
|
|
|
16.5 |
|
| Other funds |
|
|
— |
|
|
|
5.8 |
|
|
|
— |
|
|
|
5.8 |
|
| Mutual funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity fund |
|
|
8.0 |
|
|
|
— |
|
|
|
— |
|
|
|
8.0 |
|
| Corporate debt securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Corporate stock |
|
|
7.7 |
|
|
|
— |
|
|
|
— |
|
|
|
7.7 |
|
| Government securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Limited partnership interests |
|
|
— |
|
|
|
— |
|
|
|
4.3 |
|
|
|
4.3 |
|
| Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Investments |
|
$ |
25.7 |
|
|
$ |
146.4 |
|
|
$ |
4.3 |
|
|
$ |
176.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
In accordance with the Purchase Agreement, an initial transfer representing a portion of the fair value of
plan assets related to the Consumer Products Business was completed in connection with the closing date of February 18, 2014. A true-up adjustment was required within 270 days after the transaction closing date and the final transfer amount was
completed in February 2015, as referred to above under “Sale of the Consumer Products Business”. The total fair value of the plan’s assets in the table above includes the estimated residual fair value of plan assets to be transferred,
and is reconciled to plan assets reflected in the Consolidated Balance Sheets as follows (in millions):
|
|
|
|
|
| Investments at fair value as of April 27, 2014 |
|
$ |
176.4 |
|
| Less: Residual fair value of plan assets to be transferred |
|
|
(40.5 |
) |
|
|
|
|
|
| Net investments at fair value |
|
$ |
135.9 |
|
|
|
|
|
|
The following table sets forth by level within the fair value hierarchy of the plan’s assets at fair value for both
continuing and discontinued operations as of April 28, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Investments at Fair Value |
|
|
|
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Plan investments in Master Trust: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing cash |
|
$ |
5.5 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5.5 |
|
| Common collective trust funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fixed income |
|
|
— |
|
|
|
144.0 |
|
|
|
— |
|
|
|
144.0 |
|
| Equity index funds |
|
|
— |
|
|
|
106.3 |
|
|
|
— |
|
|
|
106.3 |
|
| Equity fund |
|
|
— |
|
|
|
39.4 |
|
|
|
— |
|
|
|
39.4 |
|
| Other funds |
|
|
— |
|
|
|
25.4 |
|
|
|
— |
|
|
|
25.4 |
|
| Mutual funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity fund |
|
|
31.7 |
|
|
|
— |
|
|
|
— |
|
|
|
31.7 |
|
| Corporate debt securities |
|
|
— |
|
|
|
46.2 |
|
|
|
— |
|
|
|
46.2 |
|
| Corporate stock |
|
|
26.3 |
|
|
|
— |
|
|
|
— |
|
|
|
26.3 |
|
| Government securities |
|
|
49.9 |
|
|
|
3.9 |
|
|
|
— |
|
|
|
53.8 |
|
| Limited partnership interests |
|
|
— |
|
|
|
— |
|
|
|
3.6 |
|
|
|
3.6 |
|
| Other |
|
|
— |
|
|
|
4.9 |
|
|
|
— |
|
|
|
4.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Investments |
|
$ |
113.4 |
|
|
$ |
370.1 |
|
|
$ |
3.6 |
|
|
$ |
487.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no transfers of plan assets between Level 1 and Level 2 or into or out of Level 3 during fiscal 2014 and fiscal
2013.
The Operating Subsidiary held investments in a private limited partnership with unobservable inputs (Level 3). Investments are valued at estimated
fair value based on audited financial statements received from the general partner. The general partner annually engages an independent appraiser to value the investments of the limited partnership.
Changes in fair value measurements of Level 3 investments during fiscal 2014 were as follows (in millions):
|
|
|
|
|
| |
|
Level 3 |
|
| Balance at April 29, 2012 |
|
$ |
3.7 |
|
| Unrealized loss |
|
|
(0.1 |
) |
|
|
|
|
|
| Balance at April 28, 2013 |
|
|
3.6 |
|
| Unrealized gain |
|
|
0.7 |
|
|
|
|
|
|
| Balance at April 27, 2014 |
|
$ |
4.3 |
|
|
|
|
|
|
The Operating Subsidiary’s investment objectives are to ensure that the assets of its pension plan are invested to
provide an optimal rate of investment return on the total investment portfolio, consistent with the assumption of a reasonable risk level, and to ensure that pension funds are available to meet the plan’s benefit obligations as they become due.
The Operating Subsidiary believes that a well-diversified investment portfolio, including both equity and fixed income components, will result in the highest attainable investment return with an acceptable level of overall risk. The Operating
Subsidiary’s investment policies and procedures are designed to ensure that the plan’s investments are in compliance with ERISA.
35
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Defined Contribution Plans. The Operating Subsidiary participates in three defined contribution plans,
two of which have company contributions. Contributions to these defined contribution plans are based on employee contributions and compensation. Contributions under these plans were as follows for the periods indicated (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Operating Subsidiary contributions |
|
$ |
5.1 |
|
|
$ |
5.4 |
|
|
$ |
5.6 |
|
Following the sale of the Consumer Products Business, the Operating Subsidiary transferred employees and retirees under the
defined contribution plans to the Acquiror in accordance with the Purchase Agreement.
Multi-employer Plans. The Operating Subsidiary participates
in one multi-employer pension plan, which provides defined benefits to certain union employees. Contributions to the plan were as follows for the periods indicated (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Operating Subsidiary contributions |
|
$ |
1.9 |
|
|
$ |
1.7 |
|
|
$ |
1.2 |
|
The risks of participating in multi-employer pension plans are different from the risks of participating in single-employer
pension plans in the following respects:
| |
• |
|
Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers; |
| |
• |
|
If a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to such withdrawing employer may be borne by the remaining participating employers; and |
| |
• |
|
If the Operating Subsidiary stops participating in its multi-employer pension plan, the Operating Subsidiary may be required to pay those plans an amount based on its allocable share of the underfunded status of the
plan, referred to as a withdrawal liability. |
The following table presents information regarding the multi-employer plan of the Operating
Subsidiary:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pension |
|
EIN/ Pension
Plan Number |
|
Pension Protection
Act Zone Status 1 |
|
FIP/RP Status
Pending/
Implemented2 |
|
Contributions of the
Operating Subsidiary
(For the 12 months ended
December
31)
(in millions) |
|
|
Surcharge
Imposed3 |
|
Expiration
Date of
Collective
Bargaining
Agreement |
| Fund Name |
|
|
2013 |
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
2011 |
|
|
|
| Bakery and Confectionery |
|
|
|
as of 1/1/13 |
|
as of 1/1/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yes |
|
|
| Union and Industry |
|
52-6118572 |
|
66.41% |
|
66.86% |
|
Implemented |
|
$ |
1.9 |
|
|
$ |
1.7 |
|
|
$ |
1.2 |
|
|
5% Calendar
2012 |
|
9/28/2014 |
| International Health |
|
|
|
RED |
|
RED |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10% Calendar
2013 |
|
|
| 1 |
The Pension Protection Act of 2006 ranks the funded status of multiemployer pension plans depending upon a plan’s current and projected funding. A plan is in the Red Zone (Critical) if it has a current funded
percentage less than 65%. A plan is in the Yellow Zone (Endangered) if it has a current funded percentage of less than 80%, or projects a credit balance deficit within seven years. A plan is in the Green Zone (Healthy) if it has a current funded
percentage greater than 80% and does not have a projected credit balance deficit within seven years. The zone status is based on the plan’s year end, not the Operating Subsidiary’s year-end. The zone status is based on information that the
Operating Subsidiary received from the plan and is certified by the plan’s actuary. During calendar year 2013, the Bakery and Confectionery Union and Industry International Health Benefits and Pension Fund (Bakery and Confectionery Union Fund)
were in Red Zone status. Although the current funding status as of calendar year 2013 was 66.41%, the plan’s actuary concluded that the funding status is more than likely to fall below 65% within the next five years and has classified the
Bakery and Confectionery Union Fund in Red Zone status. |
36
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
| 2 |
Funding Improvement Plan or Rehabilitation Plan as defined under ERISA has been implemented or is pending. |
| 3 |
Whether the Operating Subsidiary paid a surcharge to the Plan in the most current year due to funding shortfalls and the amount of the surcharge. |
| 4 |
The Operating Subsidiary was not listed in the Plan’s Form 5500 as providing more than 5% of the total contributions for the plan year ending December 31, 2012, the most recent year available.
|
Other Plans. The Operating Subsidiary has various other non-qualified retirement plans and supplemental retirement plans for
executives, designed to provide benefits in excess of those otherwise permitted under the Operating Subsidiary’s qualified retirement plans. These plans are unfunded and comply with the Internal Revenue Service (“IRS”) rules for
nonqualified plans.
| Note 12. |
Accumulated Other Comprehensive Income (Loss) |
The following table summarizes the reclassifications from
accumulated other comprehensive income (loss) to the Consolidated Statements of Operations for the fiscal year ended April 27, 2014 (in millions):
|
|
|
|
|
|
|
| Details about Accumulated Other
Comprehensive Income (Loss) Components |
|
Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss) |
|
|
Affected Line Item in the
Consolidated Statements of
Operations |
| |
|
Fiscal Year Ended
April 27, 2014 |
|
|
|
| Loss on cash flow hedges: |
|
|
|
|
|
|
| Commodity contracts |
|
$ |
(7.7 |
) |
|
Cost of products sold |
|
|
|
|
|
|
|
|
|
|
(7.7 |
) |
|
Total before tax |
|
|
|
|
|
|
|
|
|
|
(3.0 |
) |
|
Provision (benefit) for income taxes |
|
|
|
|
|
|
|
|
|
$ |
(4.7 |
) |
|
Net of tax |
|
|
|
|
|
|
|
|
|
|
| Defined benefit plan items1: |
|
|
|
|
|
|
| Amortization of prior service benefits |
|
$ |
1.4 |
|
|
|
| Amortization of actuarial losses |
|
|
(4.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(3.0 |
) |
|
Total before tax |
|
|
|
|
|
|
|
|
|
|
(1.2 |
) |
|
Provision (benefit) for income taxes |
|
|
|
|
|
|
|
| Total reclassifications |
|
$ |
(1.8 |
) |
|
Net of tax |
|
|
|
|
|
|
|
| 1 |
These accumulated and other comprehensive income (loss) components are included in the computation of net periodic benefit costs. See Note 11 for additional information. |
| Note 13. |
Other (Income) Expense, net |
The components of other (income) expense, net are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
|
|
|
|
| (Gain) loss on hedging contracts |
|
$ |
(14.9 |
) |
|
$ |
(9.8 |
) |
|
$ |
49.6 |
|
| Foreign currency transaction (gains) losses |
|
|
2.7 |
|
|
|
0.1 |
|
|
|
— |
|
| Other |
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total other (income) expense, net |
|
$ |
(12.1 |
) |
|
$ |
(9.8 |
) |
|
$ |
49.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
| Note 14. |
Provision for Income Taxes |
The provision (benefit) for income taxes from continuing operations consists
of the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
|
|
|
|
| Income (loss) from continuing operations before income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
$ |
(5.9 |
) |
|
$ |
(18.6 |
) |
|
$ |
(92.1 |
) |
| Foreign |
|
|
1.2 |
|
|
|
4.3 |
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(4.7 |
) |
|
$ |
(14.3 |
) |
|
$ |
(90.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax provision (benefit): |
|
|
|
|
|
|
|
|
|
|
|
|
| Current: |
|
|
|
|
|
|
|
|
|
|
|
|
| U.S federal |
|
$ |
9.0 |
|
|
$ |
1.6 |
|
|
$ |
6.4 |
|
| State and foreign |
|
|
0.2 |
|
|
|
0.3 |
|
|
|
3.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total current |
|
|
9.2 |
|
|
|
1.9 |
|
|
|
9.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
| U.S federal |
|
|
(9.4 |
) |
|
|
(8.7 |
) |
|
|
(32.4 |
) |
| State and foreign |
|
|
3.3 |
|
|
|
(1.5 |
) |
|
|
(0.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total deferred |
|
|
(6.1 |
) |
|
|
(10.2 |
) |
|
|
(32.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision (benefit) for income taxes |
|
$ |
3.1 |
|
|
$ |
(8.3 |
) |
|
$ |
(23.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant components of the Company’s deferred tax assets and liabilities are as follows (in millions):
|
|
|
|
|
|
|
|
|
| |
|
April 27,
2014 |
|
|
April 28,
2013 |
|
| Deferred tax assets: |
|
|
|
|
|
|
|
|
| Post employment benefits |
|
$ |
12.0 |
|
|
$ |
52.8 |
|
| Pension liability |
|
|
2.8 |
|
|
|
19.4 |
|
| Workers’ compensation |
|
|
1.3 |
|
|
|
12.4 |
|
| Net operating loss and tax credit carry forwards |
|
|
0.5 |
|
|
|
3.7 |
|
| Stock-based compensation |
|
|
16.9 |
|
|
|
12.5 |
|
| Fair value of derivatives |
|
|
9.3 |
|
|
|
26.9 |
|
| Inventory |
|
|
10.1 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
25.8 |
|
|
|
51.2 |
|
| Gross deferred tax assets |
|
|
78.7 |
|
|
|
178.9 |
|
| Deferred tax liabilities: |
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
61.0 |
|
|
|
134.9 |
|
| Intangible assets |
|
|
766.1 |
|
|
|
959.5 |
|
| Inventory |
|
|
— |
|
|
|
32.1 |
|
| Other |
|
|
18.7 |
|
|
|
6.3 |
|
|
|
|
|
|
|
|
|
|
| Gross deferred tax liabilities |
|
|
845.8 |
|
|
|
1,132.8 |
|
|
|
|
|
|
|
|
|
|
| Net deferred tax liability |
|
$ |
(767.1 |
) |
|
$ |
(953.9 |
) |
|
|
|
|
|
|
|
|
|
At April 27, 2014, the Company has not provided any valuation allowance on its deferred tax assets. In evaluating the
Company’s ability to realize its deferred tax assets, the Company considers all available positive and negative evidence and recognizes a benefit for those deferred tax assets that it believes will be more likely than not to be realized in the
future.
38
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
The differences between the expected provision (benefit) for income taxes and the actual provision (benefit)
for income taxes computed at the statutory U.S. federal income tax rate for continuing operations is explained as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Expected income provision (benefit) computed at the statutory U.S. federal income tax rate |
|
$ |
(1.6 |
) |
|
$ |
(5.0 |
) |
|
$ |
(31.6 |
) |
| State taxes, net of federal benefit |
|
|
0.5 |
|
|
|
(0.1 |
) |
|
|
(2.1 |
) |
| Expense (benefit) of state tax law change and change ineffective state rate |
|
|
3.2 |
|
|
|
(2.5 |
) |
|
|
0.9 |
|
| Non-deductible severance related costs |
|
|
— |
|
|
|
— |
|
|
|
8.3 |
|
| Non-deductible transaction costs |
|
|
1.6 |
|
|
|
— |
|
|
|
0.4 |
|
| Other |
|
|
(0.6 |
) |
|
|
(0.7 |
) |
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Actual provision (benefit) for income taxes |
|
$ |
3.1 |
|
|
$ |
(8.3 |
) |
|
$ |
(23.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of April 27, 2014, the Company has state net operating loss carryforwards of $0.8 million, which will expire in fiscal
2022 and 2025, and state tax credits of $0.8 million, which will expire in fiscal 2024. The net operating loss and tax credit carryforwards may be subject to limitations under Section 382 of the Internal Revenue Code.
The Company had gross unrecognized tax benefits of $7.6 million and $7.4 million as of April 27, 2014 and April 28, 2013, respectively.
Reconciliations of the beginning and ending balance of total unrecognized tax benefits for fiscal 2014 and fiscal 2013 are as follows (in millions):
|
|
|
|
|
|
|
|
|
| |
|
April 27,
2014 |
|
|
April 28,
2013 |
|
|
|
|
| Balance at beginning of year |
|
$ |
7.4 |
|
|
$ |
7.3 |
|
| Additions based on tax positions related to the current year |
|
|
0.6 |
|
|
|
1.0 |
|
| Additions based on tax positions of prior years |
|
|
2.5 |
|
|
|
1.2 |
|
| Reductions for tax positions of prior years |
|
|
(1.2 |
) |
|
|
— |
|
| Settlements |
|
|
(1.4 |
) |
|
|
— |
|
| Lapse of statute of limitations issues |
|
|
(0.3 |
) |
|
|
(2.1 |
) |
|
|
|
|
|
|
|
|
|
| Balance at end of year |
|
$ |
7.6 |
|
|
$ |
7.4 |
|
|
|
|
|
|
|
|
|
|
If recognized, $3.2 million and $5.8 million of the Company’s unrecognized tax benefits for fiscal 2014 and fiscal 2013,
respectively, would impact the effective tax rate on loss from continuing operations. The Company’s continuing practice is to recognize interest on uncertain tax positions in income tax expense (benefit) and penalties in selling, general and
administrative expense. For fiscal 2014, fiscal 2013, and fiscal 2012, the amount of interest recorded in the Consolidated Statements of Operations was $0.3 million, $0.2 million, and $0.0 million, respectively. As of April 27, 2014 and
April 28, 2013, the amount of accrued interest included in the non-current income tax liability account was $0.9 million and $1.0 million, respectively. The Company has no amounts accrued for penalties.
The Company files income tax returns in the U.S. and in some foreign and state jurisdictions. A number of years may elapse before an uncertain tax position,
for which the Company has unrecognized tax benefits, is audited and finally resolved. Favorable resolution would be recognized in the period of settlement. The Company believes it is reasonably possible it will settle an audit and close a tax year
to audit during the next 12 months. Should this occur, the liability for unrecognized tax benefits would decrease by approximately $2 million.
39
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
The Company has open tax years primarily from 2008 to 2013 with various significant taxing jurisdictions
including the U.S., Mexico and Canada. These open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, timing or inclusion of revenue and expenses as determined
by the various taxing jurisdictions.
Supplemental Disclosure of Cash Flow Information. Including discontinued operations, the Company made net
income tax payments of $422.3 million and $24.8 million for fiscal 2014 and fiscal 2013, respectively. The Company realized a significant taxable gain on the sale of the Consumer Products Business because the tax basis of assets associated with the
Consumer Products Business was not stepped up in connection with the Merger. Approximately $365.5 million of the fiscal 2014 tax payments relate to this taxable gain. The Company received net income tax refunds of $38.9 million for fiscal 2012,
which includes discontinued operations.
| Note 15. |
Commitments and Contingencies |
As part of its ongoing operations, the Operating Subsidiary enters into
arrangements that obligate it to make future payments to various parties. Some of these contractual and other cash obligations are not reflected on the Consolidated Balance Sheets due to their nature. Such obligations include operating leases and
other purchase commitments.
Lease Commitments
The
Operating Subsidiary leases certain property, equipment and office and warehouse facilities. At April 27, 2014, the aggregate minimum rental payments required under non-cancelable operating leases were as follows (in millions):
|
|
|
|
|
| 2015 |
|
$ |
21.1 |
|
| 2016 |
|
|
17.6 |
|
| 2017 |
|
|
14.3 |
|
| 2018 |
|
|
11.8 |
|
| 2019 |
|
|
11.3 |
|
| Thereafter |
|
|
20.3 |
|
Rent expense related to operating leases was comprised of the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Minimum rentals |
|
$ |
26.8 |
|
|
$ |
23.1 |
|
|
$ |
24.0 |
|
| Contingent rentals |
|
|
6.5 |
|
|
|
7.3 |
|
|
|
7.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
33.3 |
|
|
$ |
30.4 |
|
|
$ |
31.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Operating Subsidiary sub-leases office space to the Acquiror of the Consumer Products Business in addition to others.
Future minimum rentals to be received under all non-cancelable operating sub-leases through March 31, 2021 were $24.5 million as of April 27, 2014.
Other Purchase Commitments
Co-pack, Packaging and
Service Commitments. The Operating Subsidiary has entered into non-cancelable agreements with co-packers, packaging suppliers and other service providers with commitments generally ranging from one year to five years. In addition, the Operating
Subsidiary has commitments under purchase orders with co-packers. Pricing under a metal can supplier agreement is adjusted up to twice a year to reflect changes in metal costs and annually to reflect changes in the costs of manufacturing.
40
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Total purchases under these agreements and purchase orders were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Purchases |
|
$ |
271.7 |
|
|
$ |
316.5 |
|
|
$ |
275.4 |
|
Certain of the Operating Subsidiary’s products are supplied by a sole source co-packer located in the U.S.
At April 27, 2014, aggregate purchase commitments under non-cancelable agreements with co-packers, packaging suppliers and other service providers are
estimated as follows (in millions):
|
|
|
|
|
| 2015 |
|
$ |
238.9 |
|
| 2016 |
|
|
106.5 |
|
| 2017 |
|
|
106.7 |
|
| 2018 |
|
|
107.5 |
|
| 2019 |
|
|
108.9 |
|
| Thereafter |
|
|
280.9 |
|
Ingredients and other. The Operating Subsidiary has purchase commitments with vendors for various ingredients and other
items. Total commitments under these agreements with payments due in fiscal 2015 were approximately $138.5 million and with payments due in fiscal 2016 were approximately $8.9 million as of April 27, 2014.
Union Contracts
As of April 27, 2014, the Operating
Subsidiary had seven collective bargaining agreements with seven union locals covering approximately 45% of its hourly employees. Of these employees, approximately 28% are covered under collective bargaining agreements scheduled to expire in fiscal
2015, approximately 1% are covered under collective bargaining agreements scheduled to expire in fiscal 2016 to fiscal 2019 and approximately 71% are covered under collective bargaining agreements scheduled to expire in fiscal 2020. These agreements
are subject to negotiation and renewal. The agreements scheduled to expire in fiscal 2015 have since been renewed.
Legal Proceedings
Commercial Litigation Involving the Company and its Subsidiaries
On February 2, 2015, Plaintiff filed a complaint in the U.S. District Court of the Northern District of Florida (Thomas v. Big Heart Pet Brands),
alleging false and misleading advertising and misbranding under Florida’s consumer protection laws, negligence and breach of warranties. Specifically, the complaint alleges that Nature’s Recipe claims of “all natural” and
“no artificial preservatives” on its packaging are inaccurate and misleading. Plaintiff seeks certification as a class action and damages in excess of $5.0 million. The Operating Subsidiary denies these allegations and intends to
vigorously defend itself. The Operating Subsidiary cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.
On
October 31, 2014, the Ecuador National Court of Justice issued a final, non-appealable decision relating to the appeal by Empresa Pesquara Ecautorian S.A. Empesec (“Empesec”), an Ecuadorian corporation, of tax assessment claims made
by the Ecuador Internal Revenue Service (“EIRS”) against Empesec for the 1999 tax year. Empesec is a former indirect subsidiary of H.J. Heinz Company (“Heinz”) involved in the North American tuna business (including the
StarKist brand) that the Operating Subsidiary acquired from Heinz in December 2002 and subsequently sold in October 2008. Empesec has been disputing the 1999 tax year assessment in court along with an assessment related to the 2000 tax year
(an appeal relating to the 2000 assessment is currently pending). The Operating Subsidiary did not have a business relationship with Empesec during 1999 or 2000. The assessment for the 1999 tax year is subject to enforcement against Empesec;
however, Empesec believes that Heinz has an indemnification obligation. The Operating Subsidiary understands that as of May 2013 the amount assessed for the 1999 tax year was approximately $4.5 million and the amount assessed
41
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
for the 2000 tax year was approximately $5.2 million (including interest). The Operating Subsidiary believes that Heinz retained the obligation to indemnify Empesec for these tax assessments.
Recently, beginning in June 2013, Heinz has asserted that the Operating Subsidiary was responsible for indemnifying Empesec for the assessments. The Operating Subsidiary responded to Heinz that the language of the agreements relating to the 2002
acquisition of the North American tuna and other businesses from Heinz and its decade-long course of conduct made Heinz responsible for the indemnification obligation. Heinz and the Operating Subsidiary have continued these discussions with no
resolution. No litigation against the Operating Subsidiary has been initiated or threatened by Heinz. The Operating Subsidiary plans to continue to vigorously assert its position that Heinz bears full responsibility for the indemnification
obligation. Since the Operating Subsidiary believes that Heinz is responsible for the indemnification obligation, it does not believe that a loss is probable at this time. However, the Operating Subsidiary cannot currently predict the ultimate
outcome of this matter and therefore cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.
On January 31,
2014, Plaintiff filed a complaint in the Superior Court of California, San Francisco County (Gamez v. Del Monte) alleging violations of various California wage and hour statutes. This lawsuit was transferred to Del Monte Foods, Inc. pursuant
to the terms of the Purchase Agreement. However, liabilities associated with Kingsburg, CA and Terminal Island, CA facilities were retained by the Operating Subsidiary. On August 7, 2014, the Court approved to transfer this case to the Superior
Court of California, Fresno County. On October 14, 2014, the Operating Subsidiary was served with the Complaint. Del Monte Foods, Inc. is maintaining primary defense of the litigation, but any settlement made with the class will likely include
the Operating Subsidiary. The Operating Subsidiary denies these allegations and intends to vigorously defend itself. The Operating Subsidiary has accrued an estimated amount to resolve this matter that is not considered material.
On April 19, 2013, Plaintiff filed a complaint on behalf of himself and all other similarly situated employees in Superior Court of California, Alameda
County (Montgomery v. Del Monte) alleging, inter alia, failure to provide meal and rest periods and pay wages properly in violation of various California wage and hour statutes. This lawsuit was transferred to Del Monte Foods, Inc.
pursuant to the terms of the Purchase Agreement. However, liabilities associated with Kingsburg, CA and Terminal Island, CA facilities were retained by the Operating Subsidiary. Del Monte Foods, Inc. is maintaining primary defense of the litigation,
but any settlement made with the class will likely include the Operating Subsidiary. The Operating Subsidiary denies these allegations and intends to vigorously defend itself. Mediation was held on June 24, 2014. A settlement was preliminarily
approved by the Court on December 4, 2014. The hearing for final Court approval is set for May 18, 2015. The Operating Subsidiary has accrued an estimated amount to resolve this matter that is not considered material, and the Operating
Subsidiary’s share of the settlement is expected to be covered by the amount accrued.
On January 31, 2013, a putative class action complaint
was filed against the Operating Subsidiary in the Circuit Court of Jackson County, Missouri (Miller v. Del Monte, formerly known as Harmon v. Del Monte) alleging that Milo’s Kitchen chicken jerky treats (“Chicken Jerky
Treats”) and Milo’s Kitchen Chicken Grillers Recipe home-style dog treats contain “poisonous antibiotics and other potentially lethal substances.” Plaintiff seeks certification as a class action, as well as restitution and
damages not to exceed $75,000 per class member and the aggregated claim for damages of the class not to exceed $5.0 million under the Missouri Merchandising Practices Act. The complaint also alleges the Operating Subsidiary continued to sell its
Chicken Jerky Treats in Jackson County, Missouri after it announced its recall of the product on January 9, 2013. The Operating Subsidiary successfully removed this case to federal court on March 12, 2013. On April 9, 2013, Plaintiff
filed a Second Amended Class Action Petition against the Operating Subsidiary. The Operating Subsidiary filed its Motion to Transfer to the Western District of Pennsylvania on April 19, 2013 and its Motion to Stay Pending the Motion to Transfer
on April 25, 2013. The Motion to Stay was granted the same day it was filed. On May 6, 2013, Plaintiff filed an Opposition to Defendant’s Motion to Transfer. The Operating Subsidiary filed its Reply in Support of its Motion to
Transfer on May 23, 2013. The Court denied the Operating Subsidiary’s Motion to Transfer on July 22, 2013. The Operating Subsidiary filed its Answer on August 13, 2013 and discovery has commenced. On February 3, 2014,
Plaintiff filed a Third Amended Complaint and filed a Fourth Amended Complaint to include an additional named plaintiff on April 22, 2014. The Plaintiffs filed a Fifth Amended Complaint on July 14, 2014 to include an additional Plaintiff
and remove Harmon as a named Plaintiff. The Opposition to the Plaintiffs’ Motion for Class Certification was filed on January 20, 2015. The Operating Subsidiary denies these allegations and intends to vigorously defend itself. The
Operating Subsidiary cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.
On September 6,
2012, October 12, 2012 and October 16, 2012, three separate putative class action complaints were filed against the Operating Subsidiary in U.S. District Court for the Northern District of California (Langone v. Del Monte,
Ruff v. Del Monte, and Funke v. Del Monte, respectively) alleging product liability claims relating to Chicken Jerky Treats. Specifically, the complaints allege that Plaintiffs’ dogs became ill as a result of consumption of
Chicken Jerky Treats. The complaints also allege that the Operating
42
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Subsidiary breached its warranties and California’s consumer protection laws. Each of the complaints seeks certification as a class action and damages in excess of $5.0 million. The
Operating Subsidiary denies these allegations and intends to vigorously defend itself. On December 18, 2012, Plaintiffs filed a motion to relate and consolidate the Langone, Ruff and Funke matters. The Operating Subsidiary
agreed that the cases are related but argued in its response that they should not be consolidated. The Court ordered the cases are related in an Order on January 24, 2013. In the Langone case, the Operating Subsidiary filed a Motion to
Transfer/Dismiss on February 1, 2013. Plaintiff in the Langone matter voluntarily dismissed his Complaint without prejudice on February 21, 2013 and re-filed in the U.S. District Court for the Western District of Pennsylvania on
May 21, 2013. The Operating Subsidiary filed its Motion to Dismiss in the Langone case with the U.S. District Court for the Western District of Pennsylvania on August 2, 2013. The individual claims in the Langone case were
settled for a de minimus amount, and a stipulation to dismiss with prejudice was filed on November 25, 2013. On April 9, 2013, the Court transferred Ruff and Funke to the U.S. District Court for the Western District of
Pennsylvania but denied without prejudice Defendant’s motions to consolidate and dismiss. On April 23, 2013, the Operating Subsidiary filed its Motion to Dismiss in Ruff and Funke with the U.S. District Court for the Western
District of Pennsylvania and its Reply in Support of its Motion to Dismiss in both cases on June 3, 2013. On February 11, 2014, the Magistrate Judge issued a Report and Recommendation that the Motion to Dismiss be granted as to
Plaintiffs’ claim for unjust enrichment and denied in all other respects. The Operating Subsidiary filed its objections to the Report and Recommendations on March 5, 2014. The District Judge adopted the Magistrate Judge’s Report and
Recommendation on March 25, 2014. The Operating Subsidiary filed its Answer on April 8, 2014. The Operating Subsidiary cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.
On July 19, 2012, a putative class action complaint was filed against the Operating Subsidiary in U.S. District Court for the Western District of
Pennsylvania (Mazur v. Del Monte) alleging product liability claims relating to Chicken Jerky Treats. Specifically, the complaint alleges that Plaintiff’s dog became ill and had to be euthanized as a result of consumption of Chicken
Jerky Treats. The complaint also alleges that the Operating Subsidiary breached its warranties and Pennsylvania’s consumer protection laws. The complaint seeks certification as a class action and damages in excess of $5.0 million. The Operating
Subsidiary denies these allegations and intends to vigorously defend itself. On August 3, 2012, Plaintiff’s counsel filed a Motion to Consolidate the previously filed two similar class actions against Nestle Purina Petcare Company, owner
of the Waggin’ Train brand of chicken jerky treats, in U.S. District Court for the Northern District of Illinois under the federal rules for multi-district litigation (“MDL”). Plaintiff’s Motion also sought to include the case
against the Operating Subsidiary in the proposed MDL consolidation as a “related case.” On September 28, 2012, the Court denied the MDL Motion. The case will now proceed in the jurisdiction in which it was originally filed. Plaintiff
filed a Motion for Leave to Commence Limited Discovery on the subject of the voluntary recall of Chicken Jerky Treats on January 25, 2013. The Operating Subsidiary filed its response opposing the Motion on February 8, 2013. The Court
denied Plaintiff’s Motion on March 12, 2013; thus, discovery is stayed until the Court rules on the Operating Subsidiary’s Motion to Dismiss, which was filed on September 24, 2012. On May 24, 2013, the Judge in the matter
issued a Report and Recommendation stating that the Motion to Dismiss be granted as to Plaintiff’s claim for unjust enrichment and denied in all other respects. The Operating Subsidiary filed its Objections to the Report and Recommendation on
June 7, 2013. The Court issued an Order adopting the Magistrate Judge’s Report and Recommendation on June 25, 2013. The Court denied the Operating Subsidiary’s Motion for Reconsideration on July 8, 2013. The Operating
Subsidiary filed its Answer on August 2, 2013. The Operating Subsidiary cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.
On August 16, 2013, the Langone, Ruff, Funke and Mazur cases were consolidated.
On June 22, 2012, a putative class action complaint was filed against the Operating Subsidiary in Los Angeles Superior Court (Webster v. Del
Monte) alleging false advertising under California’s consumer protection laws, negligence, breach of warranty and strict liability. Specifically, the complaint alleges that the Operating Subsidiary engaged in false advertising by
representing that the Chicken Jerky Treats are healthy, wholesome, and safe for consumption by dogs, and alleges that Plaintiff’s pet became ill after consuming Chicken Jerky Treats. The allegations apply to all other putative class members
similarly situated. The complaint seeks certification as a class action and unspecified damages, disgorgement of profits, punitive damages, attorneys’ fees and injunctive relief. The Operating Subsidiary denies these allegations and intends to
vigorously defend itself. On September 6, 2012, the Operating Subsidiary filed a Notice of Removal to remove the case to the U.S. District Court for the Central District of California. Plaintiff subsequently filed a motion to amend its
complaint to remove the federal class action claims and remand the case back to Los Angeles County Superior Court. The Operating Subsidiary subsequently stipulated to Plaintiff’s motion, and the case has been remanded to Los Angeles County
Superior Court. The Operating Subsidiary filed a Motion for Judgment on the Pleadings on July 3, 2013. The Plaintiff filed an Opposition on August 21, 2013. The Operating Subsidiary filed its Reply on August 27, 2013. The Court denied
the
43
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Operating Subsidiary’s Motion for Judgment on the Pleadings on February 20, 2014. The Operating Subsidiary cannot at this time reasonably estimate a range of exposure, if any, of the
potential liability.
| Note 16. |
Related Party Transactions |
Substantially all of the Company’s outstanding common stock is held by
Blue Holdings I, L.P.; a partnership that is controlled by funds affiliated with the Sponsors. Blue Holdings GP, LLC is the general partner of Blue Holdings I, L.P. Funds affiliated with the Sponsors control Blue Holdings GP, LLC. The following
provides a summary of material transactions that involve the Company, the Operating Subsidiary, DMFC, management, the Sponsors and entities affiliated with the Sponsors, Blue Sub, Blue Holdings I, L.P. and Blue Holdings GP, LLC.
Equity Contributions – Capitalization of the Company
Pursuant to an equity contribution agreement dated March 8, 2011, and an equity contribution and subscription agreement, dated February 16, 2011,
Blue Holdings I, L.P. contributed to the Company the sum of approximately $1,564.2 million and received from the Company 312,829,237 shares of common stock of the Company. The Operating Subsidiary’s (i) Executive Vice President and Chief
Financial Officer and (ii) then Chief Operating Officer contributed approximately $0.6 million in the aggregate in cash to the Company and received 125,644 shares of common stock of the Company. Blue Acquisition Group, Inc. then contributed to
Blue Sub approximately $1,550.7 million and paid $14.2 million in expenses on behalf of Blue Sub, and received from Blue Sub 10 shares of common stock of Blue Sub, which represented 100% of Blue Sub’s outstanding common stock.
Transactions with the Sponsors
Monitoring Agreement
On March 8, 2011, in connection with the Merger, entities affiliated with the Sponsors and an entity affiliated with AlpInvest Partners (the
“AlpInvest Manager,” together with the affiliates of the Sponsors, collectively, the “Managers”) entered into a monitoring agreement (the “Monitoring Agreement”) with the Operating Subsidiary, the Company and Blue
Holdings I, L.P., pursuant to which the Managers provide management, consulting, financial and other advisory services to the Operating Subsidiary and to its divisions, subsidiaries, parent entities and controlled affiliates. Pursuant to the
Monitoring Agreement, the Managers, other than the AlpInvest Manager, are entitled to receive an aggregate annual advisory fee to be allocated among the Sponsors in accordance with their respective equity holdings in Blue Holdings I, L.P. in an
amount equal to the greater of (i) $6.5 million and (ii) 1.00% of the Operating Subsidiary’s “Adjusted EBITDA” (as defined in the Senior Notes Indenture) less an annual advisory fee of approximately $0.25 million paid to the
AlpInvest Manager. For fiscal 2014, fiscal 2013, and fiscal 2012, the total expense for the Monitoring Agreement was $6.6 million, $6.7 million, and $6.5 million, respectively. As of April 27, 2014, there was a payable of $1.6 million due to
the Managers related to the Monitoring Agreement, which amount is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.
The Managers also receive reimbursement of reasonable out-of-pocket expenses incurred in connection with the provision of services pursuant to the Monitoring
Agreement. The Monitoring Agreement will continue indefinitely unless terminated by the consent of all the parties thereto. In addition, the Monitoring Agreement will terminate automatically upon an initial public offering of the Company, unless the
Operating Subsidiary elects by prior written notice to continue the Monitoring Agreement. Upon a change of control of the Company, the Operating Subsidiary may terminate the Monitoring Agreement.
Indemnification Agreement
On March 8, 2011, DMFC,
the Company, Blue Holdings I, L.P. and Blue Holdings GP, LLC, entered into an indemnification agreement with the Managers. This indemnification agreement contains a customary exculpation and indemnification provisions in favor of the Managers and
their affiliates.
44
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Sale of the Consumer Products Business
In February 2014, following the sale of the Consumer Products Business, the Operating Subsidiary paid a total of $15.0 million to the Sponsors for transaction
related fees, which included $8.9 million to KKR, $4.2 million to Vestar, $1.6 million to Centerview, and $0.3 million to the AlpInvest Manager. The Operating Subsidiary also paid an advisory fee of $9.4 million to Centerview Partners LLC, an
affiliate of Centerview.
Pittsburgh Office Space Lease
On July 31, 2012, the Operating Subsidiary assigned its Right Of First Refusal (“ROFR”) with respect to its leased administrative space in
Pittsburgh, Pennsylvania (“Pittsburgh Office Space”) and the related Landlord Partnership Interests to an affiliate of KKR. On November 20, 2012, a KKR affiliate purchased 89% of the Landlord Partnership Interests, and made a payment
of $0.4 million to the Operating Subsidiary in consideration of the prior assignment of the ROFR. As a result, the KKR affiliate is the beneficiary of future lease payments made by the Operating Subsidiary through the remaining term of the lease.
For the fiscal year ended April 27, 2014, the Operating Subsidiary paid approximately $2.8 million of rent to the KKR affiliate. For the period from November 20, 2012 to April 28, 2013, the Operating Subsidiary paid approximately $1.2
million of rent to the KKR affiliate.
Natural Balance Acquisition
The Operating Subsidiary paid $3.5 million to a Vestar advisor for a finder’s fee related to the Natural Balance acquisition during fiscal 2014.
Financing Arrangements
In February 2014, the Operating
Subsidiary paid $0.4 million to KKR Capital Markets LLC, an affiliate of KKR (“KCM”), for arrangement services in connection with entering into an amendment to the Senior Secured Term Loan Credit Agreement and refinancing the Senior
Secured Asset-Based Revolving Credit Agreement.
Other Transactions
Equity Method Investees
The Operating Subsidiary made
total purchases of $82.8 million from equity method investees during fiscal 2014.
In January 2013, the Operating Subsidiary engaged KCM to act as a joint
lead arranger and joint bookrunner in connection with the amendment to the Senior Secured Term Loan Credit Agreement. KCM received approximately $0.6 million for its services in arranging the transaction.
45
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
| Note 17. |
Quarterly Results of Operations (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
First |
|
|
Second |
|
|
Third |
|
|
Fourth |
|
| |
|
(in millions) |
|
| Fiscal 2014: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net sales |
|
$ |
481.0 |
|
|
$ |
552.0 |
|
|
$ |
575.7 |
|
|
$ |
581.4 |
|
| Operating income |
|
|
66.2 |
|
|
|
71.8 |
|
|
|
82.4 |
|
|
|
34.4 |
|
| Net income (loss) |
|
|
19.9 |
|
|
|
(92.7 |
) |
|
|
34.2 |
|
|
|
(91.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
First |
|
|
Second |
|
|
Third |
|
|
Fourth |
|
| |
|
(in millions) |
|
| Fiscal 2013: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net sales |
|
$ |
458.3 |
|
|
$ |
497.0 |
|
|
$ |
527.0 |
|
|
$ |
506.7 |
|
| Operating income |
|
|
28.1 |
|
|
|
57.1 |
|
|
|
65.1 |
|
|
|
82.8 |
|
| Net income |
|
|
6.3 |
|
|
|
29.6 |
|
|
|
28.3 |
|
|
|
28.0 |
|
As described in Note 4, the Company recognized a non-cash impairment charge of $193.8 million before income taxes in the
second quarter of fiscal 2014 as well as a pre-tax gain on sale of $1.2 million (recognized in the fourth quarter of fiscal 2014) related to the sale of the Consumer Products Business. In the fourth quarter of fiscal 2014, the Company also incurred
a significant tax expense within discontinued operations associated with the significant taxable gain on the sale of the Consumer Products Business.
Net
sales and operating income as presented in the quarterly results of operations above are for continuing operations.
| Note 18. |
Geographic Information |
The following table presents domestic and foreign net sales as a percentage of
total net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal
2014 |
|
|
Fiscal
2013 |
|
|
Fiscal
2012 |
|
| Percentage of net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
95.7 |
% |
|
|
96.4 |
% |
|
|
96.2 |
% |
| Foreign |
|
|
4.3 |
% |
|
|
3.6 |
% |
|
|
3.8 |
% |
At April 27, 2014, substantially all of the Company’s fixed assets are located in the United States.
| Note 19. |
Subsequent Events |
The Company has evaluated subsequent events through March 5, 2015, the date of
issuance of the consolidated financial statements, and determined the following to disclose:
On February 3, 2015, the Company entered into an
Agreement and Plan of Merger (the “Merger Agreement”) with The J. M. Smucker Company (“Smucker”), and certain subsidiaries of Smucker, pursuant to which Smucker will acquire the Company (the “Smucker Merger”), on the
terms and subject to the conditions set forth in the Merger Agreement. The aggregate purchase price paid by Smucker will consist of approximately 17.9 million shares of Smucker common stock and approximately $1.3 billion in cash, subject to a
post-closing working capital adjustment, and adjustment for cash, transaction expenses and certain other amounts. Smucker will also refinance approximately $2.6 billion of the Operating Subsidiary’s outstanding debt.
Under the 2011 Stock Incentive Plan for Key Employees of the Company, the Smucker Merger constitutes a change in control transaction. As of the Smucker Merger
closing date, any outstanding unvested portion of restricted common stock, service-based stock options, EBITDA Performance Options and, except for one officer, Exit Return Options become vested and all vested restricted common stock and stock
options will be converted into Smucker common stock and cash pursuant to the terms of the Merger
46
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 27, 2014
Agreement. The Operating Subsidiary is currently evaluating and will recognize stock compensation expense related to the accelerated vesting of restricted common stock and stock options in the
Company’s consolidated statement of operations upon closing of the Smucker Merger.
On February 13, 2015, the Operating Subsidiary issued a
notice pursuant to the indenture governing its $900.0 million outstanding 7.625% Senior Notes due 2019, that it intends to redeem the full aggregate principal amount outstanding of the Senior Notes as early as March 16, 2015. The Senior Notes
will be redeemed at a redemption price equal to 101.906% of their aggregate principal amount plus accrued and unpaid interest to the redemption date. The Company is obligated to pay the redemption price on the redemption date and is subject to the
occurrence of the Effective Time (as defined in the Merger Agreement) among the Company and Smucker, the receipt by Smucker of net cash proceeds from third-party debt financing sources for the purpose of enabling Smucker to fulfill its obligations
under the Merger Agreement, and receipt by the Operating Subsidiary of immediately available funds for the purpose of enabling the Operating Subsidiary to redeem the Senior Notes in full and pay certain fees and expenses in connection therewith.
47
Exhibit 99.3
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Financial Statements
As of January 25, 2015 and April 27, 2014 and for
the Nine Months Ended January 25, 2015 and January 26, 2014
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
For the Nine Months Ended January 25, 2015
Table of Contents
|
|
|
|
|
| CONDENSED CONSOLIDATED BALANCE SHEETS – January 25, 2015 (unaudited) and April 27, 2014 |
|
|
1 |
|
|
|
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) – nine months ended January 25, 2015 and January 26,
2014 |
|
|
2 |
|
|
|
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) – nine months ended January 25, 2015 and
January 26, 2014 |
|
|
3 |
|
|
|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) – nine months ended January 25, 2015 and January 26,
2014 |
|
|
4 |
|
|
|
| NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
|
|
5 |
|
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
|
|
|
|
|
|
|
|
|
| |
|
January 25,
2015 |
|
|
April 27,
2014 |
|
| |
|
(unaudited) |
|
|
(derived from audited
financial statements) |
|
| |
|
|
|
|
See Note 1 |
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
155.8 |
|
|
$ |
112.8 |
|
| Trade accounts receivable, net of allowance |
|
|
146.4 |
|
|
|
127.2 |
|
| Inventories, net |
|
|
213.6 |
|
|
|
227.5 |
|
| Prepaid expenses and other current assets |
|
|
118.7 |
|
|
|
164.3 |
|
|
|
|
|
|
|
|
|
|
| Total current assets |
|
|
634.5 |
|
|
|
631.8 |
|
|
|
|
| Property, plant and equipment, net |
|
|
363.6 |
|
|
|
375.4 |
|
| Goodwill |
|
|
2,113.4 |
|
|
|
2,113.4 |
|
| Intangible assets, net |
|
|
2,119.8 |
|
|
|
2,155.2 |
|
| Other assets, net |
|
|
89.6 |
|
|
|
87.8 |
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
$ |
5,320.9 |
|
|
$ |
5,363.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses |
|
$ |
291.8 |
|
|
$ |
367.8 |
|
| Current portion of long-term debt |
|
|
17.3 |
|
|
|
17.3 |
|
|
|
|
|
|
|
|
|
|
| Total current liabilities |
|
|
309.1 |
|
|
|
385.1 |
|
|
|
|
| Long-term debt, net of discount |
|
|
2,590.4 |
|
|
|
2,603.0 |
|
| Deferred tax liabilities |
|
|
790.7 |
|
|
|
792.1 |
|
| Other non-current liabilities |
|
|
75.1 |
|
|
|
95.3 |
|
|
|
|
|
|
|
|
|
|
| Total liabilities |
|
|
3,765.3 |
|
|
|
3,875.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock, restricted common stock and stock options classified as temporary equity |
|
|
25.3 |
|
|
|
23.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders’ equity: |
|
|
|
|
|
|
|
|
| Common stock ($0.01 par value per share, shares authorized: |
|
|
|
|
|
|
|
|
| 1,000,000,000; 314,857,728 and 314,402,328 issued and outstanding, respectively) |
|
|
3.1 |
|
|
|
3.1 |
|
| Additional paid-in capital |
|
|
1,567.3 |
|
|
|
1,563.4 |
|
| Accumulated other comprehensive income |
|
|
7.6 |
|
|
|
8.4 |
|
| Retained earnings (accumulated deficit) |
|
|
(47.7 |
) |
|
|
(109.9 |
) |
|
|
|
|
|
|
|
|
|
| Total stockholders’ equity |
|
|
1,530.3 |
|
|
|
1,465.0 |
|
|
|
|
|
|
|
|
|
|
| Total liabilities, common stock, restricted common stock and stock options classified as temporary equity and stockholders’
equity |
|
$ |
5,320.9 |
|
|
$ |
5,363.6 |
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to the Condensed Consolidated Financial Statements.
1
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in millions)
|
|
|
|
|
|
|
|
|
| |
|
Nine Months Ended |
|
| |
|
January 25,
2015 |
|
|
January 26,
2014 |
|
| Net sales |
|
$ |
1,685.1 |
|
|
$ |
1,608.7 |
|
| Cost of products sold |
|
|
1,088.7 |
|
|
|
1,026.3 |
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
|
596.4 |
|
|
|
582.4 |
|
| Selling, general and administrative expense |
|
|
367.6 |
|
|
|
362.0 |
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
228.8 |
|
|
|
220.4 |
|
| Interest expense |
|
|
105.7 |
|
|
|
176.8 |
|
| Other (income) expense, net |
|
|
19.9 |
|
|
|
(9.8 |
) |
|
|
|
|
|
|
|
|
|
| Income from continuing operations before income taxes |
|
|
103.2 |
|
|
|
53.4 |
|
| Provision for income taxes |
|
|
40.9 |
|
|
|
25.0 |
|
|
|
|
|
|
|
|
|
|
| Income from continuing operations |
|
|
62.3 |
|
|
|
28.4 |
|
| Loss from discontinued operations before income taxes |
|
|
(5.1 |
) |
|
|
(105.4 |
) |
| Benefit for income taxes |
|
|
(5.0 |
) |
|
|
(38.4 |
) |
|
|
|
|
|
|
|
|
|
| Loss from discontinued operations |
|
|
(0.1 |
) |
|
|
(67.0 |
) |
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
62.2 |
|
|
$ |
(38.6 |
) |
|
|
|
|
|
|
|
|
|
See accompanying Notes to the Condensed Consolidated Financial Statements.
2
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)
(in millions)
|
|
|
|
|
|
|
|
|
| |
|
Nine Months Ended |
|
| |
|
January 25,
2015 |
|
|
January 26,
2014 |
|
| Net income (loss) |
|
$ |
62.2 |
|
|
$ |
(38.6 |
) |
|
|
|
|
|
|
|
|
|
| Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
| Foreign currency translation adjustments |
|
|
— |
|
|
|
(1.5 |
) |
| Pension and other postretirement benefit adjustments: |
|
|
6.9 |
|
|
|
(0.6 |
) |
| Gain (loss) on cash flow hedging instruments, net of tax |
|
|
(7.7 |
) |
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
| Total other comprehensive loss |
|
|
(0.8 |
) |
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
| Comprehensive income (loss) |
|
$ |
61.4 |
|
|
$ |
(38.0 |
) |
|
|
|
|
|
|
|
|
|
See accompanying Notes to the Condensed Consolidated Financial Statements.
3
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in millions)
|
|
|
|
|
|
|
|
|
| |
|
Nine Months Ended |
|
| |
|
January 25,
2015 |
|
|
January 26,
2014 |
|
| Operating activities: |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
62.2 |
|
|
$ |
(38.6 |
) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
74.5 |
|
|
|
102.3 |
|
| Deferred taxes |
|
|
(3.9 |
) |
|
|
(62.3 |
) |
| Write off of debt issuance costs and loss on debt refinancing/repricing |
|
|
— |
|
|
|
1.7 |
|
| Loss on asset disposals |
|
|
1.3 |
|
|
|
3.7 |
|
| Stock compensation expense |
|
|
7.3 |
|
|
|
11.8 |
|
| Unrealized (gain) loss on derivative financial instruments |
|
|
23.0 |
|
|
|
(25.1 |
) |
| Impairment on assets held for sale |
|
|
— |
|
|
|
193.8 |
|
| Other items, net |
|
|
(1.2 |
) |
|
|
(0.6 |
) |
| Changes in operating assets and liabilities |
|
|
(69.8 |
) |
|
|
(263.4 |
) |
|
|
|
|
|
|
|
|
|
| Net cash provided by (used in) operating activities |
|
|
93.4 |
|
|
|
(76.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| Investing activities: |
|
|
|
|
|
|
|
|
| Capital expenditures |
|
|
(38.6 |
) |
|
|
(64.5 |
) |
| Net costs from asset disposals |
|
|
9.1 |
|
|
|
0.2 |
|
| Cash used in business acquisition, net of cash acquired |
|
|
— |
|
|
|
(334.6 |
) |
| Purchases of equity method investments |
|
|
(7.6 |
) |
|
|
(14.6 |
) |
| Other items, net |
|
|
(0.2 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
| Net cash used in investing activities |
|
|
(37.3 |
) |
|
|
(413.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| Financing activities: |
|
|
|
|
|
|
|
|
| Proceeds from short-term borrowings |
|
|
— |
|
|
|
239.9 |
|
| Payments on short-term borrowings |
|
|
— |
|
|
|
(240.9 |
) |
| Principal payments on long-term debt |
|
|
(13.0 |
) |
|
|
(74.5 |
) |
| Payments of debt-related costs |
|
|
(0.2 |
) |
|
|
— |
|
| Issuance of common stock |
|
|
— |
|
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
| Net cash used in financing activities |
|
|
(13.2 |
) |
|
|
(74.8 |
) |
|
|
|
|
|
|
|
|
|
| Effect of exchange rate changes on cash and cash equivalents |
|
|
0.1 |
|
|
|
(0.1 |
) |
| Net change in cash and cash equivalents |
|
|
43.0 |
|
|
|
(565.1 |
) |
| Cash and cash equivalents at beginning of period |
|
|
112.8 |
|
|
|
594.2 |
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents at end of period |
|
$ |
155.8 |
|
|
$ |
29.1 |
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to the Condensed Consolidated Financial Statements.
4
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended January 25, 2015
(unaudited)
Note 1. Business and Basis
of Presentation
Blue Acquisition Group, Inc. (together with its subsidiaries, “the Company”) was incorporated in Delaware on
November 19, 2010, in connection with the acquisition of Del Monte Foods Company (“DMFC”) on March 8, 2011 by an investor group led by funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (“KKR”), Vestar
Capital Partners (“Vestar”) and Centerview Capital, L.P. (“Centerview,” and together with KKR and Vestar, the “Sponsors”). The acquisition (also referred to as the “Merger”) was effected by the merger of Blue
Merger Sub Inc. (“Blue Sub”) with and into DMFC, with DMFC being the surviving corporation. As a result of the Merger, DMFC became a wholly-owned subsidiary of the Company. Substantially all of the Company’s outstanding common stock
is held by Blue Holdings I, L.P., an investment fund that is owned in its entirety by funds affiliated with the Sponsors and related entities. Blue Holdings GP, LLC is the general partner of Blue Holdings I, L.P. Funds affiliated with the Sponsors
and related entities own controlling interests in Blue Holdings GP, LLC.
Del Monte Corporation (“DMC,” together with its consolidated
subsidiaries, “Del Monte”) was a direct, wholly-owned subsidiary of DMFC. On April 26, 2011, DMFC merged with and into DMC, with DMC being the surviving corporation. As a result of this merger, DMC became a direct wholly-owned
subsidiary of the Company. In connection with the sale of the Consumer Products Business (see “Discontinued Operations and Assets Held for Sale” below) on February 18, 2014, DMC changed its name to Big Heart Pet Brands (together with
its consolidated subsidiaries, “Big Heart Pet”). As the Company is a holding company with no direct operations, the consolidated financial results of the Company reflect that of Big Heart Pet. The term “Operating Subsidiary” is
used herein to refer to DMC prior to the company name change in February 2014 and to Big Heart Pet subsequent to the company name change in February 2014.
The Company operates on a 52 or 53-week fiscal year ending on the Sunday closest to April 30. The results of operations for the nine months ended
January 25, 2015 and January 26, 2014 each reflect periods that contain 39 weeks.
Big Heart Pet is the largest U.S. standalone producer,
distributor and marketer of premium quality, branded pet food and pet snacks. The Company’s pet food and pet snacks brands include well-known household brands such as Meow Mix®,
Milk-Bone®, Kibbles ‘n Bits®, 9Lives®, Natural Balance®, Pup-Peroni®, Gravy Train®, Nature’s Recipe®, Canine Carry Outs®, Milo’s Kitchen® and other brand names. The Company
has one operating segment: Pet Products, which manufactures, markets and sells branded and private label dry and wet pet food and pet snacks.
The
accompanying unaudited condensed consolidated financial statements as of January 25, 2015 and for the nine months ended January 25, 2015 and January 26, 2014 have been prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. These unaudited condensed consolidated financial
statements should be read in conjunction with the notes to the consolidated financial statements in the Company’s 2014 annual financial statements included elsewhere in this Current Report on Form 8-K (“2014 Annual Report”). In the
opinion of management, all adjustments consisting of normal and recurring entries considered necessary for a fair presentation of the results for the interim periods presented have been included. All significant intercompany balances and
transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. These estimates
are based on information available as of the date of the unaudited condensed consolidated financial statements. Therefore, actual results could differ from those estimates. Furthermore, operating results for the nine months ended January 25,
2015 are not necessarily indicative of the results expected for the fiscal year ending May 3, 2015 (“fiscal 2015”). The Company’s income from continuing operations and Loss from discontinued operations were increased by $2.7
million and $2.6 million, respectively, for the nine months ended January 25, 2015 as a result of adjustments related to prior periods that were not deemed material to prior year results or to expected results for fiscal 2015.
The results of the former Consumer Products Business have been reported as discontinued operations for all periods presented. Expenses allocated to
discontinued operations are limited to selling, administrative and distribution expenses that were directly attributable to the Consumer Products Business in accordance with the terms of the purchase agreement. Consequently, certain expenses that
have historically been allocated to the Consumer Products segment are not included in discontinued operations. The Company has combined cash flows from discontinued operations with cash flows from continuing operations within the operating,
investing and financing categories in the Condensed Consolidated Statements of Cash Flows for all periods presented. Cash flows are not comparable year over year due to the sale of the Consumer Products Business.
5
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended January 25, 2015
(unaudited)
As of January 25, 2015, the Company had recorded a gross receivable of $16.3 million for the working
capital adjustment related to the sale of the Consumer Products Business. In June 2014, the Operating Subsidiary received a Notice of Disagreement from the Acquiror disputing the $16.3 million working capital adjustment presented by the Operating
Subsidiary as well as the incremental preliminary working capital adjustment of approximately $110 million paid by the Acquiror at closing on February 18, 2014. The purchase agreement specifies that such working capital disputes are to be
submitted to and resolved by a mutually agreed upon independent certified public accounting firm in the United States of national recognition. The Operating Subsidiary believes that the working capital adjustment presented to the Acquiror is
appropriate, is in accordance with the terms of the purchase agreement and plans to vigorously defend its position. However, the Company cannot currently predict the ultimate outcome of this dispute.
Net sales from discontinued operations were $0.0 million for the nine months ended January 25, 2015 and $1,228.9 million for the nine months ended
January 26, 2014. Loss from discontinued operations before income taxes was $(5.1) million for the nine months ended January 25, 2015 and $(105.4) million for the nine months ended January 26, 2014. All subsequent footnote disclosures
represent continuing operations.
Note 2. Recently Issued Accounting Standards
There have been no material developments in recently issued accounting standards potentially impacting the Company’s consolidated financial statements
since those reported in the 2014 Annual Report.
6
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended January 25, 2015
(unaudited)
Note 3. Supplemental Financial Statement Information
|
|
|
|
|
|
|
|
|
| |
|
January 25,
2015 |
|
|
April 27,
2014 |
|
| |
|
(in millions) |
|
| Trade accounts receivable, net of allowance: |
|
|
|
|
|
|
|
|
| Trade |
|
$ |
146.4 |
|
|
$ |
127.2 |
|
| Allowance for doubtful accounts |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
146.4 |
|
|
$ |
127.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Inventories, net: |
|
|
|
|
|
|
|
|
| Finished products |
|
$ |
179.3 |
|
|
$ |
191.5 |
|
| Raw materials and in-process materials |
|
|
23.0 |
|
|
|
24.5 |
|
| Packaging materials and other |
|
|
11.3 |
|
|
|
11.5 |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
213.6 |
|
|
$ |
227.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Prepaid expenses and other current assets: |
|
|
|
|
|
|
|
|
| Prepaid taxes |
|
$ |
32.7 |
|
|
$ |
57.3 |
|
| Other prepaid expenses |
|
|
25.8 |
|
|
|
36.1 |
|
| Other current assets |
|
|
60.2 |
|
|
|
70.9 |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
118.7 |
|
|
$ |
164.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment, net: |
|
|
|
|
|
|
|
|
| Land and land improvements |
|
$ |
8.5 |
|
|
$ |
12.4 |
|
| Buildings and leasehold improvements |
|
|
120.1 |
|
|
|
123.3 |
|
| Machinery and equipment |
|
|
272.7 |
|
|
|
256.8 |
|
| Computers and software |
|
|
62.3 |
|
|
|
58.8 |
|
| Construction in progress |
|
|
39.9 |
|
|
|
35.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
503.5 |
|
|
|
487.1 |
|
| Accumulated depreciation |
|
|
(139.9 |
) |
|
|
(111.7 |
) |
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
363.6 |
|
|
$ |
375.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses: |
|
|
|
|
|
|
|
|
| Accounts payable-trade |
|
$ |
132.2 |
|
|
$ |
175.9 |
|
| Marketing, advertising and trade promotion |
|
|
49.1 |
|
|
|
67.6 |
|
| Accrued benefits, payroll and related costs |
|
|
33.8 |
|
|
|
37.3 |
|
| Accrued interest |
|
|
37.9 |
|
|
|
21.2 |
|
| Other current liabilities |
|
|
38.8 |
|
|
|
65.8 |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
291.8 |
|
|
$ |
367.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other non-current liabilities: |
|
|
|
|
|
|
|
|
| Accrued postretirement benefits |
|
$ |
17.8 |
|
|
$ |
29.8 |
|
| Pension liability |
|
|
21.8 |
|
|
|
17.1 |
|
| Long-term hedge payable |
|
|
— |
|
|
|
9.8 |
|
| Other non-current liabilities |
|
|
35.5 |
|
|
|
38.6 |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
75.1 |
|
|
$ |
95.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
| Pension and other postretirement benefits adjustments, net of tax |
|
$ |
12.9 |
|
|
$ |
6.0 |
|
| Income (loss) on cash flow hedging instruments, net of tax |
|
|
(5.3 |
) |
|
|
2.4 |
|
|
|
|
|
|
|
|
|
|
| Total accumulated other comprehensive income |
|
$ |
7.6 |
|
|
$ |
8.4 |
|
|
|
|
|
|
|
|
|
|
7
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended January 25, 2015
(unaudited)
Note 4. Goodwill and Intangible Assets
The following table presents the Company’s goodwill and intangible assets (in millions):
|
|
|
|
|
|
|
|
|
| |
|
January 25,
2015 |
|
|
April 27,
2014 |
|
| Goodwill |
|
$ |
2,113.4 |
|
|
$ |
2,113.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-amortizable intangible assets: |
|
|
|
|
|
|
|
|
| Trademarks |
|
$ |
1,389.9 |
|
|
$ |
1,389.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortizable intangible assets: |
|
|
|
|
|
|
|
|
| Trademarks |
|
|
39.3 |
|
|
|
39.3 |
|
| Customer relationships |
|
|
852.7 |
|
|
|
852.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
892.0 |
|
|
|
892.0 |
|
| Accumulated amortization |
|
|
(162.1 |
) |
|
|
(126.7 |
) |
|
|
|
|
|
|
|
|
|
| Amortizable intangible assets, net |
|
|
729.9 |
|
|
|
765.3 |
|
|
|
|
|
|
|
|
|
|
| Total intangible assets, net |
|
$ |
2,119.8 |
|
|
$ |
2,155.2 |
|
|
|
|
|
|
|
|
|
|
Amortization expense for the period indicated below was as follows (in millions):
|
|
|
|
|
|
|
|
|
| |
|
Nine Months Ended |
|
| |
|
January 25,
2015 |
|
|
January 26,
2014 |
|
| Amortization expense |
|
$ |
35.4 |
|
|
$ |
33.4 |
|
As of January 25, 2015, expected amortization of intangible assets for each of the five succeeding fiscal years and
thereafter is as follows (in millions):
|
|
|
|
|
| 2015 (remainder) |
|
$ |
11.9 |
|
| 2016 |
|
|
47.1 |
|
| 2017 |
|
|
46.7 |
|
| 2018 |
|
|
46.7 |
|
| 2019 |
|
|
46.7 |
|
| 2020 and thereafter |
|
|
530.8 |
|
Note 5. Derivative Financial Instruments
The Operating Subsidiary uses interest rate swaps, commodity swaps, futures, option and swaption (an option on a swap) contracts as well as foreign currency
forward contracts, to hedge market risks relating to possible adverse changes in interest rates, commodity, transportation, and foreign currency exchange rates and other input price exposures. The Operating Subsidiary continually monitors its
positions and the credit ratings of the counterparties involved to mitigate the amount of credit exposure to any one party.
The Company designates each
derivative contract as one of the following: (1) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”) or (2) a hedging
instrument for which the change in fair value is recognized to act as an economic hedge but does not meet the requirements to receive hedge accounting treatment (“economic hedge”). As of January 25, 2015, the Operating Subsidiary had
both cash flow and economic hedges.
Interest Rates: The Operating Subsidiary’s debt primarily consists of floating rate term loans and fixed
rate notes. The Operating Subsidiary maintains its floating rate revolver for flexibility and for other general corporate purposes. Interest expense on the Operating Subsidiary’s floating rate debt is typically calculated based on a fixed
spread over a reference rate, such as LIBOR (also
8
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended January 25, 2015
(unaudited)
known as the Eurodollar rate). Therefore, fluctuations in market interest rates will cause interest expense increases or decreases on a given amount of floating rate debt.
The Operating Subsidiary from time to time manages a portion of its interest rate risk related to floating rate debt by entering into interest rate swaps in
which the Operating Subsidiary receives floating rate payments and makes fixed rate payments. Swaps are recorded as an asset or liability in the Condensed Consolidated Balance Sheets at fair value. The Company currently accounts for these interest
rate swaps as economic hedges and gains and losses are recorded directly in earnings.
As of January 25, 2015, the following economic hedge swaps
were outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Contract date |
|
(in millions) |
|
|
Fixed LIBOR rate |
|
|
Effective date |
|
|
Maturity date |
|
| April 12, 2011 |
|
$ |
900.0 |
|
|
|
3.029 |
% |
|
|
September 4, 2012 |
|
|
|
September 1, 2015 |
|
On August 13, 2010, the Operating Subsidiary entered into interest rate swaps with a total notional amount of $300.0
million as the fixed rate payer and an effective date of February 1, 2011. The interest rate swaps fixed LIBOR at 1.368% for the term of the swaps and expired during fiscal 2014 on February 3, 2014.
Commodities: Certain commodities such as soybean meal, corn, wheat, soybean oil, diesel fuel and natural gas (collectively, “commodity
contracts”) are used in the production and transportation of the Operating Subsidiary’s products. Generally these commodities are purchased based upon market prices that are established with the vendor as part of the purchase process. The
Operating Subsidiary uses futures, swaps, swaption and option contracts, as deemed appropriate; to reduce the effect of price fluctuations on anticipated purchases. These contracts may have a term of up to 36 months. The Company accounts for these
commodities derivatives as either economic or cash flow hedges. Changes in the value of economic hedges are recorded directly in earnings. For cash flow hedges, the effective portion of derivative gains and losses is deferred in equity and
recognized as part of cost of products sold in the appropriate period and the ineffective portion is recognized as other (income) expense.
The table
below presents the notional amounts of the Operating Subsidiary’s commodity derivative contracts as of the dates indicated (in millions):
|
|
|
|
|
|
|
|
|
| |
|
January 25,
2015 |
|
|
April 27,
2014 |
|
|
|
|
| Commodity contracts |
|
$ |
173.2 |
|
|
$ |
124.8 |
|
Foreign Currency: From time to time, the Operating Subsidiary manages its exposure to fluctuations in foreign currency
exchange rates by entering into forward contracts to cover a portion of its projected expenditures paid in local currency. These contracts may have a term of up to 36 months. The Company accounts for these contracts as either economic or cash flow
hedges. Changes in the value of economic hedges are recorded directly in earnings. For cash flow hedges, the effective portion of derivative gains and losses is deferred in equity and recognized as part of cost of products sold in the appropriate
period and the ineffective portion is recognized as other (income) expense.
The table below presents the notional amounts of the Operating
Subsidiary’s foreign currency derivative contracts as of the dates indicated (in millions). As of April 27, 2014, the Operating Subsidiary did not have any outstanding foreign currency exchange contracts because the Operating Subsidiary
did not believe it was in its best interest at the time. All of the foreign currency derivative contracts held on January 25, 2015 are scheduled to mature prior to the end of fiscal 2015.
|
|
|
|
|
|
|
|
|
| |
|
January 25,
2015 |
|
|
April 27,
2014 |
|
|
|
|
| Contract amount |
|
$ |
6.5 |
|
|
$ |
— |
|
9
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended January 25, 2015
(unaudited)
Fair Value of Derivative Instruments
The fair value of derivative instruments recorded in the Condensed Consolidated Balance Sheets as of January 25, 2015 was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Asset derivatives |
|
|
Liability derivatives |
|
| Derivatives in cash flow hedging relationships |
|
Balance Sheet
location |
|
Fair value |
|
|
Balance Sheet
location |
|
Fair value |
|
| Interest rate contracts |
|
Prepaid expenses and other current assets |
|
$ |
— |
|
|
Accounts payable and accrued expenses |
|
$ |
16.7 |
(1) |
| Commodity and other contracts |
|
Prepaid expenses and other current assets |
|
|
— |
|
|
Accounts payable and accrued expenses |
|
|
21.7 |
(2) |
| Foreign currency exchange contracts |
|
Prepaid expenses and other current assets |
|
|
0.7 |
|
|
Accounts payable and accrued expenses |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
$ |
0.7 |
|
|
|
|
$ |
38.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Represents liability derivatives designated as economic hedges. |
| (2) |
Includes $12.5 million of commodity contracts (liability derivatives) designated as economic hedges. |
The fair value of derivative instruments recorded in the Condensed Consolidated Balance Sheets as of April 27, 2014 was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Asset derivatives |
|
|
Liability derivatives |
|
| Derivatives in cash flow hedging relationships |
|
Balance Sheet
location |
|
Fair value |
|
|
Balance Sheet
location |
|
Fair value |
|
| Interest rate contracts |
|
Other non-current assets |
|
$ |
— |
|
|
Other non-current liabilities |
|
$ |
9.8 |
(2) |
| Interest rate contracts |
|
Prepaid expenses and other current assets |
|
|
— |
|
|
Accounts payable and accrued expenses |
|
|
25.4 |
(2) |
| Commodity and other contracts |
|
Prepaid expenses and other current assets |
|
|
9.4 |
(1) |
|
Accounts payable and accrued expenses |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
$ |
9.4 |
|
|
|
|
$ |
35.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Includes $1.8 million of commodity contracts (asset derivatives) designated as economic hedges. |
| (2) |
Represents liability derivatives designated as economic hedges. |
The effect of economic hedges on other
(income) expense, net in the Condensed Consolidated Statements of Operations for the period indicated below was as follows (in millions):
|
|
|
|
|
|
|
|
|
| |
|
Nine Months Ended |
|
| |
|
January 25,
2015 |
|
|
January 26,
2014 |
|
| Interest rate contracts |
|
$ |
0.8 |
|
|
$ |
0.7 |
|
| Commodity and other contracts |
|
|
14.0 |
|
|
|
(10.0 |
) |
|
|
|
|
|
|
|
|
|
| Included in other (income) expense, net |
|
$ |
14.8 |
|
|
$ |
(9.3 |
) |
|
|
|
|
|
|
|
|
|
10
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended January 25, 2015
(unaudited)
The effect of derivative instruments designated as cash flow hedges in the Condensed Consolidated Statements
of Operations for the nine months ended January 25, 2015 was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(Gain) loss
recognized in
AOCI |
|
|
Location of (gain)
loss reclassified
from AOCI |
|
(Gain) loss
reclassified from
AOCI into income |
|
|
Location of (gain) loss
recognized in income
(ineffective portion and
amount excluded from
effectiveness testing) |
|
(Gain) loss recognized
in income (ineffective
portion and amount
excluded from
effectiveness testing) |
|
| |
|
Nine Months
Ended |
|
|
|
Nine Months
Ended |
|
|
|
Nine Months
Ended |
|
| Derivatives in cash flow hedging
relationships |
|
January 25,
2015 |
|
|
|
January 25,
2015 |
|
|
|
January 25,
2015 |
|
| Commodity and other contracts |
|
$ |
13.0 |
|
|
Cost of products sold |
|
$ |
5.4 |
|
|
Other (income) expense, net |
|
$ |
2.8 |
|
| Foreign currency exchange contracts |
|
|
(0.7 |
) |
|
Cost of products sold |
|
|
(0.3 |
) |
|
Other (income) expense, net |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
12.3 |
|
|
|
|
$ |
5.1 |
|
|
|
|
$ |
2.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effect of the derivative instruments designated as cash flow hedges in the Condensed Consolidated Statements of Operations
for the nine months ended January 26, 2014 was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(Gain) loss recognized
in AOCI |
|
|
Location of (gain)
loss
reclassified from AOCI |
|
(Gain) loss
reclassified from
AOCI into income |
|
|
Location of (gain) loss
recognized in income
(ineffective portion and
amount excluded from
effectiveness testing) |
|
(Gain) loss recognized
in income (ineffective
portion and amount
excluded from
effectiveness testing) |
|
| |
|
Nine Months
Ended |
|
|
|
Nine Months
Ended |
|
|
|
Nine Months
Ended |
|
| Derivatives in cash flow
hedging relationships |
|
January 26,
2014 |
|
|
|
January 26,
2014 |
|
|
|
January 26,
2014 |
|
| Commodity and other contracts |
|
$ |
(4.3 |
) |
|
Cost of products sold |
|
$ |
7.0 |
|
|
Other (income) expense, net |
|
$ |
(1.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
(4.3 |
) |
|
|
|
$ |
7.0 |
|
|
|
|
$ |
(1.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 25, 2015, $7.2 million is expected to be reclassified from AOCI to cost of products sold within the next 12
months.
Note 6. Fair Value Measurements
A
three-tier fair value hierarchy is utilized to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). The
three levels are defined as follows:
| |
• |
|
Level 1 Inputs—unadjusted quoted prices in active markets for identical assets or liabilities; |
| |
• |
|
Level 2 Inputs—quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for
substantially the full term of the financial instrument; and |
| |
• |
|
Level 3 Inputs—unobservable inputs reflecting the Company’s own assumptions in measuring the asset or liability at fair value. |
The Operating Subsidiary uses interest rate swaps, commodity contracts and forward foreign currency contracts to hedge market risks relating to possible
adverse changes in interest rates, commodity prices, diesel fuel prices and foreign exchange rates.
11
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended January 25, 2015
(unaudited)
The following table provides the fair value hierarchy for financial assets and liabilities measured on a
recurring basis (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
| Description |
|
January 25,
2015 |
|
|
April 27,
2014 |
|
|
January 25,
2015 |
|
|
April 27,
2014 |
|
|
January 25,
2015 |
|
|
April 27,
2014 |
|
|
|
|
|
|
|
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commodity and other contracts |
|
$ |
— |
|
|
$ |
7.5 |
|
|
$ |
— |
|
|
$ |
1.9 |
|
|
$ |
— |
|
|
$ |
— |
|
| Foreign currency exchange contracts |
|
|
— |
|
|
|
— |
|
|
|
0.7 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
— |
|
|
|
7.5 |
|
|
|
0.7 |
|
|
|
1.9 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest rate contracts |
|
|
— |
|
|
|
— |
|
|
|
16.7 |
|
|
|
35.2 |
|
|
|
— |
|
|
|
— |
|
| Commodity and other contracts |
|
|
8.1 |
|
|
|
— |
|
|
|
13.6 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.2 |
|
|
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
8.1 |
|
|
$ |
— |
|
|
$ |
30.3 |
|
|
$ |
35.2 |
|
|
$ |
2.2 |
|
|
$ |
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s determination of the fair value of its interest rate swaps was calculated using a discounted cash flow
analysis based on the terms of the swap contracts and the observable interest rate curve. Futures and options contracts are traded on regulated exchanges such as the Chicago Board of Trade, Kansas City Board of Trade and the New York Mercantile
Exchange. The Company values these contracts based on the daily settlement prices published by the exchanges on which the contracts are traded. The commodities swap and swaption contracts are traded over-the-counter and are valued based on the
Chicago Board of Trade quoted prices for similar instruments in active markets or corroborated by observable market data available from the Energy Information Administration. The Company measures the fair value of foreign currency forward contracts
using an income approach based on forward rates (obtained from market quotes for futures contracts with similar terms) less the contract rate multiplied by the notional amount.
The Company has classified contingent consideration as Level 3 in the fair value hierarchy as it is based on unobservable inputs. Significant inputs and
assumptions are management’s estimate of net sales using probability weighted estimates and the discount rate used to calculate the present value of the liability. Significant changes in any Level 3 input or assumption would result in increases
or decreases to fair value measurements for contingent consideration. See Note 5 of the 2014 Annual Report for additional information.
The Operating
Subsidiary has both fixed and floating rate debt. The Operating Subsidiary uses Level 2 inputs to estimate the fair value of such debt. As of January 25, 2015, the book value of the Operating Subsidiary’s floating rate debt instruments
approximates fair value. The following table provides the book value and the fair value of the Company’s fixed rate notes (“Senior Notes”) (in millions):
|
|
|
|
|
|
|
|
|
| Senior Notes |
|
January 25,
2015 |
|
|
April 27,
2014 |
|
| Book value |
|
$ |
900.0 |
|
|
$ |
900.0 |
|
| Fair value |
|
$ |
896.6 |
|
|
$ |
938.3 |
|
Fair value for both fixed and floating rate debt was estimated based on quoted market prices from the trading desk of a
nationally recognized investment bank. As the Senior Notes are available to investors through certain brokerage firms, and as a result not actively traded, the Company has classified the fair value of this debt as Level 2 of the fair value
hierarchy.
Note 7. Retirement Benefits
Periodic
Retirement Benefit Cost
The Operating Subsidiary sponsors a qualified defined benefit pension plan (“pension benefits” or “pension
plan”) and several unfunded defined benefit postretirement plans (“other benefits” or “postretirement plans”) providing certain medical, dental and life insurance benefits to eligible retired, salaried, non-union hourly and
union employees. See Note 11 of the 2014 Annual Report for
12
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended January 25, 2015
(unaudited)
additional information about these plans. The components of net periodic benefit cost for the pension benefits and other benefits for the period indicated are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Pension Benefits |
|
|
Other Benefits |
|
| |
|
Nine Months Ended |
|
| |
|
January 25,
2015 |
|
|
January 26,
2014 |
|
|
January 25,
2015 |
|
|
January 26,
2014 |
|
| Components of net periodic benefit cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Service cost for benefits earned during the period |
|
$ |
5.4 |
|
|
$ |
5.3 |
|
|
$ |
0.1 |
|
|
$ |
0.1 |
|
| Interest cost on projected benefit obligation |
|
|
4.1 |
|
|
|
5.5 |
|
|
|
1.1 |
|
|
|
2.0 |
|
| Expected return on plan assets |
|
|
(6.6 |
) |
|
|
(10.1 |
) |
|
|
— |
|
|
|
— |
|
| Net (loss) gain amortization |
|
|
— |
|
|
|
— |
|
|
|
(1.3 |
) |
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net periodic benefit cost (credit) |
|
$ |
2.9 |
|
|
$ |
0.7 |
|
|
$ |
(0.1 |
) |
|
$ |
3.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Amendment
In
December 2014, the Operating Subsidiary amended its retiree medical defined benefit plan, with respect to Medicare-eligible retirees, to convert from a premium based plan to a healthcare exchange effective January 1, 2015. The change resulted
in a decrease to the projected benefit obligation and a corresponding gain of $18.9 million, which will be amortized over five years. As a result, the Company recognized a $0.3 million benefit to the Condensed Consolidated Statements of Operations
for the nine months ended January 25, 2015, with an approximate $1.0 million benefit expected to be recognized in the fourth quarter of fiscal 2015. The remeasurement of the plan obligations as of January 1, 2015 utilized a discount rate
of 4.30%, as well as the RP-2014 mortality table with collar adjustment and generational projection based on MP-2014 (issued October 2014).
Sale of
the Consumer Products Business
Following the sale of the Consumer Products Business, the Operating Subsidiary transferred a significant amount of the
plan obligations and plan assets for the pension benefits and other benefits, as well as the related components of net periodic benefit costs, for the transferred employees and retirees of the Consumer Products Business to the Acquiror. The
Operating Subsidiary completed the transfer of plan assets for pension benefits in February 2015. Plan assets for the pension benefits were allocated to the Acquiror in accordance with the Employee Retirement Income Security Act of 1974
Section 4044. The final transfer amount was adjusted to reflect actual investment income or losses less pension payments made by the Operating Subsidiary on the Acquirors’ behalf, from the sale date to the actual asset transfer date, in
accordance with the purchase agreement. The Operating Subsidiary final transfer amount was materially accurate to the amount disclosed in Note 11 of the 2014 Annual Report.
13
BLUE ACQUISITION GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended January 25, 2015
(unaudited)
Note 8. Accumulated Other Comprehensive Income
The following table summarizes the reclassifications from accumulated other comprehensive income to the Condensed Consolidated Statements of Operations for the
period indicated (in millions):
|
|
|
|
|
|
|
|
|
|
|
| Details about Accumulated Other Comprehensive
Income Components |
|
Amount Reclassified from Accumulated
Other Comprehensive Income |
|
|
Affected Line Item in the Condensed
Consolidated Statements of Operations |
| |
|
Nine Months Ended |
|
|
|
| |
|
January 25,
2015 |
|
|
January 26,
2014 |
|
|
|
| Gains (losses) on cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
| Commodity and other contracts |
|
$ |
(5.4 |
) |
|
$ |
7.0 |
|
|
Cost of products sold |
| Foreign currency exchange contracts |
|
|
0.3 |
|
|
|
— |
|
|
Cost of products sold |
|
|
|
|
|
|
|
|
|
|
|
| Total reclassifications, before tax |
|
|
(5.1 |
) |
|
|
7.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tax provision (benefit) |
|
|
(2.0 |
) |
|
|
2.7 |
|
|
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
| Total reclassifications, net of tax |
|
$ |
(3.1 |
) |
|
$ |
4.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Defined benefit plan items (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization of prior service benefits (credits) |
|
$ |
(0.7 |
) |
|
$ |
1.1 |
|
|
|
|
|
|
|
| Amortization of actuarial gains (losses) |
|
|
1.1 |
|
|
|
(1.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total reclassifications, before tax |
|
|
0.4 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tax provision |
|
|
0.2 |
|
|
|
— |
|
|
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
| Total reclassifications, net of tax |
|
$ |
0.2 |
|
|
$ |
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
These accumulated and other comprehensive income components are included in the computation of net periodic pension and postretirement benefit costs. See Note 7 for
additional information. |
Note 9. Legal Proceedings
There have been no material developments in the legal proceedings of the Company and its subsidiaries since those reported in the 2014 Annual Report.
Note 10. Related Party Transactions
See Note 17 of the
2014 Annual Report for a description of the Company’s related party transactions. As of January 25, 2015, there was a payable of $1.6 million due to the managers related to the monitoring agreement, which is included in accounts payable
and accrued expenses in the Condensed Consolidated Balance Sheets. As of April 27, 2014, there was a payable of $1.6 million due to the managers related to the monitoring agreement. For the nine months ended January 25, 2015 and
January 26, 2014 the Operating Subsidiary paid $2.1 million, to a KKR affiliate for rent related to a leased administrative space in Pittsburgh, PA. During the nine months ended January 26, 2014 the Operating Subsidiary paid $3.5 million
to a Vestar advisor for a finder’s fee related to the Natural Balance acquisition.
Note 11. Subsequent Events
The Company has evaluated subsequent events through March 10, 2015, the date the condensed consolidated financial statements were issued. See Note 19 of
the 2014 Annual Report for a description of events affecting the Company subsequent to January 25, 2015.
14
Exhibit 99.4
As used below, except where otherwise specified or unless the context otherwise requires, the terms “Smucker,” the “Company,”
“we,” “us,” and “our” refer to The J. M. Smucker Company, an Ohio corporation, and its consolidated subsidiaries prior to the Mergers (as defined below), and the term “BAG” refers to Blue Acquisition Group,
Inc., a Delaware corporation and the parent of Big Heart Pet Brands (“Big Heart Pet”), and its consolidated subsidiaries. As used herein, the term “Merger Agreement” refers to the Agreement and Plan of Merger, dated as of
February 3, 2015, as it may be amended from time to time, by and among the Company, BAG, SPF Holdings I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company, SPF Holdings II, LLC, a Delaware limited liability company and a
wholly owned subsidiary of the Company, and for the limited purposes set forth in the Merger Agreement, Blue Holdings I, L.P., the controlling stockholder of BAG.
The term “Mergers” refers to the acquisition by Smucker of BAG pursuant to the Merger Agreement, which was consummated on March 23, 2015, and
references to the “combined company” as used herein refer to Smucker and its consolidated subsidiaries after giving pro forma effect to the Mergers. You should not assume that the information set forth below is accurate as of any date
other than March 23, 2015.
Cautionary Statement Regarding Forward-Looking Statements
The information set forth below contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements include,
without limitation, statements concerning plans, objectives, goals, projections, strategies, future events or performance, and underlying assumptions and other statements, which are not statements of historical fact. Forward-looking statements may
be identified by the use of words like “expect,” “anticipate,” “intend,” “forecast,” “outlook,” “will,” “may,” “might,” “potential,” “likely,”
“target,” “plan,” “contemplate,” “seek,” “attempt,” “should,” “could,” “would” or expressions of similar meaning. Forward-looking statements reflect management’s
good faith evaluation of information currently available and are based on management’s current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict, including, among others, those discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended April 30, 2014 and those discussed in the section entitled “Risk Factors” in the Big Heart Pet Annual Report on Form 10-K for the fiscal year ended
April 27, 2014 and in our subsequent Quarterly Reports on Form 10-Q and in Big Heart Pet’s subsequent Quarterly Reports on Form 10-Q. Specific factors that may impact performance or other predictions of future actions have, in
many but not all cases, been identified in connection with specific forward-looking statements. Our actual results may differ materially from any future results, performance, or achievements expressed or implied by the forward-looking statements.
They are neither statements of historical fact nor guarantees or assurances of future performance. We caution you therefore against relying on any of these forward-looking statements.
Important factors that could cause actual results to differ materially from those in the forward-looking statements include economic, business, competitive,
market and regulatory conditions and the following: volatility of commodity markets from which raw materials, particularly green coffee beans, peanuts, soybean oil, wheat, milk, corn, and sugar, are procured and the related impact on costs; risks
associated with derivative and purchasing strategies we employ to manage commodity pricing risks, including the risk that such strategies could result in significant losses and adversely impact our liquidity; crude oil price trends and their impact
on transportation, energy, and packaging costs; the availability of reliable transportation, which may be affected by the cost of fuel, regulations affecting the industry, labor shortages, service failures by third-party service providers,
accidents, or natural disasters, on acceptable terms; our ability to successfully implement and realize the full benefit of price changes that are intended to ultimately fully recover cost, including the competitive, retailer, and consumer response,
and the impact of the timing of the price changes to profits and cash flow in a particular period; the success and cost of introducing new products and the competitive response; the success and cost of marketing and sales programs and strategies
intended to promote growth in our businesses; general competitive activity in the market, including competitors’ pricing practices and promotional spending levels; our ability to successfully integrate acquired and merged businesses in a timely
and cost-effective manner and retain key suppliers, customers, and employees; the impact of food security concerns involving either our products or our competitors’ products; the impact of accidents, extreme weather, and natural disasters,
including crop failures and storm damage; the concentration of certain of our businesses with key customers and suppliers, including single-source suppliers of certain key raw materials, such as packaging for our Folgers coffee products, and
finished goods, such as K-Cup®
packs, and the ability to manage and maintain key relationships; the loss of significant customers, a substantial reduction in orders from these customers, or the bankruptcy of any such customer;
changes in consumer coffee preferences and other factors affecting our coffee businesses, which represent a substantial portion of our business; a change in outlook or downgrade in our public credit ratings by a rating agency; our ability to obtain
any required financing on a timely basis and on acceptable terms; the ability of the Company to generate sufficient cash flow to meet its deleveraging objectives within the time frames currently anticipated; the timing and amount of capital
expenditures, share repurchases, and restructuring costs; impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets or changes in useful lives of other intangible assets; the impact of new or changes to
existing governmental laws and regulations and their application; the impact of future legal, regulatory, or market measures regarding climate change; the outcome of current and future tax examinations, changes in tax laws, and other tax matters,
and their related impact on our tax positions; foreign currency and interest rate fluctuations; political or economic disruption; other factors affecting share prices and capital markets generally; our ability to integrate acquired businesses into
our operations, including Big Heart Pet; our ability to realize the anticipated benefits of the Mergers, the time required to realize such benefits, if any, and our ability to integrate the two businesses; the effect of direct and indirect costs we
have incurred and will incur as a result of the Mergers; the accuracy of our unaudited pro forma condensed combined financial information; and other risks, including the risks described in the “Risk Factors” section of our Annual Report on
Form 10-K for the fiscal year ended April 30, 2014 and in our subsequent Quarterly Reports on Form 10-Q and in the “Risk Factors” section of the Big Heart Pet Annual Report on Form 10-K for the fiscal year ended
April 27, 2014 and in Big Heart Pet’s subsequent Quarterly Reports on Form 10-Q.
Users are cautioned not to unduly rely on such
forward-looking statements, which speak only as of the date made, when evaluating the information presented here. We do not undertake any obligation to update or revise these forward-looking statements to reflect new events or circumstances.
Unaudited Pro Forma Condensed Combined Financial Information of Smucker
Pursuant to the closing of the Mergers on March 23, 2015, the Company acquired BAG, the holding company of Big Heart Pet. The following unaudited
pro forma condensed combined financial information and notes thereto have been prepared by Smucker using the acquisition method of accounting and are based on the historical consolidated financial statements of Smucker and BAG, after giving effect
to the Mergers and the consummation of Smucker’s financing transactions related to the Mergers. The acquisition method of accounting is based on Accounting Standards Codification (“ASC”) 805, Business Combinations, and uses the
fair value concepts defined in ASC 820, Fair Value Measurements and Disclosures. Under this method of accounting the purchase price will be allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the
closing date of the Mergers.
The allocation of the purchase price used in the unaudited pro forma condensed combined financial statements is based
on preliminary estimates of the fair value of assets acquired and liabilities assumed, and the related income tax impact of the acquisition accounting adjustments. The pro forma adjustments included herein, which include a preliminary evaluation of
accounting policies for conformity, may be revised as additional information becomes available and as additional analyses are performed. The final allocation of the purchase price will be determined after completion of a final analysis to determine
the fair values of the tangible assets, identifiable intangible assets, and liabilities as of the acquisition date. Accordingly, the final purchase accounting adjustments may be materially different from the pro forma adjustments presented.
Increases or decreases in the fair value of the net assets may change the amount of the purchase price allocated to goodwill and other assets and liabilities. This may impact the Unaudited Pro Forma Condensed Combined Statements of Income due to an
increase or decrease in the amount of amortization or depreciation of the adjusted assets, among other items.
ASC 805 requires, among other things, that
assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. In addition, ASC 805 establishes that the consideration transferred, including equity consideration, be measured at the closing date of
the Mergers at the then current market price.
-2-
The Unaudited Pro Forma Condensed Combined Statements of Income combine BAG’s audited historical
Consolidated Statement of Operations for the fiscal year ended April 27, 2014 and the unaudited historical Condensed Consolidated Statement of Operations for the nine months ended January 25, 2015, with Smucker’s audited historical
Statement of Consolidated Income for the fiscal year ended April 30, 2014 and the unaudited historical Condensed Statement of Consolidated Income for the nine months ended January 31, 2015, to reflect the Mergers and the financing
transactions as if they had occurred on May 1, 2013. The Unaudited Pro Forma Condensed Combined Balance Sheet combines the unaudited historical Condensed Consolidated Balance Sheet of BAG as of January 25, 2015, with Smucker’s
unaudited historical Condensed Consolidated Balance Sheet as of January 31, 2015, to reflect the Mergers and the financing transactions as if they had occurred on January 31, 2015. The historical consolidated financial information has been
adjusted to give effect to pro forma adjustments that are:
| |
• |
|
directly attributable to the Mergers; |
| |
• |
|
reclassifications made to conform BAG’s presentations to those of Smucker; |
| |
• |
|
reflective of Smucker’s financing transactions related to the Mergers; and |
The unaudited pro forma condensed combined financial information should be read in
conjunction with:
| |
• |
|
accompanying notes to the unaudited pro forma condensed combined financial information; |
| |
• |
|
Smucker’s audited historical consolidated financial statements for the fiscal year ended April 30, 2014 in the Annual Report on Form 10-K of Smucker for the fiscal year ended April 30, 2014, and
unaudited historical condensed consolidated financial statements for the nine months ended January 31, 2015 in the Form 10-Q of Smucker for the fiscal quarter ended January 31, 2015; and |
| |
• |
|
BAG’s audited historical consolidated financial statements for the fiscal year ended April 27, 2014 filed by Smucker as Exhibit 99.2 to this Current Report on Form 8-K, and unaudited historical condensed
consolidated financial statements for the nine months ended January 25, 2015, filed by Smucker as Exhibit 99.3 to this Current Report on Form 8-K. |
The unaudited pro forma condensed combined financial information has been prepared for illustrative purposes only, and is not necessarily indicative of the
operating results or financial position that would have occurred if the Mergers had been consummated on the dates indicated, nor are they necessarily indicative of any future operating results or financial position. See “Risk Factors” in
the Annual Report on Form 10-K of Smucker for the fiscal year ended April 30, 2014 and in Smucker’s subsequent Quarterly Reports on Form 10-Q for additional discussion of risk factors associated with the pro forma financial
information.
Items Not Reflected in the Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial information does not include any discontinued operations for BAG; adjustments related to future
restructuring or one-time charges; future initiatives related to potential profit improvements or potential cost savings, which may result from the Mergers; or the result of final valuations of tangible and intangible assets and liabilities.
Accordingly, no additional adjustments with respect to these costs were required to be reflected in the Unaudited Pro Forma Condensed Combined Statements of Income. Smucker is currently developing plans to integrate the operations of Smucker and
BAG, which may involve material costs. Smucker expects to incur approximately $225.0 million in one-time costs related to the transaction, of which approximately $150.0 million are expected to be cash charges. These one-time costs are
anticipated to be incurred primarily over the next three years, with one-half of the costs expected to be recognized in fiscal 2016. Smucker expects that its integration and cost savings initiatives, as well as other potential synergies, will result
in anticipated profit improvements of approximately $200.0 million, which are expected to be fully realized by fiscal 2018. The synergies are expected to come from the efficiencies of combining Smucker and BAG, and leveraging the current
administrative, information services, and selling and marketing functions, along with Smucker’s supply chain and distribution network. Integration teams will be formed to further develop and execute detailed implementation programs, the related
costs of which have not been determined.
-3-
Unaudited Pro Forma Condensed Combined Balance Sheet
As of January 31, 2015 for Smucker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Historical |
|
|
Pro Forma |
|
| (Dollars in millions) |
|
Smucker
January 31,
2015 |
|
|
BAG
January 25,
2015 |
|
|
Adjustments |
|
|
|
|
|
Combined |
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
111.7 |
|
|
$ |
155.8 |
|
|
$ |
(107.5 |
) |
|
|
(A |
) |
|
$ |
160.0 |
|
| Trade receivables, less allowance for doubtful accounts |
|
|
373.9 |
|
|
|
146.4 |
|
|
|
— |
|
|
|
|
|
|
|
520.3 |
|
| Inventories |
|
|
944.2 |
|
|
|
213.6 |
|
|
|
10.0 |
|
|
|
(B |
) |
|
|
1,167.8 |
|
| Other current assets |
|
|
85.8 |
|
|
|
118.7 |
|
|
|
73.3 |
|
|
|
(C |
) |
|
|
277.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Current Assets |
|
|
1,515.6 |
|
|
|
634.5 |
|
|
|
(24.2 |
) |
|
|
|
|
|
|
2,125.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, Plant, and Equipment – net |
|
|
1,323.3 |
|
|
|
363.6 |
|
|
|
(27.3 |
) |
|
|
(D |
) |
|
|
1,659.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Goodwill |
|
|
3,134.9 |
|
|
|
2,113.4 |
|
|
|
778.9 |
|
|
|
(E |
) |
|
|
6,027.2 |
|
| Other intangible assets – net |
|
|
2,973.9 |
|
|
|
2,119.8 |
|
|
|
1,991.2 |
|
|
|
(F |
) |
|
|
7,084.9 |
|
| Other noncurrent assets |
|
|
147.9 |
|
|
|
89.6 |
|
|
|
(23.4 |
) |
|
|
(G |
) |
|
|
214.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Other Noncurrent Assets |
|
|
6,256.7 |
|
|
|
4,322.8 |
|
|
|
2,746.7 |
|
|
|
|
|
|
|
13,326.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Assets |
|
$ |
9,095.6 |
|
|
$ |
5,320.9 |
|
|
$ |
2,695.2 |
|
|
|
|
|
|
$ |
17,111.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
232.3 |
|
|
$ |
112.1 |
|
|
$ |
— |
|
|
|
|
|
|
$ |
344.4 |
|
| Current portion of long-term debt |
|
|
24.0 |
|
|
|
17.3 |
|
|
|
2.5 |
|
|
|
(A |
) |
|
|
43.8 |
|
| Short-term borrowings |
|
|
264.0 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
264.0 |
|
| Other current liabilities |
|
|
189.8 |
|
|
|
179.7 |
|
|
|
(63.2 |
) |
|
|
(H |
) |
|
|
306.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Current Liabilities |
|
|
710.1 |
|
|
|
309.1 |
|
|
|
(60.7 |
) |
|
|
|
|
|
|
958.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Long-term debt |
|
|
1,891.8 |
|
|
|
2,590.4 |
|
|
|
1,658.7 |
|
|
|
(A |
) |
|
|
6,140.9 |
|
| Deferred income taxes |
|
|
1,025.6 |
|
|
|
790.7 |
|
|
|
726.3 |
|
|
|
(C |
) |
|
|
2,542.6 |
|
| Other noncurrent liabilities |
|
|
243.9 |
|
|
|
75.1 |
|
|
|
9.6 |
|
|
|
(I |
) |
|
|
328.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Noncurrent Liabilities |
|
|
3,161.3 |
|
|
|
3,456.2 |
|
|
|
2,394.6 |
|
|
|
|
|
|
|
9,012.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock, restricted common stock, and stock options classified as temporary equity |
|
|
— |
|
|
|
25.3 |
|
|
|
(25.3 |
) |
|
|
(J |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Equity |
|
|
5,224.2 |
|
|
|
1,530.3 |
|
|
|
386.6 |
|
|
|
(K |
) |
|
|
7,141.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Liabilities and Equity |
|
$ |
9,095.6 |
|
|
$ |
5,320.9 |
|
|
$ |
2,695.2 |
|
|
|
|
|
|
$ |
17,111.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-4-
Unaudited Pro Forma Condensed Combined Statement of Income
For the Year Ended April 30, 2014 for Smucker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Historical |
|
|
Pro Forma |
|
| (in millions, except per share data) |
|
Smucker
year ended
April 30,
2014 |
|
|
BAG
year ended
April 27,
2014 |
|
|
Reclassifications
(L) |
|
|
Adjustments |
|
|
|
|
|
Combined |
|
| Net sales |
|
$ |
5,610.6 |
|
|
$ |
2,190.1 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
7,800.7 |
|
| Cost of products sold |
|
|
3,579.6 |
|
|
|
1,408.8 |
|
|
|
(40.6 |
) |
|
|
(0.3 |
) |
|
|
(M |
) |
|
|
4,947.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross Profit |
|
|
2,031.0 |
|
|
|
781.3 |
|
|
|
40.6 |
|
|
|
0.3 |
|
|
|
|
|
|
|
2,853.2 |
|
| Selling, distribution, and administrative expenses |
|
|
988.8 |
|
|
|
526.5 |
|
|
|
(4.7 |
) |
|
|
(0.1 |
) |
|
|
(M |
) |
|
|
1,510.5 |
|
| Amortization |
|
|
98.9 |
|
|
|
— |
|
|
|
45.3 |
|
|
|
79.1 |
|
|
|
(N |
) |
|
|
223.3 |
|
| Other special project costs |
|
|
25.6 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
25.6 |
|
| Other operating income – net |
|
|
(1.3 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
(1.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Income |
|
|
919.0 |
|
|
|
254.8 |
|
|
|
— |
|
|
|
(78.7 |
) |
|
|
|
|
|
|
1,095.1 |
|
| Interest expense – net |
|
|
(79.4 |
) |
|
|
(219.2 |
) |
|
|
— |
|
|
|
130.0 |
|
|
|
(O |
) |
|
|
(168.6 |
) |
| Other debt costs |
|
|
— |
|
|
|
(52.4 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
(52.4 |
) |
| Other income – net |
|
|
10.1 |
|
|
|
12.1 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
22.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) from Continuing Operations Before Income Taxes |
|
|
849.7 |
|
|
|
(4.7 |
) |
|
|
— |
|
|
|
51.3 |
|
|
|
|
|
|
|
896.3 |
|
| Income taxes |
|
|
284.5 |
|
|
|
3.1 |
|
|
|
— |
|
|
|
19.5 |
|
|
|
(P |
) |
|
|
307.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income (Loss) from Continuing Operations |
|
$ |
565.2 |
|
|
$ |
(7.8 |
) |
|
$ |
— |
|
|
$ |
31.8 |
|
|
|
|
|
|
$ |
589.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income from Continuing Operations per common share |
|
$ |
5.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income from Continuing Operations per common share – assuming dilution |
|
$ |
5.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares outstanding |
|
|
103.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Q |
) |
|
|
121.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares outstanding – assuming dilution |
|
|
103.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Q |
) |
|
|
121.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Pro Forma Condensed Combined Statement of Income
For the Nine Months Ended January 31, 2015 for Smucker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Historical |
|
|
Pro Forma |
|
| (in millions, except per share data) |
|
Smucker
nine months
ended
January 31,
2015 |
|
|
BAG
nine months
ended
January 25,
2015 |
|
|
Reclassifications
(L) |
|
|
Adjustments |
|
|
|
|
|
Combined |
|
| Net sales |
|
$ |
4,245.6 |
|
|
$ |
1,685.1 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
5,930.7 |
|
| Cost of products sold |
|
|
2,707.5 |
|
|
|
1,088.7 |
|
|
|
(36.3 |
) |
|
|
(0.3 |
) |
|
|
(M |
) |
|
|
3,759.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross Profit |
|
|
1,538.1 |
|
|
|
596.4 |
|
|
|
36.3 |
|
|
|
0.3 |
|
|
|
|
|
|
|
2,171.1 |
|
| Selling, distribution, and administrative expenses |
|
|
743.1 |
|
|
|
367.6 |
|
|
|
0.9 |
|
|
|
(0.1 |
) |
|
|
(M |
) |
|
|
1,111.5 |
|
| Amortization |
|
|
75.3 |
|
|
|
— |
|
|
|
35.4 |
|
|
|
57.9 |
|
|
|
(N |
) |
|
|
168.6 |
|
| Other special project costs |
|
|
17.3 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
17.3 |
|
| Other operating expense – net |
|
|
0.9 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Income |
|
|
701.5 |
|
|
|
228.8 |
|
|
|
— |
|
|
|
(57.5 |
) |
|
|
|
|
|
|
872.8 |
|
| Interest expense – net |
|
|
(50.4 |
) |
|
|
(105.7 |
) |
|
|
— |
|
|
|
33.8 |
|
|
|
(O |
) |
|
|
(122.3 |
) |
| Other income (expense) – net |
|
|
1.7 |
|
|
|
(19.9 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
(18.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from Continuing Operations Before Income Taxes |
|
|
652.8 |
|
|
|
103.2 |
|
|
|
— |
|
|
|
(23.7 |
) |
|
|
|
|
|
|
732.3 |
|
| Income taxes |
|
|
217.6 |
|
|
|
40.9 |
|
|
|
— |
|
|
|
(9.0 |
) |
|
|
(P |
) |
|
|
249.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income from Continuing Operations |
|
$ |
435.2 |
|
|
$ |
62.3 |
|
|
$ |
— |
|
|
$ |
(14.7 |
) |
|
|
|
|
|
$ |
482.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income from Continuing Operations per common share |
|
$ |
4.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income from Continuing Operations per common share – assuming dilution |
|
$ |
4.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares outstanding |
|
|
101.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Q |
) |
|
|
119.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares outstanding – assuming dilution |
|
|
101.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Q |
) |
|
|
119.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-5-
THE J. M. SMUCKER COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED
FINANCIAL
INFORMATION
(dollars in millions, except per share data)
Note 1—Basis of Pro Forma Presentation
The
unaudited pro forma condensed combined financial information related to the Mergers and the related financing transactions is included for the fiscal year ended April 30, 2014 and as of and for the nine months ended January 31, 2015. Upon
completion of the Mergers on March 23, 2015, BAG became a wholly-owned subsidiary of Smucker.
The transaction is being accounted for under the
acquisition method of accounting, and accordingly, the purchase price will be allocated to the assets acquired and the liabilities assumed based upon their respective estimated fair values as of March 23, 2015, the date the Mergers were
completed. The purchase price paid in the Mergers reflects approximately 17.9 million shares issued and the assumption of approximately $2.6 billion of debt. The following purchase price is estimated based upon the closing price of Smucker
stock on March 20, 2015. The final purchase price will reflect the value of Smucker common shares based on the average stock price on March 23, 2015.
|
|
|
|
|
| Estimated total value of Smucker common shares issued |
|
$ |
2,034.6 |
|
| Assumed debt from BAG |
|
|
2,607.7 |
|
| Cash consideration paid, net of cash acquired |
|
|
1,327.3 |
|
|
|
|
|
|
| Total estimated purchase price |
|
$ |
5,969.6 |
|
|
|
|
|
|
Under the purchase method of accounting, the total estimated purchase price as shown in the table above is allocated to
BAG’s net tangible and intangible assets and liabilities based on their estimated fair values. The pro forma adjustments included herein may be revised as additional information becomes available and as additional analyses are performed. The
final allocation of the purchase price will be determined after completion of a final analysis to determine the fair values of BAG’s tangible assets, identifiable intangible assets, and liabilities as of March 23, 2015. Accordingly, the
final purchase accounting adjustments may be materially different from the pro forma adjustments presented in this document. Increases or decreases in the fair value of the net assets may change the amount of the purchase price allocated to goodwill
and other assets and liabilities. This may impact the Unaudited Pro Forma Condensed Combined Statements of Income due to an increase or decrease in the amount of amortization or depreciation of the adjusted assets, among other items.
The preliminary purchase price is allocated as follows:
|
|
|
|
|
| Tangible assets, net of cash acquired |
|
$ |
859.8 |
|
| Identifiable indefinite-lived intangible assets |
|
|
1,847.0 |
|
| Identifiable finite-lived intangible assets |
|
|
2,264.0 |
|
| Goodwill |
|
|
2,892.3 |
|
| Liabilities assumed |
|
|
(1,893.5 |
) |
|
|
|
|
|
| Total preliminary purchase price allocation |
|
$ |
5,969.6 |
|
|
|
|
|
|
Certain amounts in the historical financial statements of BAG have been reclassified to conform with Smucker’s historical
financial presentation. The unaudited pro forma condensed combined financial information presented in this document does not necessarily indicate the results of operations or the combined financial position that would have resulted had the Mergers
been completed at the beginning of the applicable period presented, nor is it indicative of the results of operations in future periods or the future financial position of the combined company.
-6-
Note 2—Pro Forma Adjustments
The pro forma and reclassification adjustments included in the unaudited pro forma condensed combined financial information are as follows:
| |
(A) |
Cash and debt have been adjusted to reflect the financing activities associated with the Mergers. |
|
|
|
|
|
| Debt: |
|
|
|
|
| New bank term loan |
|
$ |
1,750.0 |
|
| New long-term bonds |
|
|
3,650.0 |
|
| Original issue discounts related to long-term bonds |
|
|
(17.5 |
) |
| Pay off of BAG’s debt |
|
|
(2,607.7 |
) |
| Pay off of Smucker’s private placement notes |
|
|
(1,100.0 |
) |
| Noncash adjustment for Smucker’s terminated interest rate swap (K) |
|
|
(13.6 |
) |
|
|
|
|
|
| Net change in total debt |
|
|
1,661.2 |
|
| Less: |
|
|
|
|
| Current portion of BAG’s and Smucker’s extinguished debt |
|
|
41.3 |
|
| Current portion of new bank term loan |
|
|
(43.8 |
) |
|
|
|
|
|
| Net change in current portion of long-term debt |
|
|
(2.5 |
) |
|
|
|
|
|
| Net change in long-term debt |
|
$ |
1,658.7 |
|
|
|
|
|
|
|
|
| Cash: |
|
|
|
|
| Net change in total debt |
|
$ |
1,661.2 |
|
| Noncash adjustment for Smucker’s terminated interest rate swap (K) |
|
|
13.6 |
|
|
|
|
|
|
| Cash received from net change in debt |
|
|
1,674.8 |
|
| Less: |
|
|
|
|
| Cash consideration paid, including adjustment for BAG’s cash |
|
|
(1,483.1 |
) |
| BAG’s and Smucker’s accrued and unpaid interest |
|
|
(51.3 |
) |
| Cash settlement of BAG’s interest rate swap |
|
|
(16.7 |
) |
| BAG’s and Smucker’s make-whole payments (K) |
|
|
(176.6 |
) |
| Estimated capitalized debt issuance costs (G) |
|
|
(34.0 |
) |
| Other debt related costs (K) |
|
|
(20.6 |
) |
|
|
|
|
|
| Net change in cash due to financing activities |
|
$ |
(107.5 |
) |
|
|
|
|
|
| |
|
The aggregate cash consideration paid is subject to a working capital adjustment which has not been reflected in the pro forma adjustments above. |
| |
(B) |
Historical inventory of BAG has been adjusted to reflect estimated fair values. |
| |
(C) |
Differences in the financial reporting and tax reporting treatment of assets acquired and liabilities assumed in the purchase transaction resulted in a deferred income tax adjustment. Smucker’s preliminary estimate
of the deferred tax adjustment resulting from the purchase accounting adjustments was calculated at a tax rate of 38%, representing Smucker’s best estimate of the blended income tax rate related to BAG’s operations for all jurisdictions.
The adjustment also includes the tax related impact of the required make-whole payments, other costs related to debt refinancing, and the write-off of capitalized debt issuance costs, as referenced in (A) and (K). |
| |
(D) |
Net book value of property, plant, and equipment of BAG has been adjusted to estimated fair value based on a preliminary assessment of the acquired assets. For purposes of determining the impact on the Unaudited Pro
Forma Condensed Combined Statements of Income, the estimated fair value adjustment is being depreciated over an estimated weighted-average useful life of approximately 7 years for personal property and 20 years for real property. |
-7-
| |
(E) |
Goodwill, representing the excess of the purchase price paid over Smucker’s preliminary estimates of the fair value of the assets acquired and liabilities assumed, has been recorded; historical goodwill of BAG has
been eliminated in recording the Mergers; and differences in the financial reporting and tax reporting treatment of assets acquired and liabilities assumed in the purchase transaction resulted in a deferred income tax adjustment. Smucker’s
preliminary estimate of the deferred tax adjustment resulting from the purchase accounting adjustments was calculated at a rate of 38%, representing Smucker’s best estimate of the blended income tax rate related to BAG’s operations for all
jurisdictions. |
| |
(F) |
Intangible assets related to BAG have been recorded based on Smucker’s preliminary estimate of fair value determined based upon the present value of the estimated future cash flows projected by management, and
historical intangibles of BAG have been eliminated in recording the Mergers. |
| |
|
Indefinite-lived intangible assets of approximately $1,847.0 are primarily brand-related trade names principally associated with the Milk Bone®,
Pup-peroni®, Meow Mix® and Kibbles ‘n Bits® brands.
Smucker preliminarily assigned an indefinite life to these intangible assets as these brand-related intangible assets have no legal, regulatory, or contractual provisions that may limit their maximum useful lives, and Smucker expects that they will
directly or indirectly contribute to cash flows of Smucker for an indefinite period. Key factors included in Smucker’s determination were the brands’ strong history, significant presence in the pet food and snacks category, the current and
anticipated competitive environment, and the anticipated future operating plans for the brands under Smucker ownership. |
| |
|
Finite-lived intangible assets of approximately $2,264.0 are primarily customer relationship assets. For purposes of determining the impact on the Unaudited Pro Forma Condensed Combined Statements of Income, the
finite-lived intangible assets are being amortized over an estimated weighted-average useful life of approximately 20 years. Smucker’s preliminary assessment of the weighted-average useful life is based on historical attrition experience of
similar assets. |
| |
(G) |
Other noncurrent assets have been adjusted to reflect the write-off of historical capitalized debt issuance costs related to the extinguishment of debt discussed in (A); the capitalization of estimated debt issuance
costs in association with the bank term loan and long-term bonds discussed in (A); and the estimated fair value of BAG’s defined pension and other postretirement plans as of January 31, 2015 discussed in (I). |
|
|
|
|
|
| Write-off of BAG’s and Smucker’s capitalized debt issuance costs |
|
$ |
(47.5 |
) |
| Capitalization of estimated debt issuance costs |
|
|
34.0 |
|
| Reclassification of overfunded pension asset |
|
|
(9.9 |
) |
|
|
|
|
|
| Net change in other noncurrent assets |
|
$ |
(23.4 |
) |
|
|
|
|
|
| |
(H) |
The adjustment to other current liabilities reflects adjustments for BAG’s and Smucker’s accrued and unpaid interest discussed in (A), the cash settlement of BAG’s interest rate swap discussed in (A), and
the accrual of certain executive compensation costs to be paid as a result of the Mergers. |
| |
(I) |
Historical assets and liabilities associated with BAG’s pension and other postretirement plans have been adjusted based upon a preliminary estimate of fair value, which included an adjustment to reflect the decline
in discount rates from April 27, 2014 to January 31, 2015, as well as an adjustment for actual pension asset values as of January 31, 2015. The adjustment reflects a reclassification of the defined pension plan, which was overfunded
as of April 27, 2014, from other noncurrent assets to other noncurrent liabilities. The adjustment to reflect the estimated fair value of the defined pension plan resulted in an underfunded position as of January 31, 2015, as a result of
the impact of declining discount rates and updated mortality assumptions. |
| |
(J) |
Historical temporary equity accounts have been eliminated in recording the Mergers. As of March 23, 2015, the outstanding unvested portion of temporary equity vested and all vested restricted common stock and stock
options were converted into Smucker common stock and/or cash. |
-8-
| |
(K) |
The adjustment to total equity reflects adjustments to common shares and additional capital, retained earnings, and the elimination of BAG’s historical equity as described below. |
| |
|
Common shares and additional capital were increased by a total of $2,034.6 to reflect the impact of issuing approximately 17.9 million Smucker common shares at an estimated price of $113.71 per share, the closing
price on March 20, 2015. The actual value of the shares will be based on the average price of Smucker common shares on March 23, 2015. A $10.00 change in the price of Smucker common shares would impact the value of the shares issued by
$178.9, which would impact the allocation of goodwill and other intangible assets resulting from the Mergers. |
| |
|
Historical equity accounts of BAG, consisting of common stock, additional capital, accumulated other comprehensive income, and an accumulated deficit, have been eliminated in recording the Mergers. |
| |
|
Retained earnings includes adjustments to reflect required make-whole payments, other costs related to debt refinancing, the write-off of capitalized debt issuance costs, the write-off of the terminated interest rate
swap, the accrual of certain executive compensation costs, and the related tax impact; however, these adjustments are not included in the Unaudited Pro Forma Condensed Combined Statements of Income as these charges are nonrecurring.
|
|
|
|
|
|
| Estimated total value of Smucker common shares issued |
|
$ |
2,034.6 |
|
| Write-off of BAG’s equity |
|
|
(1,530.3 |
) |
| BAG’s and Smucker’s make-whole payments (A), including make-whole on Smucker’s private placement notes |
|
|
(176.6 |
) |
| Other debt related costs (A) |
|
|
(20.6 |
) |
| Write-off of Smucker’s capitalized debt issuance costs |
|
|
(1.5 |
) |
| Write-off of Smucker’s terminated interest rate swap related to extinguished debt (A) |
|
|
13.6 |
|
| Accrual of certain executive compensation costs (H) |
|
|
(4.8 |
) |
| Tax benefit of merger related items |
|
|
72.2 |
|
|
|
|
|
|
| Net change in total equity |
|
$ |
386.6 |
|
|
|
|
|
|
| |
(L) |
Reclassifications have been made to BAG’s audited historical consolidated financial statements for the fiscal year ended April 27, 2014 and unaudited historical condensed consolidated financial statements for
the nine months ended January 25, 2015 to conform to the presentation used by Smucker for: |
| |
a. |
amortization included in selling, distribution, and administrative expenses by BAG but presented separately by Smucker; |
| |
b. |
distribution expenses included in cost of products sold by BAG but included in selling, distribution, and administrative expenses by Smucker; and |
| |
c. |
freight expenses included in selling, distribution, and administrative expenses by BAG but included in cost of goods sold by Smucker. |
| |
(M) |
Depreciation expense related to personal property will increase as a result of the preliminary adjustment to record BAG’s personal property at estimated fair values. For purposes of determining the impact on the
Unaudited Pro Forma Condensed Combined Statements of Income, the fair value adjustment is being depreciated using a straight-line method over an estimated weighted-average useful life of approximately 7 years. Depreciation expense related to real
property will decrease as a result of the preliminary adjustment to record BAG’s real property at estimated fair values. For purposes of determining the impact on the Unaudited Pro Forma Condensed Combined Statements of Income, the fair value
adjustment is being depreciated using a straight-line method over an estimated weighted-average useful life of 20 years. The net adjustment is a reduction of depreciation expense. |
-9-
| |
(N) |
Amortization expense will increase as a result of the preliminary adjustment to record identifiable finite-lived intangible assets of BAG. For purposes of determining the impact on the Unaudited Pro Forma Condensed
Combined Statements of Income, the finite-lived intangible assets are being amortized using a straight-line method over an estimated weighted-average useful life of approximately 20 years. |
| |
(O) |
Interest expense, including the amortization of estimated capitalized debt issuance costs, original issue discounts, and other related fees, as well as the impact of continuing interest rate swaps, will increase as a
result of the financing transactions described in (A). For purposes of determining the impact on the Unaudited Pro Forma Condensed Combined Statements of Income, historical interest expense related to extinguished debt was eliminated and an
estimated weighted-average borrowing rate of 2.76 percent was used for new borrowings based on the borrowing rates applicable to the financing transactions. |
|
|
|
|
|
|
|
|
|
| |
|
Year ended
April 30,
2014 |
|
|
Nine months
ended
January 31,
2015 |
|
| Elimination of BAG’s historical interest expense |
|
$ |
219.2 |
|
|
$ |
105.7 |
|
| Elimination of Smucker’s historical interest expense associated with refinanced debt |
|
|
65.6 |
|
|
|
44.2 |
|
| Interest expense related to new borrowings |
|
|
(154.8 |
) |
|
|
(116.1 |
) |
|
|
|
|
|
|
|
|
|
| Net change in interest expense |
|
$ |
130.0 |
|
|
$ |
33.8 |
|
|
|
|
|
|
|
|
|
|
| |
(P) |
Estimated income tax expense related to the pro forma adjustments is calculated based on a tax rate of 38%. This represents Smucker’s best estimate of the blended income tax rate related to BAG operations for all
jurisdictions. |
| |
(Q) |
Pro forma per share data is based on the weighted-average common shares outstanding of Smucker for the period presented and assumes the issuance of approximately 17.9 million Smucker common shares at the closing of
the Mergers. Smucker’s historical earnings per share is computed based on the allocation of Smucker’s net income to common shareholders divided by the weighted-average common shares outstanding in accordance with the two-class method. For
purposes of these pro forma financial statements, the allocation of net income is not presented. |
-10-
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