1
EXHIBIT 2.2
EXECUTION COPY
AMENDMENT NUMBER 1 TO THE
RECAPITALIZATION AGREEMENT
(DATED AS OF DECEMBER 15, 1998)
AMONG
HERSHEY FOODS CORPORATION,
HERSHEY CHOCOLATE & CONFECTIONERY CORPORATION (AS SUCCESSOR IN
INTEREST TO HERSHEY CRE, INC.),
HOMESTEAD, INC.,
NEW WORLD PASTA COMPANY
(FORMERLY KNOWN AS HERSHEY PASTA MANUFACTURING COMPANY),
NEW WORLD PASTA, LLC,
XXXXXX XXXXXXXXXX & XXXX FUND III, L.P.
AND,
AS ADDITIONAL PARTIES THERETO
PASTA GROUP, L.L.C.
AND
WINCHESTER PASTA, L.L.C.
DATED AS OF JANUARY 28, 1999
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TABLE OF CONTENTS
PAGE
1. Definitions.................................................... 2
1.1 Amendment to the definition of "Subsidiaries"......... 2
2. Amendment to Parties........................................... 2
2.1 Amendment to Introductory Paragraph................... 2
2.2 Transferors........................................... 3
3. Amendment to Recitals.......................................... 3
4. Amendment to Section 2.3....................................... 3
5. Amendment to Section 2.4....................................... 3
6. Schedule 2.6................................................... 4
7. Amendment to Section 2.6.2..................................... 4
8. Amendment to Section 2.6.4..................................... 4
9. Amendment to Section 5.5....................................... 4
10. Amendment to Section 5.10...................................... 4
11. Amendment to Section 7.8.2..................................... 4
12. Amendment to Section 9.3....................................... 5
13. Amendment to Section 9.8....................................... 6
14. Amendment to Section 10.3...................................... 6
15. Amendment to Section 10.5...................................... 7
16. Amendment to Section 10.6.2.................................... 7
17. Limited Amendment.............................................. 7
18. Amendment and Waiver........................................... 7
19. Notices........................................................ 7
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20. Counterparts.................................... 7
21. Entire Agreement................................ 8
22. Severability.................................... 8
23. Governing Law................................... 8
24. Headings........................................ 8
SCHEDULE 2.6............................................. Schedule 2.6, Page 1
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INDEX OF DEFINED TERMS
Accrued Vacation Benefits................................................. 6
Agreement ................................................................ 1
Company................................................................... 1
Amendment ................................................................ 1
CRE ...................................................................... 1
HCCCo .................................................................... 1
HFC ...................................................................... 1
Homestead ................................................................ 1
JLL ...................................................................... 1
New World ................................................................ 1
Pasta Group .............................................................. 1
Subsidiaries ............................................................. 2
Transferors .............................................................. 1
Winchester ............................................................... 1
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This AMENDMENT Number 1 (the "Amendment") dated as of January
28, 1999 to the RECAPITALIZATION AGREEMENT (together with the Exhibits and
Schedules thereto, the "Agreement"), (dated as of December 15, 1998), by and
among HERSHEY FOODS CORPORATION, a Delaware corporation ("HFC"), HERSHEY
CHOCOLATE & CONFECTIONERY CORPORATION), a Delaware corporation ("HCCCo"), as the
successor in interest to HERSHEY CRE, INC., a Delaware corporation ("CRE"),
HOMESTEAD, INC., a Delaware corporation ("Homestead"), NEW WORLD PASTA COMPANY
(formerly known as HERSHEY PASTA MANUFACTURING COMPANY), a Delaware corporation
(the "Company"), NEW WORLD PASTA, LLC, a Delaware limited liability company
("New World"), XXXXXX XXXXXXXXXX & XXXX FUND III, L.P., a Delaware limited
partnership ("JLL"), PASTA GROUP L.L.C., a Delaware limited liability company
("Pasta Group"), and WINCHESTER PASTA, L.L.C., a Delaware limited liability
company ("Winchester"). HCCCo, and HOMESTEAD are each a wholly owned subsidiary
of HFC, and together with HFC are referred to herein as the "Transferors,"
W I T N E S S E T H:
WHEREAS, HFC, CRE, Homestead, the Company, New World and, with
respect to Section 7.7 and 7.8 only, JLL entered into the Agreement as of
December 15, 1998;
WHEREAS, effective as of 11:59 p.m. Eastern Standard Time on
December 31, 1998, CRE was merged into HCCCo with HCCCo being the surviving
entity;
WHEREAS, on January 21, 1999, Hershey Pasta Manufacturing
Company amended its Certificate of Incorporation to change its name to New World
Pasta Company;
WHEREAS, HFC, HCCCo in its capacity as the successor in
interest to CRE, Homestead, the Company, New World and JLL desire to amend and
clarify certain terms contained in the Agreement, all as more fully set forth
herein;
WHEREAS, Pasta Group and Winchester, each desires to and each
of the parties thereto desire that Pasta Group and Winchester, each become a
party to the Agreement, all as more fully set forth herein;
WHEREAS, prior to the Execution of the Agreement, HFC
announced to the Transferred Employees that HFC would pay to each of them for
all accrued, but unused, vacation, vacation pay in connection with the sale of
the pasta business;
WHEREAS, pursuant to Section 9.8 of the Agreement, New World
announced to the Transferred Employees that each of them would be entitled to
receive paid vacation time accrued with the pasta business prior to the Closing;
and
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WHEREAS, New World requested that HFC refrain from paying any
of the Transferred Employees their accrued vacation pay prior to Closing;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt, sufficiency and adequacy of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. Definitions. Capitalized terms used but not defined in this
Amendment shall have the meaning specified in the Agreement (including the
Schedules and Exhibits thereto).
1.1 Amendment to the definition of "Subsidiaries".
The definition of Subsidiaries set forth in the Agreement is hereby amended by
deleting Section 1.20 in its entirety and replacing it with the following:
1.20 "Subsidiaries" shall mean Winchester
Pasta, L.L.C., a Delaware limited liability
company (the successor in interest to
Hershey Pasta Group Winchester, Inc., a
Delaware corporation), New World Pasta
Company (formerly known as Hershey Pasta
Manufacturing Company), a Delaware
corporation, and Pasta Group, L.L.C., a
Delaware limited liability company, each
directly or indirectly a wholly owned
subsidiary of HFC.
2. Amendment to Parties. The parties to the Agreement are
hereby amended by adding HCCCo, Pasta Group and Winchester as parties to the
Agreement and HCCCo also as a Transferor thereunder as follows:
2.1 Amendment to Introductory Paragraph. The
introductory paragraph contained in the Agreement is hereby amended by deleting
the introductory paragraph and replacing it with the following:
This RECAPITALIZATION AGREEMENT (this
"Agreement"), dated as of December 15, 1998,
by and among HERSHEY FOODS CORPORATION
("HFC"), a Delaware corporation, HERSHEY
CHOCOLATE & CONFECTIONERY CORPORATION, a
Delaware corporation ("HCCCo"), HCCCo, as
the successor in interest to HERSHEY CRE,
INC., a Delaware corporation ("CRE"),
HOMESTEAD, INC., a Delaware corporation
("Homestead"), NEW WORLD PASTA COMPANY
(formerly known as HERSHEY PASTA
MANUFACTURING COMPANY), a Delaware
corporation, NEW WORLD PASTA, LLC, a
Delaware limited liability company ("New
World"), with respect to Sections 7.7 and
7.8 only, XXXXXX XXXXXXXXXX & XXXX FUND III,
L.P. ("JLL"), PASTA GROUP, L.L.C., a
Delaware limited liability company ("Pasta
Group"), and WINCHESTER PASTA, L.L.C., a
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Delaware limited liability company ("Winchester");
HCCCo, and HOMESTEAD are each a wholly owned
subsidiary of HFC, and together with HFC are referred
to herein as the "Transferors,"
2.2 Transferors. For the avoidance of doubt, in determining
all obligations, covenants, warranties, representations and all rights and
benefits of the "Transferors" as contemplated by the Agreement, HCCCo shall be
included as a "Transferor." In addition, for all purposes of the Agreement, the
terms "HFC Company" and "HFC Companies" will include HCCCo.
3. Amendment to Recitals. The recital clauses contained on the first
page of the Agreement are hereby amended by adding as the fourth recital clause
the following:
"WHEREAS, following the execution of this Agreement, upon
completion of the Reorganization Transactions contemplated
hereby, HCCCo will own all of the outstanding capital stock of
the Company immediately prior to Closing."
4. Amendment to Section 2.3. Section 2.3 of the Agreement is hereby
amended by deleting the last paragraph of Section 2.3 and replacing it with the
following:
HFC or HCCCo may cause the Subsidiaries to assign and transfer
their right, title and interest in and to any Excluded Assets
held by such Subsidiaries to any of the Transferors or any
other Person designated by HFC or HCCCo at any time prior to
Closing without any consideration or value being received by
the Subsidiaries for such Excluded Assets.
5. Amendment to Section 2.4. Section 2.4 of the Agreement is hereby
amended by deleting the first paragraph of Section 2.4 and replacing it with the
following:
At or prior to the Closing, HFC or HCCCo shall cause one or
more of the Company, Pasta Group or Winchester to assume and
agree to be responsible for and to discharge or otherwise
satisfy the Assumed Liabilities, but only the Assumed
Liabilities, in accordance with the terms thereof. The Assumed
Liabilities shall consist of all Liabilities that have arisen
prior to or arise after the Closing in the conduct of or
relate to the Business or any of the Assets, including, but
not limited to, the following:
6. Schedule 2.6. Schedule 2.6 to the Agreement is hereby amended by
deleting such Schedule 2.6 in its entirety and replacing it with the Schedule
2.6 attached to this Amendment.
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7. Amendment to Section 2.6.2. Section 2.6.2 of the Agreement is hereby
amended by deleting clauses (D) and (E) thereof and replacing them respectively
with the following:
(D) resignations of the directors and officers of the
Subsidiaries, if any, effective as of the Closing, (E) a
short-form certificate of good standing of each Transferor and
the Subsidiaries, certified by the Secretary of State of
Delaware as of a date not more than three business days prior
to the Closing Date.
8. Amendment to Section 2.6.4. Section 2.6.4 of the Agreement is hereby
amended by deleting "HFC" and replacing it with "HCCCo" throughout Section
2.6.4.
9. Amendment to Section 5.5. Section 5.5 of the Agreement is hereby
amended by deleting "HFC will" and replacing it with "HFC will or will cause
HCCCo to."
10. Amendment to Section 5.10. Section 5.10 of the Agreement is hereby
amended by inserting in the fourth line thereof the following language
immediately prior to the closing parenthesis of the first parenthetical
statement in such section following the words: ". . . workmens' compensation
policies or coverage":
"(but including the Xxxxxx Excess Liability Workmens'
Compensation Policy)"
11. Amendment to Section 7.8.2. Section 7.8.2 of the Agreement is
hereby amended by deleting Section 7.8.2 in its entirety and replacing it with
the following (it being understood that the JLL Guarantee referenced below will
terminate as of Closing Date):
Following the consummation of the transactions contemplated
hereby the Company will become a directly owned subsidiary of New
World, and Pasta Group and Winchester each will become an indirectly
owned subsidiary of New World. Therefore, as an inducement to the
Transferors to enter into this Agreement and the Transitional Services
Agreement and to undertake and consummate the transactions contemplated
hereby and thereby, subject to and effective immediately upon the
consummation of the Closing, the Company hereby guarantees (the
"Company Guarantee"), and Pasta Group and Winchester each guarantees
(each an LLC Guarantee") (the Company Guarantee and the LLC Guarantees
collectively the "Subsidiaries Guarantees"), absolutely and
unconditionally as a primary obligor and without limitation, all of the
New World Obligations and all of the New World Liabilities. The
Subsidiaries Guarantees shall be continuing guarantees and shall not
terminate until such time as all New World Obligations have been
completely performed and all New World Liabilities have been fully
identified and discharged.
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The JLL Guarantee and the Subsidiaries Guarantees are
guarantees of performance and payment not of collection and each of
them further waives any right to require that any action be brought
against New World or any other Person.
JLL, the Company, Pasta Group and Winchester hereby consent
that from time to time, with or without further notice to or assent
from JLL, the Company, Pasta Group or Winchester, any obligation or
liability of New World may be changed, altered, renewed, extended,
continued, surrendered, compromised, waived, discharged or released in
whole or in part or any default with respect thereto waived, and the
Transferors may generally deal or take action or no action with regard
to New World as the Transferors may see fit, and JLL, the Company,
Pasta Group and Winchester shall remain bound under their respective
guarantees notwithstanding any such change, alteration, renewal,
extension, continuance, compromise, waiver, discharge, inaction or
other dealing.
12. Amendment to Section 9.3. Section 9.3 of the Agreement is hereby
amended by adding at the end of Section 9.3 the following new paragraph:
Subject to the provisions of this Agreement, and in particular
Sections 10.3, 10.5 and 10.6.2, as soon as practicable
following the Closing Date, HFC shall take all actions as may
be necessary to permit each Transferred Employees who is a
participant in the HFC Employee Savings Stock Investment and
Ownership Plan and the HFC Retirement Plan (the "HFC Plans")
to make an election pursuant to the terms of such HFC Plan
during a thirty (30) day period with respect to his accrued
benefits under such HFC Plan, which possible elections shall
include (i) leaving such accrued benefits in such HFC Plan,
(ii) receiving distributions thereof, and (iii) transferring
such accrued benefits to a qualified defined contribution or
qualified defined benefit plan, as appropriate, maintained by
New World. In the event that any such Transferred Employee
does not make an affirmative election regarding the
disposition of his accrued benefit under an HFC Plan pursuant
to the procedures established by HFC, HFC shall direct that
such Transferred Employee's accrued benefit be transferred to
a qualified defined contribution or qualified defined benefit
plan, as appropriate, maintained by New World. Notwithstanding
any other provision of the Agreement, New World and the
Company after the Closing shall indemnify HFC and its
affiliates from all Losses related to any claim which is made
by or on behalf of or through any Transferred Employee against
HFC, any of its affiliates, the HFC Plans or any fiduciary
thereof as a result of the transfer of any Transferred
Employee's accrued benefit to an employee benefit plan of New
World in the absence of an affirmative election by such
Transferred Employee, as described in the immediately
preceding sentence.
13. Amendment to Section 9.8. Section 9.8 of the Agreement is hereby
amended by adding at the end of Section 9.8 the following new paragraph:
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Subject to the provisions of this Agreement, and in particular Sections
10.3, 10.5 and 10.6.2, HFC will refrain from making any payments to
Transferred Employees prior to Closing in lieu of any earned, but
unused, vacation time ("Accrued Vacation Benefits") that was accrued
for the benefit of any Transferred Employee as of the Closing Date and
is included on the Statement and New World will notify the Transferred
Employees of New World's request that HFC not pay such Accrued Vacation
Benefits.
14. Amendment to Section 10.3. Section 10.3 of the Agreement is hereby
amended by adding the following new paragraph at the end of Section 10.3:
New World and the Company after the Closing shall further indemnify HFC
and its affiliates from all Losses related to any claim which is made
by any Transferred Employee (i) against HFC or any of its affiliates
for any Accrued Vacation Benefits or HFC's or any of its affiliates'
failure to pay any such Accrued Vacation Benefits contemplated by
Section 9.8 above and in response to New World's request that HFC not
pay such Accrued Vacation Benefits or (ii) against HFC, any of its
affiliates, the HFC Plans or any fiduciary thereof as a result of the
transfer of any Transferred Employee's accrued benefit under an HFC
Plan to an employee benefit plan of New World in the absence of an
affirmative election by such Transferred Employee as described in
Section 9.3. The obligation of New World and the Company to indemnify
HFC, its affiliates, and the HFC Plans and fiduciaries thereof as
contemplated by the preceding sentence shall not be subject to the
basket, the cap or other limitations of this Section 10.3.
15. Amendment to Section 10.5. Section 10.5 of the Agreement is hereby
amended by adding the following new paragraph at the end of Section 10.5:
The obligation of New World and the Company after the Closing to
indemnify HFC and its affiliates for Losses related to Accrued Vacation
Benefit claims and claims relating to the transfer of accrued benefits
under the HFC Plans to an employee benefit plan of New World pursuant
to the second paragraph of Section 10.3 shall terminate 60 days after
the longest applicable statute of limitations period has expired for
such claims.
16. Amendment to Section 10.6.2. Section 10.6.2 of the Agreement is
hereby amended by adding the following new paragraph at the end of Section
10.6.2:
Notwithstanding the foregoing, with respect to any claim by a
Transferred Employee for Accrued Vacation Benefits or relating to
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the transfer of accrued benefits under the HFC Plans to an employee
benefit plan of New World, New World and the Company hereby acknowledge
their indemnification obligations therefor and agree to assume the
defense thereof in accordance with this Section 10.
17. Limited Amendment. Except as amended by this Amendment and as the
context may otherwise require to give effect to the intent and purpose of this
Amendment, the Agreement shall remain in full force and effect without any other
amendments or modifications.
18. Amendment and Waiver. Subject to the provisions of Section 16 of
the Agreement, this Amendment may be amended, or any provision of this Amendment
may be waived; provided, that any such amendment or waiver shall be binding upon
Transferors only if set forth in a writing executed by Transferors and referring
specifically to the provision alleged to have been amended or waived, and any
such amendment or waiver shall be binding upon New World only if set forth in a
writing executed by New World and referring specifically to the provision
alleged to have been amended or waived.
19. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered in accordance
with Section 17 of the Agreement.
20. Counterparts. This Amendment may be executed in one or more
counterparts (including by means of telecopied signature pages), all of which
shall be considered one and the same agreement, and shall become effective when
one or more such counterparts have been signed by each of the parties and
delivered to the other party.
21. Entire Agreement. The Agreement and the other agreements referred
to therein (including the Confidentiality Agreement) and the other agreements
executed by the parties on the date thereof, as amended by this Amendment,
contain the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, whether written or oral, relating to such subject matter.
22. Severability. Whenever possible, each provision of this Amendment
shall be interpreted in such manner as to be valid and effective under
applicable law, but if any provision of this Amendment or the application of any
such provision to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof.
23. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Pennsylvania (without
giving effect to its conflict of law principles). Any dispute arising from or in
connection with this Amendment shall be subject to the terms of Sections 31 and
32 of the Agreement.
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24. Headings. The headings herein are included for convenience of
reference only and shall be ignored in the construction and interpretation
hereof.
* * * * *
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IN WITNESS WHEREOF, the parties have caused this Amendment to
be duly executed as of the date first written above.
HERSHEY FOODS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President,
Finance and Chief Financial
Officer
HERSHEY CHOCOLATE &
CONFECTIONERY CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
HOMESTEAD, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President and
Assistant Secretary
NEW WORLD PASTA COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Vice President
NEW WORLD PASTA, LLC
By: /s/ Xxxxx X. Xxxx
--------------------------------
Name: Xxxxx X. Xxxx
Title: President
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XXXXXX XXXXXXXXXX & XXXX FUND III,
L.P.
By: /s/ Xxxxx X. Xxxx
--------------------------------
Name: Xxxxx X. Xxxx
Title: Partner
PASTA GROUP, L.L.C.
By: HERSHEY FOODS CORPORATION,
as Member and Manager
/s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President, General
Counsel and Secretary
WINCHESTER PASTA, L.L.C.
By: HERSHEY FOODS CORPORATION,
as Member and Manager
/s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President, General
Counsel and Secretary
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SCHEDULE 2.6
THE RECAPITALIZATION
OF NEW WORLD PASTA COMPANY
Reference is made to the Amendment, dated as of January 28, 1999, among Hershey
Foods Corporation, Hershey Chocolate & Confectionery Corporation, New World
Pasta Company, New World Pasta, LLC and certain other parties (the "Amendment").
The terms used herein which are defined in the Recapitalization Agreement (the
"Agreement"), dated as of December 15, 1998 shall have the meaning ascribed to
them in the Agreement.
The Recapitalization referred to in the Agreement shall mean the following
actions:
1. HFC or HCCCo shall cause the Company to recapitalize its outstanding
capital stock to provide that the then outstanding shares of Company
common stock shall be converted into 100,636.31 shares of redeemable
non-convertible, non-voting preferred stock which pays a market
dividend rate (liquidation preference of $1,000 per share) and
35,236,369 shares of common stock. The preferred stock shall have such
terms and conditions as New World shall determine and HFC shall approve
(which approval will not be unreasonably withheld).
2. The Company shall repurchase 30,768,500 common shares from HCCCo for a
demand promissory note in the amount of $307,685,000 (the "Note").
3. New World will acquire from HCCCo 100,636.31 shares of preferred stock
of the Company for $100,636,310 in cash and 4,167,869 shares of common
stock of the Company for $41,678,690 in cash; provided, however, New
World may assign to other investors (the "New World Investors") the
right to purchase a portion of such preferred and common stock if such
involvement will not delay the Closing.
4. New World and the New World Investors will appoint a new Board of
Directors of the Company immediately prior to approval of and the
borrowing of the amounts contemplated by the Debt Commitment Letters,
pursuant to the Debt Commitment Letters or otherwise.
5. The Company shall approve the borrowing of and shall borrow the amounts
contemplated by the Debt Commitment Letters, pursuant to the Debt
Commitment Letters or otherwise (the "Funds").
6. The Company shall use the Funds to pay off the Note.
7. None of the transactions set forth in paragraphs 2 through 6 shall
occur unless all such transactions occur. Immediately after giving
effect to the transactions set forth in
Schedule 2.6, Page 1
16
paragraphs 2 through 6 above, HCCCo shall own not less than 6% of the
fully diluted common stock of the Company.
Schedule 2.6, Page 2
