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EXHIBIT 2.1
CONTRIBUTION AND MERGER AGREEMENT
AMONG
SUIZA FOODS CORPORATION,
FRANKLIN PLASTICS, INC.,
THE SUIZA COMPANIES IDENTIFIED HEREIN,
VESTAR PACKAGING LLC,
▇▇▇▇ PLASTICS HOLDINGS, INC.,
THE ▇▇▇▇ COMPANIES IDENTIFIED HEREIN,
▇▇▇▇ PLASTICS GROUP LLC,
CONSOLIDATED CONTAINER HOLDINGS LLC
AND
CONSOLIDATED CONTAINER COMPANY LLC
DATED AS OF
APRIL 29, 1999
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CONTRIBUTION AND MERGER AGREEMENT
TABLE OF CONTENTS
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SECTION 1 DEFINITIONS.....................................................................................2
SECTION 2 MERGERS AND CONTRIBUTION; CLOSING..............................................................13
2.1 Mergers and Contribution.......................................................................13
2.2 Consideration..................................................................................13
2.3 Resulting Ownership of the Company.............................................................14
2.4 Closing........................................................................................14
2.5 Closing Obligations............................................................................15
2.6 Post-Closing Adjustment........................................................................15
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE ▇▇▇▇ PARTIES.............................................16
3.1 Organization and Good Standing.................................................................16
3.2 Authority; No Conflict; Consents...............................................................17
3.3 Capitalization.................................................................................18
3.4 Financial Statements...........................................................................18
3.5 Books and Records..............................................................................18
3.6 Title to Properties; Encumbrances..............................................................19
3.7 No Undisclosed Liabilities.....................................................................19
3.8 Taxes..........................................................................................20
3.9 No Material Adverse Change.....................................................................20
3.10 Employee Benefits..............................................................................21
3.11 Compliance with Legal Requirements; Governmental Authorizations................................22
3.12 Legal Proceedings; Orders......................................................................23
3.13 Absence of Certain Changes and Events..........................................................24
3.14 Contracts; No Defaults.........................................................................25
3.15 Insurance......................................................................................27
3.16 Environmental Matters..........................................................................27
3.17 Labor Relations; Compliance....................................................................28
3.18 Intellectual Property..........................................................................28
3.19 Brokers or Finders.............................................................................29
3.20 Competing Interests............................................................................29
3.21 Investment Intent..............................................................................29
3.22 Product Warranty and Product Liability.........................................................29
3.23 Year 2000 Compliance...........................................................................29
3.24 No Misrepresentations..........................................................................30
SECTION 4 REPRESENTATIONS AND WARRANTIES OF SUIZA PARTIES................................................30
4.1 Organization and Good Standing.................................................................30
4.2 Authority; No Conflict; Consents...............................................................30
4.3 Capitalization.................................................................................31
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4.4 Financial Statements...........................................................................32
4.5 Books and Records..............................................................................32
4.6 Title to Properties; Encumbrances..............................................................32
4.7 No Undisclosed Liabilities.....................................................................33
4.8 Taxes..........................................................................................33
4.9 No Material Adverse Change.....................................................................34
4.10 Employee Benefits..............................................................................34
4.11 Compliance with Legal Requirements; Governmental Authorizations................................36
4.12 Legal Proceedings; Orders......................................................................37
4.13 Absence of Certain Changes and Events..........................................................37
4.13A Absence of Certain Changes and Events -- Franklin..............................................39
4.14 Contracts; No Defaults.........................................................................39
4.15 Insurance......................................................................................40
4.16 Environmental Matters..........................................................................41
4.17 Labor Relations; Compliance....................................................................42
4.18 Intellectual Property..........................................................................42
4.19 Brokers or Finders.............................................................................43
4.20 Competing Interests............................................................................43
4.21 Investment Intent..............................................................................43
4.22 Product Warranty and Product Liability.........................................................43
4.23 Holdings and the Company.......................................................................43
4.24 Year 2000 Compliance...........................................................................43
4.25 No Misrepresentations..........................................................................43
SECTION 5 REPRESENTATIONS AND WARRANTIES OF VESTAR.......................................................44
5.1 Organization and Good Standing.................................................................44
5.2 Authority; No Conflict; Consents...............................................................44
SECTION 6 REPRESENTATIONS AND WARRANTIES OF SUIZA FOODS..................................................45
6.1 Organization and Good Standing.................................................................45
6.2 Authority; No Conflict; Consents...............................................................45
SECTION 7 COVENANTS OF ▇▇▇▇ PARTIES PRIOR TO CLOSING DATE................................................45
7.1 Access and Investigation.......................................................................45
7.2 Operation of the Business of the ▇▇▇▇ Companies................................................46
7.3 Negative Covenant..............................................................................46
7.4 Notification...................................................................................46
7.5 Distributions and Certain Other Restricted Payments............................................47
7.6 No Negotiation.................................................................................47
7.7 Commercially Reasonable Efforts................................................................48
7.8 Assistance with Permits and Filings............................................................48
7.9 Confidentiality................................................................................48
7.10 Assignment of Indemnification Rights...........................................................48
7.11 Appraisal......................................................................................48
SECTION 8 COVENANTS OF SUIZA PARTIES PRIOR TO CLOSING DATE...............................................48
8.1 Access and Investigation.......................................................................48
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8.2 Operation of the Business of the Suiza Companies...............................................49
8.2A Operation of the Business of Franklin..........................................................49
8.3 Negative Covenant..............................................................................49
8.4 Notification...................................................................................49
8.5 Distributions and Certain Other Restricted Payments............................................50
8.6 No Negotiation.................................................................................50
8.7 Commercially Reasonable Efforts................................................................51
8.8 Assistance with Permits and Filings............................................................51
8.9 Confidentiality................................................................................51
8.10 Tender Offer...................................................................................51
8.11 Assignment of Indemnification Rights...........................................................52
8.12 Contribution by Suiza Parent...................................................................52
8.13 Appraisal......................................................................................52
SECTION 9 CONDITIONS PRECEDENT TO THE SUIZA PARTIES' OBLIGATION TO CLOSE.................................52
9.1 Accuracy of Representations....................................................................52
9.2 ▇▇▇▇'▇ Performance.............................................................................52
9.3 Absence of Material Adverse Effects............................................................53
9.4 Consents.......................................................................................53
9.5 No Proceedings.................................................................................53
9.6 No Prohibition.................................................................................53
9.7 Legal Opinion..................................................................................53
9.8 Capital Contribution...........................................................................53
9.9 Cash Payment...................................................................................53
9.10 Financing......................................................................................53
9.12 FIRPTA Certificate.............................................................................54
9.13 Discharge of Indebtedness......................................................................54
9.14 Suiza Bank Consent.............................................................................54
SECTION 10 CONDITIONS PRECEDENT TO THE ▇▇▇▇ PARTIES' OBLIGATION TO CLOSE..................................54
10.1 Accuracy of Representations....................................................................54
10.2 Suiza's Performance............................................................................54
10.3 Absence of Material Adverse Effects............................................................55
10.4 Consents.......................................................................................55
10.5 No Proceedings.................................................................................55
10.6 No Prohibition.................................................................................55
10.7 Legal Opinion..................................................................................55
10.8 Financing......................................................................................55
10.10 FIRPTA Certificate.............................................................................55
10.11 Discharge of Indebtedness......................................................................56
10.12 Suiza Bank Consent.............................................................................56
SECTION 11 TERMINATION....................................................................................56
11.1 Termination Events.............................................................................56
11.2 Effect of Termination..........................................................................56
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SECTION 12 INDEMNIFICATION; REMEDIES......................................................................57
12.1 Representations; Survival......................................................................57
12.2 Indemnification and Payment of Damages With Respect to Breaches by ▇▇▇▇ Parties................57
12.3 Indemnification and Payment of Damages With Respect to Breaches by Suiza Parties...............58
12.4 Indemnification and Payment of Damages by the Company..........................................59
12.5 Certain Other Indemnifiable Matters............................................................59
12.6 Limitations on Amount..........................................................................60
12.7 Procedure for Indemnification - Third Party Claims.............................................60
12.8 Procedure for Indemnification - Other Claims...................................................61
12.9 Mitigation.....................................................................................61
12.10 Exclusive Remedy...............................................................................61
12.11 Payments in Preferred Units....................................................................62
SECTION 13 POST CLOSING COVENANTS................................................................................63
13.1 Nondisclosure..................................................................................63
13.2 Records Retention..............................................................................64
13.3 Allocation of Purchase Price...................................................................64
13.4 Release of Encumbrances........................................................................64
13.5 Payment of Taxes...............................................................................64
13.6 Employee Benefits..............................................................................65
SECTION 14 GENERAL PROVISIONS.............................................................................65
14.1 Expenses.......................................................................................65
14.2 Public Announcements...........................................................................66
14.3 Notices........................................................................................66
14.4 Attorney's Fees and Costs......................................................................67
14.5 Further Assurances.............................................................................67
14.6 Waiver.........................................................................................67
14.7 Entire Agreement and Modification..............................................................68
14.8 Assignments, Successors and No Third Party Rights..............................................68
14.9 Severability...................................................................................68
14.10 Section Headings, Construction.................................................................68
14.11 Time of Essence................................................................................68
14.12 Governing Law..................................................................................68
14.13 Counterparts...................................................................................68
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EXHIBITS
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Exhibit A Holdings LLC Agreement
Exhibit B Unit Option Plan, Unit Option Agreement and
Redemption Agreement
Exhibit C Trademark License Agreement
Exhibit D Legal Opinion of ▇▇▇▇'▇ Counsel
Exhibit E Legal Opinion of Suiza's Counsel
Exhibit F ▇▇▇▇▇▇▇▇ ▇▇▇▇ of Sale, Assignment and Assumption
Agreement
Exhibit G Assumption Agreement
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CONTRIBUTION AND MERGER AGREEMENT
This Contribution and Merger Agreement ("AGREEMENT") is made as of
April 29, 1999, by and among Suiza Foods Corporation, a Delaware corporation
("SUIZA FOODS"), Franklin Plastics, Inc., a Delaware corporation ("FRANKLIN" or
the "SUIZA PARENT"), the Suiza Companies identified below, Vestar Packaging LLC,
a Delaware limited liability company ("VESTAR"), ▇▇▇▇ Plastics Holdings, Inc., a
Delaware corporation (the "▇▇▇▇ PARENT"), the ▇▇▇▇ Companies identified below,
▇▇▇▇ Plastics Group LLC, a Delaware limited liability company ("▇▇▇▇ PLASTICS
LLC"), Consolidated Container Holdings LLC, a Delaware limited liability company
("HOLDINGS"), and Consolidated Container Company LLC, a Delaware limited
liability company (the "COMPANY").
RECITALS
The Suiza Parent owns, directly or indirectly, all of the outstanding
equity interests in each of the Suiza Companies, including the Franklin
Companies (identified below) and the PCI Companies (also identified below).
Franklin owns all of the outstanding equity interests in Holdings, Holdings owns
all of the outstanding equity interests in the Company, and the Company owns all
of the outstanding equity interests in ▇▇▇▇ Plastics LLC. The ▇▇▇▇ Parent owns,
directly or indirectly, all of the outstanding equity interests in the ▇▇▇▇
Companies (other than ▇▇▇▇ Mexico S.A. de C.V.). Pursuant to this Agreement,
certain of the Suiza Companies will be merged with and into the Company; and the
▇▇▇▇ Companies (other than those incorporated outside the United States, which
shall continue as subsidiaries of ▇▇▇▇ Plastics LLC after the Merger) will be
merged with and into ▇▇▇▇ Plastics LLC. Also pursuant to this Agreement, certain
of the Suiza Companies, or their operations, will be contributed to the Company.
As a result of these mergers and contributions, and the other transactions
contemplated by this Agreement, as of the Closing Date, the ▇▇▇▇ Parent and
Vestar collectively will own 51% of the outstanding equity interests in
Holdings, and the Suiza Parent will own the remaining 49% of the outstanding
equity interests in Holdings.
Suiza Foods will, prior to the Closing, cause all of the operating
assets (and the associated liabilities, excluding liabilities to Suiza Foods and
its subsidiaries) used or held for use in Suiza Foods' plastics packaging
business and held by Franklin to be transferred to a Franklin Company, and may
cause one or more of the Franklin Companies to be consolidated with one or more
of the remaining Franklin Companies. In the event of such consolidation, the
term Franklin Companies as used herein shall refer to such entities remaining as
the direct or indirect subsidiaries of Franklin, except for the PCI Companies.
The Suiza Parent will also, prior to the Closing, cause the Suiza Packaging
Restructuring (as defined herein) to occur.
The ▇▇▇▇ Parent may cause one or more of the ▇▇▇▇ Companies to be
consolidated with one or more of the remaining ▇▇▇▇ Companies. In the event of
such consolidation, the ▇▇▇▇ Companies as used herein shall refer to such
entities remaining as the direct or indirect subsidiaries of the ▇▇▇▇ Parent.
The parties, intending to be legally bound, agree as follows:
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SECTION 1
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"AFFILIATE" - with respect to a particular Person, any other Person
directly or indirectly Controlling, Controlled by, or under common Control with
such Person.
"CCC" - Continental Can Company, Inc., a Delaware corporation.
"CCCI" - Continental Caribbean Containers, Inc., a Delaware corporation
and wholly-owned subsidiary of PCI.
"CPCI" - Continental Plastic Containers, Inc., a Delaware corporation
and wholly-owned subsidiary of PCI, and/or Continental Plastic Containers LLC, a
Delaware limited liability company and wholly-owned subsidiary of PCI, after the
conversion of the corporation in the Suiza Packaging Restructuring.
"CLOSING" - as defined in Section 2.4.
"CLOSING DATE" - the date and time as of which the Closing actually
takes place.
"COMPANY" - Consolidated Container Company LLC, a Delaware limited
liability company and wholly-owned subsidiary of Holdings.
"COMPANY LLC AGREEMENT" - the Limited Liability Company Agreement of
the Company.
"COMPANY UNITS" - the issued and outstanding limited liability company
units in the Company, the terms and conditions of which are contained in the
Company LLC Agreement.
"CONSENT" - any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTROL" - with respect to a particular Person, (a) the ownership,
directly or indirectly, of more than 50% of the equity or voting interests in
such Person, or (b) the right to elect or appoint, together with others who are
required to act in concert with such Person, more than 50% of the directors or
members of another governing body that directs the management and policies of
such Person.
"CONTEMPLATED TRANSACTIONS" - all of the transactions contemplated by
this Agreement, including the Mergers and the PCI Contribution.
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"CONTRACT" - any agreement, contract, obligation, promise, or
undertaking that is legally binding.
"DAMAGES" - as defined in Section 12.2.
"DEFINED BENEFIT PLAN" - with the meaning of ERISA Section 3(35).
"DISCLOSURE LETTER" - the disclosure letter executed by the ▇▇▇▇
Parties and the Suiza Parties concurrently with the execution and delivery of
this Agreement.
"DOJ" - the United States Department of Justice.
"DOL" - the United States Department of Labor.
"EFFECTIVE TIME" - the date and time at which the last of the following
events occurs (i) the PCI Contribution is effective and (ii) certificates of
merger with respect to the Mergers are filed with the Secretary of State of
Delaware and other required states, pursuant to Section 2.4, or, if different,
the effective time for the Mergers set forth in the respective certificates of
merger.
"EMPLOYEE BENEFIT PLAN" - as defined in ERISA.
"ENCUMBRANCE" - any lien, mortgage, easement, servitude, right of way,
charge, pledge, security interest, or other encumbrance.
"ENVIRONMENT" - soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air,
plant and animal life, and any other environmental medium.
"ENVIRONMENTAL LAW" - any Legal Requirement that relates to the
Environment or the protection of human health as it relates to the Environment
or the work place.
"ERISA" - the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ERISA AFFILIATE" - each corporation, partnership or other trade or
business, whether or not incorporated, which is or has been treated as a single
employer or a controlled group member with a Person pursuant to IRC Section 414
or Section 4001 of ERISA.
"EXPIRATION DATE" - as defined in Section 8.10.
"FRANKLIN" - Franklin Plastics, Inc., a Delaware corporation and
wholly-owned direct subsidiary of Suiza Foods; Franklin will become an indirect
subsidiary of Suiza Foods as a result of the Suiza Packaging Restructuring.
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"FRANKLIN COMPANIES" - Allentown Plastics, Inc., a Pennsylvania
corporation, Atlanta Container, Inc., a Georgia corporation, ▇▇▇▇▇▇▇ County
Container Corp., a Pennsylvania corporation, First Capital Plastics, Inc., a
Pennsylvania corporation, Florida Plastics, Inc., a Florida corporation,
Franklin Plastics, Inc., a Massachusetts corporation, Illinois Plastics, Inc.,
an Illinois corporation, Kentwood Plastics, Inc., a Louisiana corporation,
Liquitane Acquisition Corporation, a Delaware corporation, Maine Plastics, Inc.,
a Maine corporation, Marlborough Plastics, Inc., a Massachusetts corporation,
Middlesex Plastics, Inc., a Connecticut corporation, New Jersey Plastics, Inc.,
a New Jersey corporation, North Carolina Plastics, Inc., a North Carolina
corporation, Ohio State Plastics, Inc., an Ohio corporation, Richmond Container,
Inc., a Virginia corporation, ▇▇▇▇▇▇ Acquisition Corporation, a Delaware
corporation, ▇▇▇▇▇▇▇ Plastics, Inc., a Texas corporation, Vanguard
Manufacturing, Inc., a New Jersey corporation and Consolidated Plastechs, Inc.,
a New Hampshire corporation.
"FRANKLIN REPLACEMENT OPTION" - as defined in Section 2.3(b).
"FRANKLIN OPTION PLAN" - the Franklin Plastics, Inc. 1998 Stock Option
Plan adopted by Franklin on February 25, 1998.
"FRANKLIN OPTIONS" - options to purchase shares of Franklin Stock,
issued pursuant to the Franklin Option Plan, whether vested or unvested.
"FRANKLIN STOCK" - common stock, par value $.001 per share, of
Franklin.
"FTC" - United States Federal Trade Commission.
"GOVERNMENTAL AUTHORIZATION" - any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" - any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature; or
(d) other body exercising any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or
power.
"HAZARDOUS ACTIVITY" - the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
release, storage, transfer, transportation, treatment, or use of Hazardous
Materials from the ▇▇▇▇ Facilities or the Suiza Facilities, as the case may be,
into the Environment that is not in compliance with Environmental Law.
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"HAZARDOUS MATERIALS" - any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law or any other material that could result in liability under or
pursuant to any Environmental Law, including without limitation, petroleum and
petroleum products, polychlorinated biphenyls, and asbestos-containing
materials.
"HOLDINGS" - Consolidated Container Holdings LLC, a Delaware limited
liability company, and wholly-owned subsidiary of Franklin prior to the Closing.
"HOLDINGS LLC AGREEMENT" - the Limited Liability Company Agreement of
Holdings to be executed at the Closing pursuant to Section 2.5(a), substantially
in the form of Exhibit A hereto.
"HSR ACT" - Title II of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulation promulgated thereunder.
"INFRINGE" - as defined in Section 3.18(b).
"INITIAL EXPIRATION DATE" - as defined in Section 8.10.
"INTELLECTUAL PROPERTY" - all U.S. and foreign intellectual property,
including without limitation: (i)(a) patents, inventions, discoveries,
processes, designs, techniques, developments, technology, and related
improvements, know-how and show-how, whether or not patented or patentable; (b)
copyrights and works of authorship in any media, including computer hardware,
software, systems, databases, documentation and Internet site content; (c)
trademarks, service marks, trade names, brand names, corporate names, domain
names, logos and trade dress; (d) trade secrets, drawings, blueprints and all
confidential or proprietary information; and (ii) all registrations,
applications and recordings related thereto.
"INTERIM ▇▇▇▇ BALANCE SHEETS" - the most recent balance sheet for each
▇▇▇▇ Company included within the ▇▇▇▇ Financial Statements.
"INTERIM SUIZA BALANCE SHEETS" - the most recent balance sheet for each
Suiza Company included within the Suiza Financial Statements.
"IRC" - the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" - the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"LEGAL REQUIREMENT" - any administrative order, constitution, law,
ordinance, principle of common law, regulation, rule or statute of any
Governmental Body, including without limitation all federal, foreign, state and
local laws related to Taxes, ERISA, Hazardous Materials
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and the Environment, zoning and land use, occupational safety and health,
product quality and safety, employment and labor matters.
"MATERIAL CONSENTS" - the consents disclosed on Schedule 3.2(d) and
Schedule 4.2(d) to the Disclosure Letter.
"MEMBER UNITS" - the limited liability company units representing
equity interests in Holdings, initially to be issued to the ▇▇▇▇ Parent, Vestar
and the Suiza Parent at the Closing, pursuant to the Holdings LLC Agreement.
"MERGERS" - the merger of each Franklin Company with and into the
Company at the Effective Time pursuant to Section 2.1 and the other provisions
of this Agreement, and the mergers of each ▇▇▇▇ Company (other than those
incorporated outside the United States, which shall continue as subsidiaries of
▇▇▇▇ Plastics LLC after the Mergers) with and into ▇▇▇▇ Plastics LLC at the
Effective Time pursuant to Section 2.1 and the other provisions of this
Agreement.
"OPTION AGREEMENT" - option agreement substantially in the form of
Exhibit C hereto.
"ORDER" - any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" - an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day
operations of such Person; and
(b) such action is not required to be authorized by the board
of directors of such Person (or by any Person or group of Persons
exercising similar authority).
"ORGANIZATIONAL DOCUMENTS" - the constituent and organizational
documents of a Person, as amended to date, and any organizational minutes or
resolutions, including (a) with respect to a limited liability company, its
certificate of formation and operating agreement, (b) with respect to a
corporation, its articles or certificate of incorporation and its bylaws and (c)
with respect to a limited partnership, its certificate of limited partnership
and agreement of limited partnership.
"PCI" - Plastic Containers, Inc., a Delaware corporation and
wholly-owned subsidiary of CCC or, after the Suiza Packaging Restructuring, a
wholly-owned subsidiary of Franklin, and/or Plastic Containers LLC, a Delaware
limited liability company and wholly-owned subsidiary of Franklin.
"PCI COMPANIES" - PCI, CCCI, and CPCI.
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"PCI CONTRIBUTION" - the contribution by Franklin of 100% of the equity
interest in PCI to the Company at the Effective Time pursuant to Section 2.1(b).
"PCI NOTES" - 10% Senior Secured Notes Due 2006, Series B, in the
currently outstanding aggregate principal amount of $121.25 million.
"PENSION PLAN" - any pension plan within the meaning of ERISA Section
3(2).
"PERMITTED ENCUMBRANCES" - (a) liens for Taxes that are not yet due and
payable, that may thereafter be paid without penalty or that are being contested
in good faith by appropriate proceedings and as to which adequate reserves have
been established in accordance with GAAP, consistently applied, (b) mechanics',
carriers', workers', repairmen's and similar Encumbrances imposed by Legal
Requirements that have been incurred in the Ordinary Course of Business, (c)
Encumbrances and other title defects, easements, encroachments and encumbrances
that do not materially impair the value, or occupancy, or continued use as
currently conducted of the asset to which they relate, (d) retention of title
agreements with suppliers entered into in the Ordinary Course of Business, (e)
the rights of others to customer deposits, (f) Encumbrances incurred in the
Ordinary Course of Business under leases or securing purchase money indebtedness
and (g) zoning, entitlement, building and other land use Legal Requirements
imposed by Governmental Bodies having jurisdiction over real property that are
not violated in any material respect by the current use and operation of such
real property.
"PERSON" - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company,
cooperative marketing association, joint venture, estate, trust, association or
other entity.
"PREFERRED UNITS" - the limited liability company units representing
preferred liquidation preference equity interests in Holdings, to be issued to
certain members of Holdings pursuant to Section 12.11 of this Agreement. The
Preferred Units shall accrue dividends at an annual rate of 12.5%.
"PROCEEDING" - any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, any Governmental
Body or arbitrator.
"REGISTRATION RIGHTS AGREEMENT" - a registration rights agreement to be
executed and delivered by the parties named therein.
"▇▇▇▇ BALANCE SHEET" - as defined in Section 3.4.
"▇▇▇▇ BONUS PLAN" - any plan, scheme or arrangement, written or
otherwise, pursuant to which any ▇▇▇▇ Company may be required to make a payment
or other transfer to any of its Affiliates, employees, or independent
contractors of cash or property the amount or value of which is in any way
contingent on the objectively or subjectively determined attainment of any
individual or group performance goals.
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"▇▇▇▇ CONFIDENTIAL INFORMATION" - as defined in Section 13.1.
"▇▇▇▇ COMPANIES" - ▇▇▇▇ Plastics, Inc., a Delaware corporation, ▇▇▇▇
Canada, Inc., an Ontario corporation, ▇▇▇▇ Intermediate, Inc., a California
corporation, Plastic Containers, Inc., an Alabama corporation, S-W Realty Co., a
California corporation, ▇▇▇▇ Mexico S.A. de C.V., Mexico D.F., ▇▇▇▇ Plastics
West, Inc., a California corporation, ▇▇▇▇▇▇▇/▇▇▇▇▇▇ Plastics, Ltd., a British
Columbia, Canada corporation, Propak Industrial, Inc., a California corporation,
Juice Tree Inc., a California corporation and Master Plastics, Inc., an Alberta,
Canada corporation.
"▇▇▇▇ CONTROLLED GROUP PLANS" - as defined in Section 3.10(b)(v).
"▇▇▇▇ ERISA PLAN" - any ▇▇▇▇ Pension Plan or ▇▇▇▇ Welfare Plan.
"▇▇▇▇ FACILITIES" - any real property, leaseholds, or other interests
in real property owned or operated by any ▇▇▇▇ Company and any buildings,
plants, structures, or fixtures owned or operated by any ▇▇▇▇ Company.
"▇▇▇▇ FINANCIAL STATEMENTS" - as defined in Section 3.4.
"▇▇▇▇ FRINGE BENEFIT PLAN" - any plan, scheme, or arrangement currently
maintained by any ▇▇▇▇ Company for the provision of "fringe benefits" to current
or former employees within the meaning of IRC Sections 61(a) or 132(a).
"▇▇▇▇ HOLDINGS" - ▇▇▇▇ Plastics Holdings, Inc., a Delaware corporation.
"▇▇▇▇ HOLDINGS STOCK" - common stock, $0.1 par value per share, of ▇▇▇▇
Holdings.
"▇▇▇▇ INDEBTEDNESS" - indebtedness of the ▇▇▇▇ Companies listed in
Section 10.11(a) of the Disclosure Letter which will be fully discharged
concurrently with the Closing.
"▇▇▇▇ IP" - as defined in Section 3.18(a).
"▇▇▇▇ MATERIAL ADVERSE EFFECT" - any material adverse effect on the
business, properties, assets, financial condition, liabilities or results of
operations of the ▇▇▇▇ Companies, taken as a whole, other than any effects
arising out of or resulting from changes affecting the economy generally or the
plastic containers industry generally.
"▇▇▇▇ MATERIAL CUSTOMERS" - as defined in Section 3.14(c).
"▇▇▇▇ OPTION PLAN" - the 1997 ▇▇▇▇ Plastics Holdings, Inc. Stock Option
Plan adopted by ▇▇▇▇ Holdings on January 22, 1998.
"▇▇▇▇ OPTIONS" - options to purchase shares of ▇▇▇▇ Holdings Stock,
issued pursuant to the ▇▇▇▇ Option Plan, whether vested or unvested.
"▇▇▇▇ PARENT" - ▇▇▇▇ Holdings.
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"▇▇▇▇ PARTIES" - Vestar, the ▇▇▇▇ Parent and the ▇▇▇▇ Companies.
"▇▇▇▇ PAYROLL POLICY" - any policy of making payments or other awards
to employees of any ▇▇▇▇ Company other than a ▇▇▇▇ Bonus Plan, a ▇▇▇▇ Fringe
Benefit Plan, a ▇▇▇▇ Pension Plan, a ▇▇▇▇ Stock Plan, or a ▇▇▇▇ Welfare Plan.
▇▇▇▇ Payroll Policies include, but are not limited to, paid sick days, vacation
days, and personal time off.
"▇▇▇▇ PENSION PLAN" - any Pension Plan maintained by any ▇▇▇▇ Company
or to which any ▇▇▇▇ Company is required to contribute for any current or former
employee.
"▇▇▇▇ PLAN" - each ▇▇▇▇ Bonus Plan, ▇▇▇▇ ERISA Plan, ▇▇▇▇ Fringe
Benefit Plan, ▇▇▇▇ Payroll Policy and ▇▇▇▇ Stock Plan.
"▇▇▇▇ PLASTICS" - ▇▇▇▇ Plastics, Inc., a Delaware corporation and
wholly-owned subsidiary of ▇▇▇▇ Holdings.
"▇▇▇▇ PLASTICS LLC" - ▇▇▇▇ Plastics Group LLC, a Delaware limited
liability company and wholly-owned subsidiary of the Company.
"▇▇▇▇ STOCK PLAN" - any compensatory interest option, restricted
interest, interest appreciation right, phantom interest, or similar plan,
program, or arrangement maintained by any ▇▇▇▇ Company for the current,
deferred, or contingent compensation of any of its employees, Affiliates or
independent contractors with an interest in or other equity security of any ▇▇▇▇
Company, a discount on the purchase price of any interest in or other equity
security of any ▇▇▇▇ Company, or a payment or other transfer of cash or property
the amount or value of which is in any way contingent on any change in value of
any interest in or other equity security of any ▇▇▇▇ Company.
"▇▇▇▇ TRANSACTION PROPOSALS" - as defined in Section 7.6.
"▇▇▇▇ WELFARE PLAN" - any Welfare Plan (as defined in Section 3(1) of
ERISA) maintained by any ▇▇▇▇ Company or to which any ▇▇▇▇ Company is required
to contribute for any current or former employees.
"▇▇▇▇'▇ ADVISORS" - as defined in Section 8.1.
"▇▇▇▇'▇ INDEMNIFIED PERSONS" - as defined in Section 12.3.
"▇▇▇▇'▇ KNOWLEDGE" - the ▇▇▇▇ Parties will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving as an executive officer of any ▇▇▇▇ Parent or ▇▇▇▇ Company (or in any
similar capacity) has actual knowledge of such fact or other matter.
"RELEASE" - any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment.
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"REPORTABLE EVENT" - as defined in Section 4043 of ERISA.
"REPRESENTATIVE" - with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT" - the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SUIZA BALANCE SHEET" - as defined in Section 4.4.
"SUIZA BONUS PLAN" - any plan, scheme or arrangement, written or
otherwise, pursuant to which any Suiza Company may be required to make a payment
or other transfer to any of its Affiliates, employees, or independent
contractors of cash or property the amount or value of which is in any way
contingent on the objectively or subjectively determined attainment of any
individual or group performance goals.
"SUIZA COMPANIES" - the Franklin Companies and the PCI Companies.
"SUIZA CONFIDENTIAL INFORMATION" - as defined in Section 13.1.
"SUIZA CONTROLLED GROUP PLANS" - as defined in Section 4.10(b)(v).
"SUIZA ERISA PLAN" - any Suiza Pension Plan or Suiza Welfare Plan.
"SUIZA FACILITIES" - any real property, leaseholds, or other interests
in real property owned or operated by any Suiza Company and any buildings,
plants, structures, or fixtures owned or operated by any Suiza Company.
"SUIZA FINANCIAL STATEMENTS" - as defined in Section 4.4.
"SUIZA FOODS" - Suiza Foods Corporation, a Delaware corporation.
"SUIZA FRINGE BENEFIT PLAN" - any plan, scheme, or arrangement
currently maintained by any Suiza Company for the provision of "fringe benefits"
to current or former employees within the meaning of IRC Sections 61(a) or
132(a).
"SUIZA INDEBTEDNESS" - indebtedness of the Suiza Companies listed in
Section 10.11(b) of the Disclosure Letter which will be fully discharged
concurrently with the Closing.
"SUIZA IP" - as defined in Section 4.18(a).
"SUIZA MATERIAL ADVERSE EFFECT" - any material adverse effect on the
business, properties, assets, financial condition, liabilities or results of
operations of the Suiza Companies,
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taken as a whole, other than any effects arising out of or resulting from
changes affecting the economy generally or the plastic containers industry
generally.
"SUIZA MATERIAL CUSTOMERS" - as defined in Section 4.14(c).
"SUIZA PACKAGING RESTRUCTURING" - the corporate restructuring of the
packaging subsidiaries of Suiza Foods, in which (i) Suiza Foods will contribute
the stock of Franklin to CCC, and (ii) CCC will contribute the stock of PCI to
Franklin, with the result that PCI becomes the wholly-owned direct subsidiary of
Franklin.
"SUIZA PARENT" - Franklin.
"SUIZA PARTIES" - Suiza Foods, the Suiza Parent and the Suiza
Companies.
"SUIZA PAYROLL POLICY" - any policy of making payments or other awards
to employees of any Suiza Company other than a Suiza Bonus Plan, a Suiza Fringe
Benefit Plan, a Suiza Pension Plan, a Suiza Stock Plan, or a Suiza Welfare Plan.
Suiza Payroll Policies include, but are not limited to, paid sick days, vacation
days, and personal time off.
"SUIZA PENSION PLAN" - any Pension Plan maintained by any Suiza Company
or to which any Suiza Company is required to contribute for any current or
former employee.
"SUIZA PLAN" - each Suiza Bonus Plan, Suiza ERISA Plan, Suiza Fringe
Benefit Plan, Suiza Payroll Policy, Suiza Pension Plan, Suiza Stock Plan and
Suiza Welfare Plan.
"SUIZA STOCK PLAN" - any compensatory interest option, restricted
interest, interest appreciation right, phantom interest, or similar plan,
program, or arrangement maintained by any Suiza Company for the current,
deferred, or contingent compensation of any of its employees, Affiliates or
independent contractors with an interest in or other equity security of any
Suiza Company, a discount on the purchase price of any interest in or other
equity security of any Suiza Company, or a payment or other transfer of cash or
property the amount or value of which is in any way contingent on any change in
value of any interest in or other equity security of any Suiza Company.
"SUIZA TRANSACTION PROPOSALS" - as defined in Section 8.6.
"SUIZA WELFARE PLAN" - any Welfare Plan (as defined in Section 3(1) of
ERISA) maintained by any Suiza Company or to which any Suiza Company is required
to contribute for any current or former employees.
"SUIZA'S ADVISORS" - as defined in Section 7.1.
"SUIZA'S INDEMNIFIED PERSONS" - as defined in Section 12.2.
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"SUIZA'S KNOWLEDGE" - Suiza will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as an executive
officer of the Suiza Parent or any Suiza Company (or in any similar capacity)
has actual knowledge of such fact or other matter.
"TAXES" - all federal, state, local or foreign taxes, charges, fees,
duties, levies or other assessments, including, without limitation, income,
gross receipts, net proceeds, ad valorem, real and personal property (tangible
and intangible), sales, use, franchise, user, transfer, fuel, excess profits,
occupational, employees' income withholding, unemployment and Social Security,
alternative or add-on minimum, environmental and franchise taxes, including
interest, penalties or additions to tax attributable to or imposed on or with
respect to such taxes, which are imposed by any Governmental Body whether
disputed or not.
"TAX RETURN" - any return (including any information return), report,
statement, schedule, notice, form, or other document or information, including
any amendment thereof, filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax.
"TENDER OFFER" - as defined in Section 8.10.
"TRANSFERRED EMPLOYEES" - as defined in Section 13.6.
"VCP" - Vestar Capital Partners, a New York general partnership.
"VCP MANAGEMENT AGREEMENT" - agreement dated the date hereof among VCP,
Holdings and the Company providing for VCP to provide certain services to
Holdings, the Company and the Company's subsidiaries.
"VESTAR" - Vestar Packaging LLC, a Delaware limited liability company.
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SECTION 2
MERGERS AND CONTRIBUTION; CLOSING
2.1 MERGERS AND CONTRIBUTION.
(a) On the terms and subject to the conditions set forth in
this Agreement, and in accordance with applicable Legal Requirements,
at the Effective Time (i) each Franklin Company shall be merged with
and into the Company, and (ii) each ▇▇▇▇ Company (other than those
incorporated outside the United States, which shall become subsidiaries
of ▇▇▇▇ Plastics LLC after the Mergers) will be merged with and into
▇▇▇▇ Plastics LLC. As a result of the Mergers, the separate corporate
or limited liability company existence of each ▇▇▇▇ Company (other than
those incorporated outside the United States) and each Franklin Company
shall cease, and the Company and ▇▇▇▇ Plastics LLC shall continue as
the surviving entities of the Mergers, governed by their respective
certificates of formation and limited liability company agreements. At
the Effective Time, the effect of the Mergers shall be as provided by
applicable Legal Requirements. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, (i) all the
properties, rights, privileges and powers of each Franklin Company will
vest in the Company, and all debts, liabilities and duties of each
Franklin Company will become the debts, liabilities and duties of the
Company, including, without limitation, any liability to pay the bond
tender premium in connection with the possible tender for the PCI Notes
in accordance with Section 8.10 of this Agreement, which possible
liability the Company hereby expressly agrees to assume (within the
meaning of Treasury Regulation Section 1.461-4(d)(5)(i)), and (ii) all
the properties, rights, privileges and powers of each ▇▇▇▇ Company
(other than those incorporated outside the United States and ▇▇▇▇
Plastics) will vest in ▇▇▇▇ Plastics LLC, and all the debts,
liabilities and duties of each ▇▇▇▇ Company (other than those
incorporated outside the United States and ▇▇▇▇ Plastics) will become
the debts, liabilities and duties of ▇▇▇▇ Plastics LLC. In effecting
the Mergers, no ▇▇▇▇ Company or Franklin Company which is a parent of
another ▇▇▇▇ Company or Franklin Company that is to be a constituent to
any merger shall be merged prior to the time when such subsidiary is
merged.
(b) On the terms and subject to the conditions set forth in
this Agreement, and in accordance with applicable Legal Requirements,
at the Effective Time Suiza Foods shall cause the PCI Contribution to
occur. As a result of the PCI Contribution, PCI shall become a
wholly-owned direct subsidiary of the Company, and each of CPCI and
CCCI shall survive as wholly-owned direct subsidiaries of PCI.
2.2 CONSIDERATION.
(a) At the Effective Time, by virtue of the Mergers, without
any action on the part of any party to this Agreement or any other
Person, all of the outstanding equity interests of the ▇▇▇▇ Companies
and the Franklin Companies which are constituent companies in the
Mergers shall be cancelled. In consideration for the Mergers and the
PCI Contribution, Member Units shall be issued to the ▇▇▇▇ Parent and
the Suiza Parent
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in accordance with Section 2.3 hereof and the provisions of the
Holdings LLC Agreement.
(b) At the Closing, Vestar shall contribute $60.8 million in
cash to Holdings as set forth in the Holdings LLC Agreement, payable in
immediately available funds, as part of its consideration for the
portion of the Member Units issued to Vestar.
(c) At the Closing, Holdings or the Company shall distribute
to Suiza Parent cash in the amount of (i) $366.7 million, plus (ii)
accrued and unpaid interest from December 31, 1998 to the Effective
Time on intercompany debt balances owed by Franklin to Suiza Foods at
the interest rates listed in Schedule 2.2(c), plus (iii) any increase
in the Other Intercompany Debt referred to in Schedule 2.2(c) from
December 31, 1998 to the Effective Time over $26,400,464, minus (iv)
any decrease in Other Intercompany Debt from December 31, 1998 to the
Effective Time below $26,400,464. The difference in the amount of cash
distributed to the Suiza Parent and $366,700,000 is referred to in this
Agreement as the "Adjustment Amount".
2.3 RESULTING OWNERSHIP OF THE COMPANY.
(a) At and immediately after the Effective Time, as a result
of the Contemplated Transactions, the Suiza Parent shall hold 49% of
the Member Units, or 4,900,000 Member Units on a primary basis, and the
▇▇▇▇ Parent and Vestar shall hold 30.5% and 20.5%, respectively, and
collectively, 51% of the Member Units on a primary basis, or 3,050,000
Member Units and 2,050,000 Member Units, respectively, and collectively
5,100,000 Member Units.
(b) At the Effective Time, each Franklin Option outstanding
immediately prior to the Effective Time shall be replaced by an option
to purchase Member Units (a "FRANKLIN REPLACEMENT OPTION") equal in
economic value to the Franklin Option being replaced, on terms and
conditions substantially identical to those contained in the original
Franklin Option including, without limitation, the provisions therein
with respect to vesting, forfeiture and liquidity rights. Upon exercise
of any Franklin Replacement Option, Franklin shall transfer to Holdings
for cancellation, without payment therefor by Holdings, a number of
Member Units equal to the number of Member Units issued upon exercise
of the Franklin Replacement Option. The ▇▇▇▇ Options outstanding
immediately prior to the Effective Time shall remain outstanding as
options to purchase shares of ▇▇▇▇ Holdings Stock.
2.4 CLOSING. The closing of the Merger (the "CLOSING") will take place
at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. (local time) on the third business day following
the satisfaction or waiver of all conditions precedent set forth in Sections 9
and 10, or at such other time and place as the Suiza Parent, ▇▇▇▇ Parent and
Vestar agree. Subject to the provisions of Section 11, failure to consummate the
purchase and sale provided for in this Agreement on the date and time and at the
place determined pursuant to this Section 2.4 will not result in the termination
of this Agreement and will not relieve any party of any obligation under this
Agreement. As promptly as practicable on
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the Closing Date, the parties hereto shall cause the Mergers and the PCI
Contribution to be consummated by filing the certificates of merger referenced
in Section 2.5(e) with the Secretary of State of the State of Delaware and with
the Secretary of State of each other state of formation of any ▇▇▇▇ Company or
Franklin Company.
2.5 CLOSING OBLIGATIONS. At the Closing:
(a) The ▇▇▇▇ Parent, Vestar and the Suiza Parent will execute
and deliver the Holdings LLC Agreement, substantially in the form of
Exhibit A hereto, which will provide (among other things) for the
issuance of Member Units to the ▇▇▇▇ Parent, Vestar and the Suiza
Parent.
(b) Unit Option Agreements, substantially in the form of
Exhibit B hereto, will be executed and delivered to the Persons who the
Suiza Parent, the ▇▇▇▇ Parent and Vestar mutually agree upon.
(c) CCC, Holdings and the Company will execute and deliver the
Trademark License Agreement, substantially in the form of Exhibit C
hereto.
(d) The ▇▇▇▇ Parent and the Suiza Parent will surrender for
cancellation any stock certificates or other certificates evidencing
their equity ownership interests in any ▇▇▇▇ Company or Suiza Company,
duly endorsed by the record holder thereof, and such certificates will
be marked "cancelled."
(e) The ▇▇▇▇ Companies and the Franklin Companies will execute
certificates of merger in the form required by the relevant provisions
of the applicable Legal Requirements of Delaware and each other state
in which any ▇▇▇▇ Company or Franklin Company is incorporated.
(f) The Supply Agreement by and among Suiza Foods, Holdings
and the Company will become effective in accordance with its terms.
(g) Franklin and a Franklin Company will execute and deliver
the ▇▇▇▇ of Sale, Assignment and Assumption Agreement, substantially in
the form of Exhibit F hereto.
(h) Holdings, the Company and the ▇▇▇▇ Parent will execute and
deliver the Assumption Agreement, substantially in the form of Exhibit
G hereto.
2.6 POST-CLOSING ADJUSTMENT.
(a) At least two business days prior to the Closing, the Suiza
Parent will deliver to the ▇▇▇▇ Parent and Vestar a preliminary
calculation (with reasonable detail relating thereto) of the Adjustment
Amount (the "ESTIMATED ADJUSTMENT AMOUNT"). The Suiza Parent will
consult in good faith with the ▇▇▇▇ Parent and Vestar with respect to
the Estimated Adjustment Amount. The Estimated Adjustment Amount
delivered by
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the Suiza Parent shall be the basis of calculating the payment to be
made at Closing under Section 2.2(c).
(b) Within 30 days of the Closing, the Suiza Parent will
prepare and deliver to the ▇▇▇▇ Parent and Vestar a final calculation
of the Adjustment Amount. If within 30 days of its receipt of the
calculation, the ▇▇▇▇ Parent or Vestar dispute the calculation of the
Adjustment Amount and the parties are unable to resolve any
disagreement with respect thereto by the 45th day following receipt of
such calculation, the Suiza Parent, the ▇▇▇▇ Parent and Vestar shall
submit the dispute to Deloitte & Touche LLP or such other nationally
recognized independent accounting firm as the parties shall agree upon
(the "INDEPENDENT AUDITOR") for resolution. Holdings will pay the fees
and expenses of the Independent Auditor.
(c) As soon as practicable, but in any event within 30 days
after submission of the dispute to the Independent Auditor, the
Independent Auditor will examine the dispute, make any adjustments it
considers appropriate and deliver the revised calculation of the
Adjustment Amount to the Suiza Parent, the ▇▇▇▇ Parent and Vestar. The
decision of the Independent Auditor with respect to the calculation
will be final and binding on the parties.
(d) If the Adjustment Amount (as finally determined pursuant
to this Section 2.6) is greater or less than the Estimated Adjustment
Amount, the Company agrees to pay the amount of any such excess to the
Suiza Parent, and the Suiza Parent agrees to pay to the Company the
amount of any such shortfall, in cash. All such payments shall be made
in immediately available funds in accordance with payment instructions
from the party to whom the payment is due within three business days
after the Adjustment Amount is finally determined pursuant to this
Section 2.6.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE ▇▇▇▇ PARTIES
The ▇▇▇▇ Parent represents and warrants to the Suiza Parent as follows
(provided, however, that the Disclosure Letter sets forth certain exceptions to
such representations and warranties or discloses certain matters in response to
such representations and warranties, in each case identified by the applicable
Section numbers below):
3.1 ORGANIZATION AND GOOD STANDING.
(a) Each ▇▇▇▇ Company and the ▇▇▇▇ Parent is a corporation,
limited partnership or limited liability company duly organized,
validly existing, and in good standing under the laws of its state of
formation, with full corporate, partnership or limited liability
company power and authority to conduct its business as it is now being
conducted. Each ▇▇▇▇ Company is duly qualified to do business as a
foreign corporation, limited partnership or foreign limited liability
company and is in good standing under the laws of each state or other
jurisdiction in which the nature of the activities conducted by it or
the ownership or leasing of its properties requires such qualification,
except where
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such failure to so qualify or to be in good standing does not have a
▇▇▇▇ Material Adverse Effect.
(b) The ▇▇▇▇ Parent has made available to the Suiza Parents
complete and correct copies of the Organizational Documents of each
▇▇▇▇ Company, as currently in effect.
(c) Except as listed on Section 3.1(c) of the Disclosure
Letter, no ▇▇▇▇ Company owns any direct or indirect equity or debt
interest in any other Person (except other ▇▇▇▇ Companies), and no ▇▇▇▇
Company is obligated or committed to acquire any such interest.
3.2 AUTHORITY; NO CONFLICT; CONSENTS.
(a) This Agreement constitutes the legal, valid and binding
obligation of each ▇▇▇▇ Company and the ▇▇▇▇ Parent, enforceable
against such entities in accordance with its terms except to the extent
that its enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, fraudulent transfer, moratorium
or other laws relating to or affecting creditors' rights generally and
by general equity principles.
(b) Each ▇▇▇▇ Company and the ▇▇▇▇ Parent has the requisite
corporate, limited partnership or limited liability company right,
power, authority and capacity to execute and deliver this Agreement and
to perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement by each ▇▇▇▇ Company and the
▇▇▇▇ Parent have been duly authorized by all necessary corporate,
limited partnership or limited liability company action, as the case
may be, on the part of such entity and its owners.
(c) Except as disclosed in Section 3.2(c) of the Disclosure
Letter, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions
will, directly or indirectly:
(i) conflict with any provision of the Organizational
Documents of any ▇▇▇▇ Company or the ▇▇▇▇ Parent;
(ii) result in a violation of, or give any
Governmental Body or other Person the right to exercise any
remedy or obtain any relief under, any Legal Requirement or
any Order to which any ▇▇▇▇ Company or the ▇▇▇▇ Parent is
subject;
(iii) result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any ▇▇▇▇ Company or
the ▇▇▇▇ Parent;
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(iv) result in a violation or breach of any provision
of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any
Contract of any ▇▇▇▇ Company described in Section 3.14(a); or
(v) result in the imposition or creation of any
Encumbrance upon any of the assets owned or used by any ▇▇▇▇
Company.
(d) Neither any ▇▇▇▇ Company nor the ▇▇▇▇ Parent is or will be
required to obtain any material Consent from any Person or Governmental
Body in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated
Transactions, except the Material Consents disclosed in Section 3.2(d)
of the Disclosure Letter.
3.3 CAPITALIZATION. The authorized and outstanding equity interests of
each ▇▇▇▇ Company are listed in Section 3.3 of the Disclosure Letter. The ▇▇▇▇
Parent or one of the other ▇▇▇▇ Companies are and will be on the Closing Date
the record and beneficial owners and holders of all such equity interests, free
and clear of all Encumbrances. All of such equity interests have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any equity interests in
any ▇▇▇▇ Company. None of the outstanding equity interests in any ▇▇▇▇ Company
was issued in violation of the Securities Act.
3.4 FINANCIAL STATEMENTS. Included within Section 3.4 of the Disclosure
Letter are the unaudited consolidated balance sheets and statements of
operations, shareholder's equity and cash flows of the ▇▇▇▇ Parent and its
subsidiaries for the year ended and as at December 31, 1998 and the notes
thereto (the "▇▇▇▇ FINANCIAL STATEMENTS"). The ▇▇▇▇ Financial Statements fairly
present in all material respects the consolidated financial condition, results
of operations, changes in stockholders' equity and cash flow of the ▇▇▇▇ Parent
on a consolidated basis, as at and for the year ended December 31, 1998. The
▇▇▇▇ Financial Statements have been prepared in accordance with generally
accepted accounting principles, consistently applied. The ▇▇▇▇ Financial
Statements have been prepared from the books and records of the ▇▇▇▇ Parent and
its subsidiaries, which accurately and fairly reflect in all material respects
the transactions of, acquisitions and dispositions of assets by, and incurrence
of liabilities by, the ▇▇▇▇ Parent and its subsidiaries. All inventories and raw
materials reflected in the balance sheet included in the ▇▇▇▇ Financial
Statements (the "▇▇▇▇ BALANCE SHEET") or acquired since the date thereof are, in
all material respects, of good and merchantable quality, salable in the Ordinary
Course of Business (in the case of inventory held for sale), currently usable
(in the case of other inventory and raw materials), or adequate reserves have
been established with respect thereto. All accounts receivable, net of
applicable reserves, reflected in the ▇▇▇▇ Balance Sheet or acquired since the
date thereof arose in the Ordinary Course of Business and are not subject to
material set-off, counterclaim or other reduction.
3.5 BOOKS AND RECORDS. The books of account and minute books of each
▇▇▇▇ Company, all of which have been made available to the Suiza Parent, are
complete and correct in
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all material respects. At the Closing, all of those books and records will be in
the possession of the applicable ▇▇▇▇ Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES.
(a) Section 3.6(a) of the Disclosure Letter includes a
complete list (including the street address, where applicable) of each
▇▇▇▇ Facility and one or more recent asset registers listing tangible
personal property owned by the ▇▇▇▇ Companies as of the date indicated.
The tangible personal property of the ▇▇▇▇ Companies is in good repair
and operating condition, normal wear and tear excepted.
(b) Except as described in Section 3.6(a) of the Disclosure
Letter, each ▇▇▇▇ Company owns all the properties and assets (whether
real, personal, or mixed and whether tangible or intangible) that it
purports to own located in the ▇▇▇▇ Facilities owned or operated by the
▇▇▇▇ Companies or reflected as owned in the books and records of the
▇▇▇▇ Companies, including all of the properties and assets reflected in
the Interim ▇▇▇▇ Balance Sheet (except for personal property sold since
the date of the ▇▇▇▇ Balance Sheet in the Ordinary Course of Business
of the ▇▇▇▇ Companies), and all of the properties and assets purchased
or otherwise acquired by the ▇▇▇▇ Companies since the date of the ▇▇▇▇
Balance Sheet (except for personal property acquired and sold since the
date of the ▇▇▇▇ Balance Sheet in the Ordinary Course of Business of
the ▇▇▇▇ Companies). Except as described in Section 3.6(b) of the
Disclosure Letter, all material properties and assets reflected in the
▇▇▇▇ Balance Sheet are free and clear of all Encumbrances, except for
Permitted Encumbrances.
(c) To ▇▇▇▇'▇ Knowledge, there are no proceedings pending or
threatened that would alter the current zoning classification of the
▇▇▇▇ Facilities or alter any applicable laws, statutes, regulations,
codes, conditions or restrictions related to zoning or land use that
would adversely affect the existing use of the ▇▇▇▇ Facilities in the
business of the ▇▇▇▇ Companies. Except as described in Section 3.6(c)
of the Disclosure Letter, no ▇▇▇▇ Company has received any written
notice from any insurance company of any defects or inadequacies in the
▇▇▇▇ Facilities that would, if not corrected, result in the termination
of existing insurance coverage or a material increase in the present
cost thereof. No ▇▇▇▇ Company has received any written notice providing
for or threatening the discontinuation of necessary utilities to the
▇▇▇▇ Facilities. The ▇▇▇▇ Parent is not a "foreign person" as that term
is defined in Section 1445 of the IRC.
(d) The assets, properties and rights of the ▇▇▇▇ Companies as
of the Closing Date constitute all assets, properties and rights
necessary for the conduct of the business of the ▇▇▇▇ Companies as
currently conducted. Except as disclosed in Section 3.6(d) of the
Disclosure Letter, the ▇▇▇▇ Companies consist of all of the plastic
packaging operations or assets of the ▇▇▇▇ Parent and its direct and
indirect subsidiaries.
3.7 NO UNDISCLOSED LIABILITIES. The ▇▇▇▇ Companies have no liabilities
or obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent or otherwise) except for (a) liabilities or obligations
reflected or reserved against in the ▇▇▇▇
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Balance Sheet, (b) current liabilities incurred by the ▇▇▇▇ Companies in the
Ordinary Course of Business since the date of the ▇▇▇▇ Balance Sheet, (c)
performance obligations under Contracts disclosed or not required to be
disclosed pursuant to Section 3.14, and (d) matters disclosed in Section 3.7 of
the Disclosure Letter.
3.8 TAXES. Except as set forth in Section 3.8 of the Disclosure
Letter:
(a) Each ▇▇▇▇ Company has filed or caused to be filed on a
timely basis all Tax Returns that are or were required to be filed by
it pursuant to applicable Legal Requirements. Each ▇▇▇▇ Company has
paid, or made provision for the payment of, all Taxes that have become
due and payable as Taxes imposed on such ▇▇▇▇ Company pursuant to those
Tax Returns or otherwise, or pursuant to any assessment received by
such ▇▇▇▇ Company, except such Taxes, if any, as are being contested in
good faith and as to which adequate reserves (other than deferred Taxes
reflecting differences between the book and tax basis in assets and
liabilities) have been provided in the applicable Interim ▇▇▇▇ Balance
Sheet.
(b) No ▇▇▇▇ Company has been granted an extension of time for
filing any Tax Return that has not yet been filed.
(c) The charges, accruals, and reserves with respect to Taxes
on the respective books of each ▇▇▇▇ Company are adequate in all
material respects. There exists no proposed tax assessment against any
▇▇▇▇ Company except as disclosed in the ▇▇▇▇ Balance Sheet. All Taxes
that any ▇▇▇▇ Company is or was required by Legal Requirements to
withhold or collect have been duly withheld or collected and, to the
extent required, have been paid timely to the proper Governmental Body,
including without limitation all estimated payments of Taxes for the
taxable period beginning January 1, 1999 in amounts that the ▇▇▇▇
Parent and each ▇▇▇▇ Company believe are appropriate under all Legal
Requirements.
(d) All Tax Returns filed by any ▇▇▇▇ Company are true,
correct, and complete in all material respects, with respect to Taxes
imposed on such ▇▇▇▇ Company.
(e) There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitation applicable to
any claim for, or the period for the collection or assessment of, Taxes
due from or with respect to any ▇▇▇▇ Company for any taxable period.
(f) No Proceeding is pending or, to ▇▇▇▇'▇ Knowledge,
threatened in regard to any Taxes due from or with respect to any ▇▇▇▇
Company or any Tax Return filed by or with respect to any ▇▇▇▇ Company.
3.9 NO MATERIAL ADVERSE CHANGE. Since the date of the ▇▇▇▇ Balance
Sheet, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or financial condition of the ▇▇▇▇
Companies, taken as a whole, except as set forth on Section 3.9 of the
Disclosure Letter.
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3.10 EMPLOYEE BENEFITS.
(a) Section 3.10(a) of the Disclosure Letter lists each ▇▇▇▇
Plan.
(b) Except as set forth in Section 3.10(b) of the Disclosure
Letter:
(i) The terms and operations of each ▇▇▇▇ Plan,
including the filing of reports and returns, have at all times
been in accordance with ERISA, the IRC and each other
applicable Legal Requirement, except for any failure to comply
that could not reasonably be expected to have a ▇▇▇▇ Material
Adverse Effect.
(ii) No ▇▇▇▇ Company has a contribution obligation to
a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA.
(iii) Other than routine claims for benefits, there
are no audits by the IRS or the DOL or actions, suits, claims
or investigations pending or, to ▇▇▇▇'▇ Knowledge, threatened
against or with respect to any of the ▇▇▇▇ Plans or their
assets, except for any audits, actions, suits, claims or
investigations that could not reasonably be expected to have a
▇▇▇▇ Material Adverse Effect.
(iv) With respect to any Employee Benefit Plan of any
▇▇▇▇ Company that is a "Defined Benefit Plan" with the meaning
of ERISA Section 3(35), (A) such ▇▇▇▇ Company has not incurred
and is not reasonably likely to incur any liability under
Title IV of ERISA (other than for the payment of premiums and
contributions, all of which have been paid when due) and which
have remained unsatisfied, (B) such ▇▇▇▇ Company has not
incurred any accumulated funding deficiency within the meaning
of IRC Section 412 which remain outstanding and has not
applied for or obtained a waiver of any minimum funding
standard or an extension of any amortization period under IRC
Section 412, and (C) no "Reportable Event" as defined in
Section 4043 of ERISA) has occurred or is expected to occur
which, in the case of any of clause (A), (B) or (C), could
reasonably be expected to have a ▇▇▇▇ Material Adverse Effect.
(v) With respect to each Employee Benefit Plan
currently maintained or contributed to by any ▇▇▇▇ Company or
any ERISA Affiliate of a ▇▇▇▇ Company, or with respect to
which any ▇▇▇▇ Company or ERISA Affiliate of a ▇▇▇▇ Company
has liability (the "▇▇▇▇ CONTROLLED GROUP PLANS"), each such
▇▇▇▇ Control Group Plan has been operated in compliance with
ERISA, applicable tax qualification requirements and all other
applicable Legal Requirements, except where noncompliance
could not reasonably be expected to have a ▇▇▇▇ Material
Adverse Effect.
(vi) None of the ▇▇▇▇ Companies, the ▇▇▇▇ Parent, any
ERISA Affiliate of a ▇▇▇▇ Company nor any plan fiduciary of
any ▇▇▇▇ Company Plan has engaged in any material transaction
in violation of Section 406(a) of ERISA or
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any "prohibited transaction" (as defined in IRC Section
4975(c)(1) that would subject any ▇▇▇▇ Company, the Company,
Suiza Parent or any ERISA Affiliate of the foregoing to any
material taxes, penalties or other material liabilities
resulting from such transaction.
(c) Except as set forth in Section 3.10(c) of the Disclosure
Letter, no ▇▇▇▇ Company is a party to or subject to any collective
bargaining agreement, contract, commitment or arrangement, nor does any
other written agreement determine the terms and conditions of
employment of any employee of any ▇▇▇▇ Company, nor will this Agreement
or the transactions contemplated hereby cause a termination or
renegotiation of, or trigger any rights or result in a default under,
any such agreement. To ▇▇▇▇'▇ Knowledge, no attempts are presently
being made to organize or represent any employees or group of employees
of any ▇▇▇▇ Company.
(d) No officer, director or employee of any of the ▇▇▇▇
Companies will be entitled to any additional benefits or payments or
any acceleration of the time of vesting of any payment or benefit under
any ▇▇▇▇ Plan as a result of the transactions contemplated by this
Agreement either alone or in combination with any other event or
occurrence (whether or not such benefit or payment would be subject to
any excise tax or penalty under Section 280G or Section 4999 of the
Code).
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
Except as set forth in Section 3.11 of the Disclosure Letter:
(a) Each ▇▇▇▇ Company is in compliance in all material
respects with each Legal Requirement that is applicable to it or to the
conduct or operation of its business.
(b) No event has occurred or circumstance exists that (with or
without notice or lapse of time) (i) constitutes a violation by a ▇▇▇▇
Company of, or a failure on the part of a ▇▇▇▇ Company to comply with,
any Legal Requirement, or (ii) may give rise to any obligation on the
part of any ▇▇▇▇ Company to undertake, or to bear all or any portion of
the cost of, any remedial action, except where such violation, failure
or obligation would not have a ▇▇▇▇ Material Adverse Effect.
(c) No ▇▇▇▇ Company has received any outstanding notice from
any Governmental Body or any other Person regarding (i) any actual or
alleged violation of any Legal Requirement, or (ii) any actual or
alleged obligation on the part of a ▇▇▇▇ Company to undertake, or to
bear the cost of, any remedial action of any nature, except where such
violation or obligation would not have a ▇▇▇▇ Material Adverse Effect.
(d) Each ▇▇▇▇ Company holds all Governmental Authorizations
that are required in connection with the business of such ▇▇▇▇ Company.
Each such Governmental Authorization is valid and in full force and
effect except where the failure to keep such authorization valid and in
full force and effect will not have a ▇▇▇▇ Material Adverse Effect.
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(e) Each ▇▇▇▇ Company is in compliance with all of the terms
and requirements of each Governmental Authorization applicable to it,
except where the failure to be in compliance would not have a ▇▇▇▇
Material Adverse Effect.
(f) No ▇▇▇▇ Company has received any outstanding notice from
any Governmental Body or any other Person regarding (i) any actual or
alleged violation of any term or requirement of any material
Governmental Authorization, or (ii) any actual or proposed revocation,
withdrawal, suspension, cancellation, termination of, or modification
to any material Governmental Authorization.
(g) All applications required to have been filed for the
renewal of any material Governmental Authorizations of the ▇▇▇▇
Companies have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made
with respect to such Governmental Authorizations have been duly made on
a timely basis with the appropriate Governmental Bodies.
(h) The Governmental Authorizations held by the ▇▇▇▇ Companies
constitute all of the Governmental Authorizations necessary to permit
each ▇▇▇▇ Company to lawfully conduct and operate its business in all
material respects in the manner it currently operates such business.
(i) To ▇▇▇▇'▇ Knowledge, since January 1, 1996, none of the
officers, employees or agents of the ▇▇▇▇ Companies, nor any other
Person acting on behalf of any of them or any ▇▇▇▇ Company has,
directly or indirectly, given or agreed to give any gift or similar
benefit to any customer, supplier, governmental employee or other
person in violation of any Legal Requirement, including, without
limitation, the Foreign Corrupt Practices Act.
(j) Since January 1, 1996, no ▇▇▇▇ Company has effected a
recall or withdrawal of any of its products and, to ▇▇▇▇'▇ Knowledge,
no facts have existed that, if known by the applicable Governmental
Body, would have resulted in a recall or withdrawal.
3.12 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Section 3.12(a) of the Disclosure
Letter, there is no Proceeding:
(i) pending or, to ▇▇▇▇'▇ Knowledge, threatened
against any ▇▇▇▇ Company that, alone or in the aggregate, has
had or could (if decided adversely) reasonably be expected to
have, a ▇▇▇▇ Material Adverse Effect; or
(ii) that challenges, or that may have the effect of
preventing or making illegal, any of the Contemplated
Transactions.
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The ▇▇▇▇ Parent has made available, or has caused the
applicable ▇▇▇▇ Company to make available, to the Suiza Parent copies
of all pleadings, correspondence, and other documents relating to each
pending Proceeding related to any ▇▇▇▇ Company.
(b) Except as set forth in Section 3.12(b) of the Disclosure
Letter:
(i) there is no Order to which any ▇▇▇▇ Company is
subject;
(ii) no Affiliate, agent, or employee of any ▇▇▇▇
Company is subject to any Order that materially prohibits such
Affiliate, agent, or employee from engaging in or continuing
any conduct, activity, or practice relating to the business of
such ▇▇▇▇ Company; and
(iii) no event has occurred or circumstance exists
that constitutes or results in (with or without notice or
lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which any ▇▇▇▇ Company is
subject.
3.13 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Section 3.13 of the Disclosure Letter, since the date of the ▇▇▇▇ Balance Sheet,
each ▇▇▇▇ Company has conducted its businesses only in the Ordinary Course of
Business and there has not been any ▇▇▇▇ Material Adverse Effect or any:
(a) change in the authorized or issued equity interests of any
▇▇▇▇ Company; grant of any option or right to purchase equity interests
in any ▇▇▇▇ Company; issuance of any security convertible into equity
interests of any ▇▇▇▇ Company; grant of any registration rights;
purchase, redemption, retirement, or other acquisition by such ▇▇▇▇
Company of any equity interests; or declaration or payment of any
dividend or other distribution or payment in respect of equity
interests;
(b) amendment to the Organizational Documents of any ▇▇▇▇
Company;
(c) except to the extent required by an agreement in effect on
the date hereof and listed in Section 3.13 of the Disclosure Letter,
payment or increase by any ▇▇▇▇ Company of any bonuses, salaries or
other compensation to any Affiliate of such ▇▇▇▇ Company, or (except in
the Ordinary Course of Business) any employee, officer or director of
any ▇▇▇▇ Company, or entry into any employment, severance or similar
Contract with any Affiliate or employee, officer or director of any
▇▇▇▇ Company;
(d) adoption of, or increase in the payments to or benefits
under, any ▇▇▇▇ Plan;
(e) damage to or destruction or loss of any material asset or
property of any ▇▇▇▇ Company that exceeds $100,000 in value,
individually or in the aggregate, and is not covered by insurance;
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(f) entry into, termination of, or receipt of notice of
termination of any Contract or transaction involving a total remaining
commitment by or to any ▇▇▇▇ Company that could exceed $100,000 or any
breach or default (or event that with notice or lapse of time would
constitute a breach or default) under any such Contract;
(g) sale (other than sales of inventory in the Ordinary Course
of Business), lease, license or other disposition of any asset or
property valued in excess of $100,000, individually or in the
aggregate, of any ▇▇▇▇ Company or any Encumbrance on any material asset
or property of any ▇▇▇▇ Company;
(h) any incurrence of indebtedness for borrowed money, except
in the Ordinary Course of Business, in excess of $100,000 in the
aggregate;
(i) change in the accounting methods used by any ▇▇▇▇ Company;
(j) Contract, whether oral or written, by any ▇▇▇▇ Company to
do any of the foregoing; or
(k) change in any material Tax elections, material change in
any method of accounting with respect to any material Taxes, material
amendment of any material Tax Return, or settlement or compromise of
any proceeding with respect to any material Tax.
3.14 CONTRACTS; NO DEFAULTS.
(a) Except for ▇▇▇▇ Permitted Encumbrances, Section 3.14(a) of
the Disclosure Letter contains a complete and accurate list of:
(i) each Contract that involves performance of
services or delivery of goods or materials by or to any ▇▇▇▇
Company of an amount or value that could exceed $100,000;
(ii) each Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or
receipts of any ▇▇▇▇ Company that could exceed $100,000 or
that is otherwise material to any ▇▇▇▇ Company;
(iii) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other
Contract affecting the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or
personal property used by any ▇▇▇▇ Company (except personal
property leases, real property leases and installment and
conditional sales agreements having a value per item or
aggregate payments of less than $100,000);
(iv) each Contract containing (A) covenants not to
compete, (B) employee non-solicitation and/or no-hire
agreements, (C) "most favored nations" provisions or (D)
similar agreements that materially restrict the business
activity
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of any ▇▇▇▇ Company or limit the freedom of any ▇▇▇▇ Company
to engage in any line of business or to compete with any
Person;
(v) each employment, consulting, noncompetition,
separation, collective bargaining, union or labor Contract
applicable to any ▇▇▇▇ Company;
(vi) each Contract by and between any ▇▇▇▇ Company
and the ▇▇▇▇ Parent or any ▇▇▇▇ Company or any Affiliate of
any ▇▇▇▇ Company or, to ▇▇▇▇'▇ Knowledge, any immediate family
member of an Affiliate of a ▇▇▇▇ Company;
(vii) each Contract under which any ▇▇▇▇ Company is
obligated to indemnify, or entitled to indemnification from,
any third party, excluding any agreement that requires
indemnification solely for a breach of such agreement and
excluding any indemnification obligation or right that could
not reasonably be expected to involve more than $100,000;
(viii) each Contract for capital expenditures by any
▇▇▇▇ Company in excess of $100,000;
(ix) each Contract to which any ▇▇▇▇ Company is a
party concerning Intellectual Property; and
(x) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
(b) With respect to the Contracts identified in Section
3.14(a) of the Disclosure Letter:
(i) each Contract is in full force and effect and is
valid and enforceable in accordance with its terms except to
the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other laws relating or affecting creditors'
rights generally and by general equity principles;
(ii) the ▇▇▇▇ Parent has delivered to the Suiza
Parent a copy of each such Contract that is in writing and a
written summary accurately describing the material provisions
of each such Contract that is not in writing;
(iii) each ▇▇▇▇ Company is in compliance with all
material terms and requirements of such Contracts; and
(iv) no ▇▇▇▇ Company has given to or received from
any other Person any notice regarding any actual or alleged
violation or default of any such Contract.
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(c) Section 3.14(c) of the Disclosure Letter includes a
complete list of each customer of any ▇▇▇▇ Company that has accounted
for more than $1,000,000 in gross sales of the ▇▇▇▇ Companies for the
twelve months ended December 31, 1998 (the "▇▇▇▇ MATERIAL CUSTOMERS").
None of the ▇▇▇▇ Material Customers has notified any ▇▇▇▇ Company or
the ▇▇▇▇ Parent of any intention to, or to ▇▇▇▇'▇ Knowledge, otherwise
threatened to, terminate or materially alter its relationship with any
▇▇▇▇ Company, and there has been no material dispute with a ▇▇▇▇
Material Customer since January 1, 1997.
3.15 INSURANCE.
(a) The ▇▇▇▇ Parent has delivered to the Suiza Parent true and
complete copies of all policies of insurance to which any ▇▇▇▇ Company
is a party or under which any ▇▇▇▇ Company, or any director (or similar
Affiliate) of a ▇▇▇▇ Company, is covered.
(b) Section 3.15 of the Disclosure Letter describes:
(i) any self-insurance arrangement by any ▇▇▇▇
Company, including any reserves established thereunder; and
(ii) all material obligations of any ▇▇▇▇ Company to
third parties with respect to insurance (including such
obligations under leases and service agreements) and
identifies the policy under which such coverage is provided.
(c) All policies to which any ▇▇▇▇ Company is a party or that
provide coverage to any ▇▇▇▇ Company, taken together, provide adequate
insurance coverage for the assets and the operations of the ▇▇▇▇
Companies for all risks normally insured against by a Person carrying
on the same business as the ▇▇▇▇ Companies.
(d) No ▇▇▇▇ Company has received (i) any refusal of coverage
or any notice that a defense will be afforded with reservation of
rights, or (ii) any notice of cancellation or any other indication that
any insurance policy is no longer in full force or effect or will not
be renewed or will be renewed only with a material increase in cost or
that the issuer of any policy is not willing or able to perform its
obligations thereunder.
3.16 ENVIRONMENTAL MATTERS. Except as set forth in Section 3.16 of the
Disclosure Letter and except as would not, individually or in the aggregate,
reasonably be expected to result in a ▇▇▇▇ Material Adverse Effect:
(a) No ▇▇▇▇ Company has violated or is in violation of any
Environmental Law.
(b) None of the ▇▇▇▇ Facilities or any facility formerly owned
or operated by the ▇▇▇▇ Parent or any ▇▇▇▇ Company contains any
Hazardous Materials in amounts exceeding the levels permitted by
applicable Environmental Law and/or under circumstances that would
require remediation or removal under Environmental Law.
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(c) No ▇▇▇▇ Company has engaged in any Hazardous Activities,
and no Hazardous Materials have been disposed of, arranged to be
disposed of, released or transported in violation of any applicable
Environmental Law or in a manner that could reasonably be expected to
result in liability under or relating to Environmental Laws, to or from
any of the ▇▇▇▇ Facilities or any facility formerly owned or operated
by the ▇▇▇▇ Parent or any ▇▇▇▇ Company.
(d) There have been no material environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance
or noncompliance with, or potential liability under or relating to, any
Environmental Law conducted by or on behalf of any ▇▇▇▇ Company, or
which are in the possession of any ▇▇▇▇ Company, relating to the
facilities, business or activities of any ▇▇▇▇ Company or any of the
▇▇▇▇ Facilities that have not been made available to the Suiza Parents.
(e) Neither any ▇▇▇▇ Company nor the ▇▇▇▇ Parent has received
any actual or threatened Order or notice or other written communication
from any Governmental Body or the current or prior owner or operator of
any ▇▇▇▇ Facilities or any other Person, of any actual or potential
violation or failure to comply with any Environmental Law, or of any
actual or threatened obligation to undertake or bear any cost, damage,
expense, liability, or obligation arising from or under any
Environmental Law.
(f) No ▇▇▇▇ Company has assumed, contractually or by operation
of law, any liability or obligation under or relating to Environmental
Laws.
3.17 LABOR RELATIONS; COMPLIANCE. Section 3.17 of the Disclosure Letter
includes a complete list of all current employees of each ▇▇▇▇ Company as of the
date set forth therein, including date of employment, current title and
compensation, and date and percentage of last increase in compensation and
indicating any employees on disability or other permitted leaves of absence.
There is not presently pending or existing (a) any strike, slowdown, picketing,
work stoppage, or material employee grievance process, or (b) any material
Proceeding against or affecting any ▇▇▇▇ Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters. To ▇▇▇▇'▇ Knowledge, no event has occurred or circumstance exists that
could provide the basis for any work stoppage or other material labor dispute.
There is no lockout of any employees by any ▇▇▇▇ Company. Each ▇▇▇▇ Company has
made good faith efforts to comply with, and to ▇▇▇▇'▇ Knowledge has complied in
all material respects with, all Legal Requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing.
3.18 INTELLECTUAL PROPERTY.
(a) Section 3.18(a) of the Disclosure Schedule contains a
complete and accurate list and summary description of, with respect to
all Intellectual Property owned, held or used by each ▇▇▇▇ Company
("▇▇▇▇ IP"), all patents, registrations or applications and all
material unregistered ▇▇▇▇ IP.
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(b) Except as disclosed in Section 3.18(b) of the Disclosure
Schedule, (i) the ▇▇▇▇ Companies own or have the right to use all the
Intellectual Property necessary or desirable to conduct their
businesses in all material respects as currently conducted and
consistent with past practice, free of all Encumbrances; (ii) to ▇▇▇▇'▇
Knowledge, all of the ▇▇▇▇ IP is valid, enforceable and unexpired, has
not been abandoned, does not infringe, impair or make unauthorized use
of ("INFRINGE") the Intellectual Property of any third party and is not
being Infringed by any third party; (iii) no Order or Proceeding is
pending, or to ▇▇▇▇'▇ Knowledge, threatened, that limits or challenges
the ownership, use, validity or enforceability of any ▇▇▇▇ IP; and (iv)
the ▇▇▇▇ Companies have taken all reasonable steps to protect, maintain
and safeguard the ▇▇▇▇ IP, including without limitation the ▇▇▇▇ IP
that is confidential in nature.
3.19 BROKERS OR FINDERS. None of the ▇▇▇▇ Parties or their Affiliates
or agents have incurred any obligation or liability, contingent or otherwise,
for brokerage or finders' fees or agents' commissions or other similar payment
in connection with this Agreement or the Contemplated Transactions for which any
▇▇▇▇ Party, Holdings, the Company, or any Suiza Party or any of their Affiliates
will be liable, except for the $5 million fee, plus expenses, to be paid to
Vestar at the Effective Time pursuant to the VCP Management Agreement and as set
forth in Section 3.19 of the Disclosure Letter.
3.20 COMPETING INTERESTS. Except as set forth in Section 3.20 of the
Disclosure Letter, neither the ▇▇▇▇ Parent, nor any Person that controls, is
controlled by or is under common control with either ▇▇▇▇ Parent, nor, to ▇▇▇▇'▇
Knowledge, any Affiliate of any ▇▇▇▇ Company owns, directly or indirectly, an
interest in any Person that is a competitor, customer or supplier of any ▇▇▇▇
Company or that otherwise has material business dealings with any ▇▇▇▇ Company,
other than ownership of less than 1% of publicly traded securities of such
Person.
3.21 INVESTMENT INTENT. The ▇▇▇▇ Parent is acquiring its Member Units
pursuant to the Merger for its own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities Act.
3.22 PRODUCT WARRANTY AND PRODUCT LIABILITY. There are no material
product warranty or product liability claims pending or, to ▇▇▇▇'▇ Knowledge,
threatened against the ▇▇▇▇ Parent or any ▇▇▇▇ Company. The ▇▇▇▇ Parent has made
available to the Suiza Parents a complete and accurate list of all warranty
information provided to or relied upon by their respective customers. Section
3.22 of the Disclosure Letter sets forth a complete and accurate summary of
product warranty or product liability claims over $100,000 made against the ▇▇▇▇
Parent or any ▇▇▇▇ Company within the past two years.
3.23 YEAR 2000 COMPLIANCE. Except as set forth in Section 3.23 of the
Disclosure Letter, to ▇▇▇▇'▇ Knowledge, the properties and assets of each ▇▇▇▇
Company, including, but not limited to, computer hardware, microprocessor driven
equipment, software and data, owned or used by any ▇▇▇▇ Company, will accurately
process, in all material respects, date and time data after December 31, 1999,
and no ▇▇▇▇ Company will suffer a material loss of functional ability when
processing dates and related data outside the 1900-1999 year range.
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3.24 NO MISREPRESENTATIONS. The representations, warranties and
statements made by the ▇▇▇▇ Parties in or pursuant to this Agreement are true,
complete and correct in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make any such representation, warranty or statement, under the circumstances in
which it is made, not misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF SUIZA PARTIES
The Suiza Parent represents and warrants to the ▇▇▇▇ Parent as follows
(provided, however, that the Disclosure Letter sets forth certain exceptions to
such representations and warranties or discloses certain matters in response to
such representations and warranties, in each case identified by the applicable
Section numbers below):
4.1 ORGANIZATION AND GOOD STANDING.
(a) Each Suiza Company and the Suiza Parent is a corporation
or limited liability company duly organized, validly existing, and in
good standing under the laws of its state of formation, with full
corporate or limited liability company power and authority to conduct
its business as it is now being conducted. Each Suiza Company is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in which
the nature of the activities conducted by it or the ownership or
leasing of its properties requires such qualification, except where
such failure to so qualify or to be in good standing could not
reasonably be expected to have a Suiza Material Adverse Effect.
(b) The Suiza Parent has made available to the ▇▇▇▇ Parent
complete and correct copies of the Organizational Documents of each
Suiza Company, as currently in effect.
(c) Except as listed on Section 4.1(c) of the Disclosure
Letter, no Suiza Company owns any direct or indirect equity or debt
interest in any other Person (except other Suiza Companies), and no
Suiza Company is obligated or committed to acquire any such interest.
4.2 AUTHORITY; NO CONFLICT; CONSENTS.
(a) This Agreement constitutes the legal, valid and binding
obligation of each Suiza Company and the Suiza Parent, enforceable
against such entities in accordance with its terms except to the extent
that its enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, fraudulent transfer, moratorium
or other laws relating to or affecting creditors' rights generally and
by general equity principles.
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(b) Each Suiza Company and the Suiza Parent have the requisite
corporate right, power, authority and capacity to execute and deliver
this Agreement and to perform their obligations under this Agreement.
The execution, delivery and performance of this Agreement by each Suiza
Company and the Suiza Parent have been duly authorized by all necessary
corporate action on the part of such entities and their owners.
(c) Except as disclosed in Section 4.2 of the Disclosure
Letter, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions
will, directly or indirectly:
(i) conflict with any provision of the Organizational
Documents of any Suiza Company or the Suiza Parent;
(ii) result in a violation of, or give any
Governmental Body or other Person the right to exercise any
remedy or obtain any relief under, any Legal Requirement or
any Order to which any Suiza Company or the Suiza Parent is
subject;
(iii) result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any Suiza Company
or the Suiza Parent;
(iv) result in a violation or breach of any provision
of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any
Contract of any Suiza Company described in Section 4.14(a); or
(v) result in the imposition or creation of any
Encumbrance upon any of the assets owned or used by any Suiza
Company.
(d) No Suiza Company nor the Suiza Parent is or will be
required to obtain any material Consent from any Person or Governmental
Body in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated
Transactions, except the Material Consents disclosed in Section 4.2 of
the Disclosure Letter, which will be obtained by Closing.
4.3 CAPITALIZATION. The authorized and outstanding equity interests of
each Suiza Company (without giving effect to the Suiza Packaging Restructuring)
are listed in Section 4.3 of the Disclosure Letter. The Suiza Parent or one of
the Suiza Companies is and will be on the Closing Date the record and beneficial
owner and holder of all such equity interests, free and clear of all
Encumbrances except as set forth in Section 4.3 of the Disclosure Letter. All of
such equity interests have been duly authorized and validly issued and are fully
paid and nonassessable. There are no Contracts relating to the issuance, sale,
or transfer of any equity interests in any Suiza Company except as set forth in
Section 4.3 of the Disclosure Letter. None
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of the outstanding equity interests in any Suiza Company was issued in violation
of the Securities Act.
4.4 FINANCIAL STATEMENTS. Included within Section 4.4 of the Disclosure
Letter is the unaudited combined balance sheet and unaudited combined statement
of operations of Suiza Packaging (Franklin Plastics, Inc. and subsidiaries for
the year ended December 31, 1998 and the PCI Companies for the period from the
date of acquisition to December 31, 1998) (together, the "SUIZA FINANCIAL
STATEMENTS"). The Suiza Financial Statements fairly present in all material
respects the financial condition and results of operations of Suiza Packaging,
as at and for the year ended December 31, 1998. The Suiza Financial Statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, subject to the absence of footnote disclosure. All
inventories and raw materials reflected in the balance sheets included in the
Suiza Financial Statements (the "SUIZA BALANCE SHEET") or acquired since the
date thereof are, in all material respects, of good and merchantable quality,
salable in the Ordinary Course of Business (in the case of inventory held for
sale), currently usable (in the case of other inventory and raw materials), or
adequate reserves have been established with respect thereto. All accounts
receivable, net of applicable reserves, reflected in the Suiza Balance Sheet or
acquired since the date thereof arose in the Ordinary Course of Business and are
not subject to material set-off, counterclaim or other reduction.
4.5 BOOKS AND RECORDS. The books of account and minute books of each
Suiza Company, all of which have been made available to the ▇▇▇▇ Parent, are
complete and correct in all material respects. At the Closing, all of those
books and records will be in the possession of the applicable Suiza Company.
4.6 TITLE TO PROPERTIES; ENCUMBRANCES.
(a) Section 4.6(a) of the Disclosure Letter includes a complete
list (including the street address, where applicable) of each Suiza
Facility and one or more recent asset registers listing tangible
personal property owned by the Suiza Companies as of the date
indicated. The tangible personal property of the Suiza Companies is in
good repair and operating condition, normal wear and tear excepted.
(b) Except as described in Section 4.6(a) of the Disclosure Letter,
each Suiza Company owns all the properties and assets (whether real,
personal, or mixed and whether tangible or intangible) that it purports
to own located in the Suiza Facilities owned or operated by the Suiza
Companies or reflected as owned in the books and records of the Suiza
Companies, including all of the properties and assets reflected in the
Suiza Balance Sheet (except for personal property sold since the date
of the Suiza Balance Sheet in the Ordinary Course of Business of the
Suiza Companies), and all of the properties and assets purchased or
otherwise acquired by the Suiza Companies since the date of the Suiza
Balance Sheet (except for personal property acquired and sold since the
date of the Suiza Balance Sheet in the Ordinary Course of Business of
the Suiza Companies). Except as described in Section 4.6(b) of the
Disclosure Letter, all material properties and assets reflected in the
Suiza Balance Sheet are free and clear of all Encumbrances, except for
Permitted Encumbrances.
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(c) To Suiza's Knowledge, there are no proceedings pending or
threatened that would alter the current zoning classification of the
Suiza Facilities or alter any applicable laws, statutes, regulations,
codes, conditions or restrictions related to zoning or land use that
would adversely affect the existing use of the Suiza Facilities in the
business of the Suiza Companies. Except as described in Section 4.6(c)
of the Disclosure Letter, no Suiza Company has received any written
notice from any insurance company of any defects or inadequacies in the
Suiza Facilities that would, if not corrected, result in the
termination of existing insurance coverage or a material increase in
the present cost thereof. No Suiza Company has received any written
notice providing for or threatening the discontinuation of necessary
utilities to the Suiza Facilities. The Suiza Parent is not a "foreign
person" as that term is defined in Section 1445 of the IRC.
(d) The assets, properties and rights of the Suiza Companies
as of the Closing Date constitute all assets, properties and rights
necessary for the conduct of the business of the plastics packaging
business of the Suiza Parties as currently conducted in the United
States, except for (i) the operations of ▇▇▇▇ Plastics, Inc. in Puerto
Rico, and (ii) the operations conducted by Affiliates of Suiza Foods
that manufacture plastic packaging products solely for their own use.
Except as disclosed in Section 4.6(d) of the Disclosure Letter, the
Suiza Parent or the Suiza Companies own all of such plastic packaging
operations or assets.
4.7 NO UNDISCLOSED LIABILITIES. The Suiza Companies have no liabilities
or obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent or otherwise) except for (a) liabilities or obligations
reflected or reserved against in the Suiza Balance Sheet, (b) current
liabilities incurred by the Suiza Companies in the Ordinary Course of Business
since the date of the Suiza Balance Sheet, (c) performance Obligations under
Contracts disclosed or not required to be disclosed pursuant to Section 4.14,
and (d) matters disclosed in Section 4.7 of the Disclosure Letter.
4.8 TAXES. Except as set forth in Section 4.8 of the Disclosure Letter:
(a) Each Suiza Company has filed or caused to be filed on a
timely basis all Tax Returns that are or were required to be filed by
it pursuant to applicable Legal Requirements. Each Suiza Company has
paid, or made provision for the payment of, all Taxes that have become
due and payable as Taxes imposed on such Suiza Company pursuant to
those Tax Returns or otherwise, or pursuant to any assessment received
by such Suiza Company, except such Taxes, if any, as are being
contested in good faith and as to which adequate reserves (other than
deferred Taxes reflecting differences between the book and tax basis in
assets and liabilities) have been provided in the applicable Interim
Suiza Balance Sheet.
(b) No Suiza Company has been granted an extension of time for
filing any Tax Return that has not yet been filed.
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(c) The charges, accruals, and reserves with respect to Taxes
on the respective books of each Suiza Company are adequate in all
material respects. There exists no proposed tax assessment against any
Suiza Company except as disclosed in the Suiza Balance Sheet. All Taxes
that any Suiza Company is or was required by Legal Requirements to
withhold or collect have been duly withheld or collected and, to the
extent required, have been paid timely to the proper Governmental Body;
including without limitation all estimated payments of Taxes for the
taxable period beginning January 1, 1999 in amounts that the Suiza
Parent and each Suiza Company believes are appropriate under all Legal
Requirements.
(d) All Tax Returns filed by any Suiza Company are true,
correct, and complete in all material respects, with respect to Taxes
imposed on such Suiza Company.
(e) There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitation applicable to
any claim for, or the period for the collection or assessment of, Taxes
due from or with respect to any Suiza Company for any taxable period.
(f) No Proceeding is pending or, to Suiza's Knowledge,
threatened in regard to any Taxes due from or with respect to any Suiza
Company or any Tax Return filed by or with respect to any Suiza
Company.
4.9 NO MATERIAL ADVERSE CHANGE. Since the date of the Suiza Balance
Sheet, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or financial condition of the Suiza
Companies, taken as a whole, except as set forth on Section 4.9 of the
Disclosure Letter.
4.10 EMPLOYEE BENEFITS.
(a) Section 4.10(a) of the Disclosure Letter lists each Suiza
Plan.
(b) Except as set forth in Section 4.10(b) of the Disclosure
Letter:
(i) The terms and operations of each Suiza Plan,
including the filing of reports and returns, have at all times
been in accordance with ERISA, the IRC and each other
applicable Legal Requirement, except for any failure to comply
that could not reasonably be expected to have a Suiza Material
Adverse Effect.
(ii) No Suiza Company has a contribution obligation
to a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA.
(iii) Other than routine claims for benefits, there
are no audits by the IRS or the DOL or actions, suits, claims
or investigations pending or, to Suiza's Knowledge, threatened
against or with respect to any of the Suiza Plans or their
assets except for any audits, actions, suits, claims or
investigations that could not reasonably be expected to have a
Suiza Material Adverse Effect.
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(iv) With respect to any Employee Benefit Plan of any
Suiza Company that is a "Defined Benefit Plan" with the
meaning of ERISA Section 3(35), (A) such Suiza Company has not
incurred and is not reasonably likely to incur any liability
under Title IV of ERISA (other than for the payment of
premiums and contributions, all of which have been paid when
due) and which have remained unsatisfied, (B) such Suiza
Company has not incurred any accumulated funding deficiency
within the meaning of IRC Section 412 which remains
outstanding and has not applied for or obtained a waiver of
any minimum funding standard or an extension of any
amortization period under IRC Section 412, and (C) no
"Reportable Event" as defined in Section 4043 of ERISA) has
occurred or is expected to occur, which in the case of any of
clause (A), (B) or (C), could reasonably be expected to have a
Suiza Material Adverse Effect.
(v) With respect to each Employee Benefit Plan
currently maintained or contributed to by any Suiza Company or
any ERISA Affiliate of a Suiza Company, or with respect to
which any Suiza Company or ERISA Affiliate of a Suiza Company
has liability (the "SUIZA CONTROLLED GROUP PLANS"), each such
Suiza Control Group Plan has been operated in compliance with
ERISA, applicable tax qualification requirements and all other
applicable Legal Requirements except where noncompliance could
not reasonably be expected to have a Suiza Material Adverse
Effect.
(vi) None of the Suiza Companies, the Suiza Parent,
any ERISA Affiliate of a Suiza Company nor any plan fiduciary
of any Suiza Company Plan has engaged in any material
transaction in violation of Section 406(a) of ERISA or any
"prohibited transaction" (as defined in IRC Section 4975(c)(1)
that would subject any Suiza Company, the Company, the ▇▇▇▇
Parent or any ERISA Affiliate of the foregoing to any material
taxes, penalties or other material liabilities resulting from
such transaction.
(c) Except as set forth in Section 4.10(c) of the Disclosure
Letter, no Suiza Company is a party to or subject to any collective
bargaining agreement, contract, commitment or arrangement, nor does any
other written agreement determine the terms and conditions of
employment of any employee of any Suiza Company, nor will this
Agreement or the transactions contemplated hereby cause a termination
or renegotiation of, or trigger any rights or result in a default
under, any such agreement. To Suiza's Knowledge, no attempts are
presently being made to organize or represent any employees or group of
employees of any Suiza Company.
(d) No officer, director or employee of any of the Suiza
Companies will be entitled to any additional benefits or payments or
any acceleration of the time of vesting of any payment or benefit under
any Suiza Plan as a result of the transactions contemplated by this
Agreement either alone or in combination with any other event or
occurrence (whether or not such benefit or payment would be subject to
any excise tax or penalty under Section 280G or Section 4999 of the
Code).
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4.11 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
Except as set forth in Section 4.11 of the Disclosure Letter:
(a) Each Suiza Company is in compliance in all material
respects with each Legal Requirement that is applicable to it or to the
conduct or operation of its business.
(b) No event has occurred or circumstance exists that (with or
without notice or lapse of time) (i) constitutes a violation by a Suiza
Company of, or a failure on the part of a Suiza Company to comply with,
any Legal Requirement, or (ii) may give rise to any obligation on the
part of any Suiza Company to undertake, or to bear all or any portion
of the cost of, any remedial action, except where such violation,
failure or obligation would not have a Suiza Material Adverse Effect.
(c) No Suiza Company has received any outstanding notice from
any Governmental Body or any other Person regarding (i) any actual or
alleged violation of any Legal Requirement, or (ii) any actual or
alleged obligation on the part of a Suiza Company to undertake, or to
bear the cost of, any remedial action of any nature, except where such
violation or obligation would not have a Suiza Material Adverse Effect.
(d) Each Suiza Company holds all Governmental Authorizations
that are required in connection with the business of such Suiza
Company. Each such Governmental Authorization is valid and in full
force and effect except where the failure to keep such authorization
valid and in full force and effect will not have a Suiza Material
Adverse Effect.
(e) Each Suiza Company is in compliance with all of the terms
and requirements of each Governmental Authorization applicable to it,
except where the failure to be in compliance would not have a Suiza
Material Adverse Effect.
(f) No Suiza Company has received any outstanding notice from
any Governmental Body or any other Person regarding (i) any actual or
alleged violation of any term or requirement of any material
Governmental Authorization, or (ii) any actual or proposed revocation,
withdrawal, suspension, cancellation, termination of, or modification
to any material Governmental Authorization.
(g) All applications required to have been filed for the
renewal of any material Governmental Authorizations of the Suiza
Companies have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made
with respect to such Governmental Authorizations have been duly made on
a timely basis with the appropriate Governmental Bodies.
(h) The Governmental Authorizations held by the Suiza
Companies constitute all of the Governmental Authorizations necessary
to permit each Suiza Company to lawfully conduct and operate its
business in all material respects in the manner it currently operates
such business.
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(i) To Suiza's Knowledge, since January 1, 1996, none of the
officers, employees or agents of the Suiza Companies, nor any other
Person acting on behalf of any of them or any Suiza Company has,
directly or indirectly, given or agreed to give any gift or similar
benefit to any customer, supplier, governmental employee or other
person in violation of any Legal Requirement, including, without
limitation, the Foreign Corrupt Practices Act.
(j) Since January 1, 1996, no Suiza Company has effected a
recall or withdrawal of any of its products, and, to Suiza's Knowledge,
no facts have existed that, if known by the applicable Governmental
Body, would have resulted in a recall or withdrawal.
4.12 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Section 4.12(a) of the Disclosure
Letter, there is no Proceeding:
(i) pending or, to Suiza's Knowledge, threatened
against any Suiza Company that, alone or in the aggregate, has
had or could (if decided adversely) reasonably be expected to
have, a Suiza Material Adverse Effect; or
(ii) that challenges, or that may have the effect of
preventing or making illegal, any of the Contemplated
Transactions.
The Suiza Parent has made available, or have caused the
applicable Suiza Company to make available, to the ▇▇▇▇ Parent copies
of all pleadings, correspondence, and other documents relating to each
pending Proceeding related to any Suiza Company.
(b) Except as set forth in Section 4.12(b) of the Disclosure
Letter:
(i) there is no Order to which any Suiza Company is
subject;
(ii) no Affiliate, agent, or employee of any Suiza
Company is subject to any Order that materially prohibits such
Affiliate, agent, or employee from engaging in or continuing
any conduct, activity, or practice relating to the business of
such Suiza Company; and
(iii) no event has occurred or circumstance exists
that constitutes or results in (with or without notice or
lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which any Suiza Company is
subject.
4.13 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Section 4.13 of the Disclosure Letter, since the date of the Suiza Balance
Sheet, each Suiza Company has
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conducted its businesses only in the Ordinary Course of Business and there has
not been any Suiza Material Adverse Effect or any:
(a) change in the authorized or issued equity interests of any
Suiza Company; grant of any option or right to purchase equity
interests in any Suiza Company; issuance of any security convertible
into equity interests of any Suiza Company; grant of any registration
rights; purchase, redemption, retirement, or other acquisition by such
Suiza Company of any equity interests; or declaration or payment of any
dividend or other distribution or payment in respect of equity
interests;
(b) amendment to the Organizational Documents of any Suiza
Company;
(c) except to the extent required by an agreement in effect on
the date hereof and listed in Section 4.13 of the Disclosure Letter,
payment or increase by any Suiza Company of any bonuses, salaries or
other compensation to any Affiliate of such Suiza Company, or (except
in the Ordinary Course of Business) any employee, officer or director
of any Suiza Company, or entry into any employment, severance or
similar Contract with any Affiliate or employee, officer or director of
any Suiza Company;
(d) adoption of, or increase in the payments to or benefits
under, any Suiza Plan.
(e) damage to or destruction or loss of any material asset or
property of any Suiza Company that exceeds $100,000 in value,
individually or in the aggregate, and is not covered by insurance;
(f) entry into, termination of, or receipt of notice of
termination of any Contract or transaction involving a total remaining
commitment by or to any Suiza Company that could exceed $100,000 or any
breach or default (or event that with notice or lapse of time would
constitute a breach or default) under any such Contract;
(g) sale (other than sales of inventory in the Ordinary Course
of Business), lease, license or other disposition of any asset or
property valued in excess of $100,000, individually or in the
aggregate, of any Suiza Company or any Encumbrance on any material
asset or property of any Suiza Company;
(h) any incurrence of indebtedness for borrowed money, except
in the Ordinary Course of Business, in excess of $100,000 in the
aggregate;
(i) change in the accounting methods used by any Suiza
Company; or
(j) Contract, whether oral or written, by any Suiza Company to
do any of the foregoing; or
(k) change in any material Tax elections, material change in
any method of accounting with respect to any material Taxes, material
amendment of any
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material Tax Return, or settlement or compromise of any proceeding with
respect to any material Tax.
4.13A ABSENCE OF CERTAIN CHANGES AND EVENTS -- FRANKLIN. Except as set
forth in Section 4.13A of the Disclosure Letter, since the date of the Suiza
Balance Sheet, Franklin has conducted its business only in the Ordinary Course
of Business and has not purchased, redeemed, retired, or acquired any of its
equity interests, or declared or paid any dividend or other distribution or
payment in respect of its equity interests.
4.14 CONTRACTS; NO DEFAULTS.
(a) Except for Suiza Permitted Encumbrances, Section 4.14(a)
of the Disclosure Letter contains a complete and accurate list of:
(i) each Contract that involves performance of
services or delivery of goods or materials by or to any Suiza
Company of an amount or value that could exceed $100,000;
(ii) each Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or
receipts of any Suiza Company that could exceed $100,000 or
that is otherwise material to any Suiza Company;
(iii) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other
Contract affecting the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or
personal property used by any Suiza Company (except personal
property leases, real property leases and installment and
conditional sales agreements having a value per item or
aggregate payments of less than $100,000);
(iv) each Contract containing (A) covenants not to
compete, (B) employee non-solicitation and/or no-hire
agreements, (C) "most-favored nations" provisions; or (D)
similar agreements that materially restrict the business
activity of any Suiza Company or limit the freedom of any
Suiza Company to engage in any line of business or to compete
with any Person;
(v) each employment, consulting, noncompetition,
separation, collective bargaining, union or labor Contract
applicable to any Suiza Company;
(vi) each Contract by and between any Suiza Company
and the Suiza Parent or any Suiza Company or any Affiliate of
any Suiza Company or, to Suiza's Knowledge, any immediate
family member of an Affiliate of a Suiza Company;
(vii) each Contract under which any Suiza Company is
obligated to indemnify, or entitled to indemnification from,
any third party, excluding any
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agreement that requires indemnification solely for a breach of
such agreement and excluding any indemnification obligation or
right that could not reasonably be expected to involve more
than $100,000;
(viii) each Contract for capital expenditures by any
Suiza Company in excess of $100,000;
(ix) each Contract to which any Suiza Company is a
party concerning Intellectual Property; and
(x) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
(b) With respect to the Contracts identified in Section
4.14(a) of the Disclosure Letter:
(i) each Contract is in full force and effect and is
valid and enforceable in accordance with its terms except to
the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other laws relating or affecting creditors'
rights generally and by general equity principles;
(ii) the Suiza Parent has delivered to the ▇▇▇▇
Parent a copy of each such Contract that is in writing and a
written summary accurately describing the material provisions
of each such Contract that is not in writing;
(iii) each Suiza Company is in compliance with all
material terms and requirements of such Contracts; and
(iv) no Suiza Company has given to or received from
any other Person any notice regarding any actual or alleged
violation or default of any such Contract.
(c) Section 4.14(c) of the Disclosure Letter includes a
complete list of each customer of any Suiza Company that has accounted
for more than $1,000,000 in gross sales of the Suiza Companies for the
twelve months ended December 31, 1998 (the "SUIZA MATERIAL CUSTOMERS").
None of the Suiza Material Customers has notified any Suiza Company or
the Suiza Parent of any intention to, or to Suiza's Knowledge,
otherwise threatened to, terminate or materially alter its relationship
with any Suiza Company, and there has been no material dispute with a
Suiza Material Customer since January 1, 1997.
4.15 INSURANCE.
(a) The Suiza Parent has delivered to the ▇▇▇▇ Parent true and
complete copies of all policies of insurance to which any Suiza Company
is a party or under which
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any Suiza Company, or any director (or similar Affiliate) of a Suiza
Company, is covered.
(b) Section 4.15 of the Disclosure Letter describes:
(i) any self-insurance arrangement by any Suiza
Company, including any reserves established thereunder; and
(ii) all material obligations of any Suiza Company to
third parties with respect to insurance (including such
obligations under leases and service agreements) and
identifies the policy under which such coverage is provided.
(c) All policies to which any Suiza Company is a party or that
provide coverage to any Suiza Company, taken together, provide adequate
insurance coverage for the assets and the operations of the Suiza
Companies for all risks normally insured against by a Person carrying
on the same business as the Suiza Companies.
(d) No Suiza Company has received (i) any refusal of coverage
or any notice that a defense will be afforded with reservation of
rights, or (ii) any notice of cancellation or any other indication that
any insurance policy is no longer in full force or effect or will not
be renewed or will be renewed only with a material increase in cost or
that the issuer of any policy is not willing or able to perform its
obligations thereunder.
4.16 ENVIRONMENTAL MATTERS. Except as set forth in Section 4.16 of the
Disclosure Letter and except as would not, individually or in the aggregate,
reasonably be expected to result in a Suiza Material Adverse Effect:
(a) No Suiza Company has violated or is in violation of any
Environmental Law.
(b) None of the Suiza Facilities or any facility formerly
owned or operated by the Suiza Parent or any Suiza Company contains any
Hazardous Materials in amounts exceeding the levels permitted by
applicable Environmental Law and/or under circumstances that would
require remediation or removal under Environmental Law.
(c) No Suiza Company has engaged in any Hazardous Activities,
and no Hazardous Materials have been disposed of, arranged to be
disposed of, released or transported in violation of any applicable
Environmental Law or in a manner that could reasonably be expected to
result in liability under or relating to Environmental Laws, to or from
any of the Suiza Facilities or any facility formerly owned or operated
by the Suiza Parent or any Suiza Company.
(d) There have been no material environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance
or noncompliance with, or potential liability under or relating to, any
Environmental Law conducted by or on behalf of any Suiza Company, or
which are in the possession of any Suiza Company, relating to the
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facilities, business or activities of any Suiza Company or any of the
Suiza Facilities that have not been made available to the ▇▇▇▇ Parents.
(e) No Suiza Company or the Suiza Parent has received any
actual or threatened Order or notice or other written communication
from any Governmental Body or the current or prior owner or operator of
any Suiza Facilities or any other Person, of any actual or potential
violation or failure to comply with any Environmental Law, or of any
actual or threatened obligation to undertake or bear any cost, damage,
expense, liability, or obligation arising from or under any
Environmental Law.
(f) No Suiza Company has assumed, contractually or by
operation of law, any liability or obligation under or relating to
Environmental Laws.
4.17 LABOR RELATIONS; COMPLIANCE. Section 4.17 of the Disclosure Letter
includes a complete list of all current employees of each Suiza Company as of
the date set forth therein, including date of employment, current title and
compensation, and date and percentage of last increase in compensation and
indicating any employees on disability or other permitted leaves of absence.
There is not presently pending or existing (a) any strike, slowdown, picketing,
work stoppage, or material employee grievance process, or (b) any material
Proceeding against or affecting any Suiza Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters. To Suiza's Knowledge, no event has occurred or circumstance exists that
could provide the basis for any work stoppage or other material labor dispute.
There is no lockout of any employees by any Suiza Company. Each Suiza Company
has made good faith efforts to comply with, and to Suiza's Knowledge has
complied in all material respects with, all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closing.
4.18 INTELLECTUAL PROPERTY.
(a) Section 4.18(a) of the Disclosure Schedule contains a
complete and accurate list and summary description of, with respect to
all Intellectual Property owned, held or used by each Suiza Company
("SUIZA IP"), all patents, registrations or applications and all
material unregistered Suiza IP.
(b) Except as disclosed in Section 4.18(b) of the Disclosure
Schedule, (i) the Suiza Companies own or have the right to use all the
Intellectual Property necessary or desirable to conduct their
businesses in all material respects as currently conducted and
consistent with past practice, free of all Encumbrances; (ii) to
Suiza's Knowledge, all of the Suiza IP is valid, enforceable and
unexpired, has not been abandoned, does not Infringe the Intellectual
Property of any third party and is not being Infringed by any third
party; (iii) no Order or Proceeding is pending, or to Suiza's
Knowledge, threatened, that limits or challenges the ownership, use,
validity or enforceability of any Suiza IP; and (iv) the Suiza
Companies have taken all reasonable steps to protect, maintain and
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safeguard the Suiza IP, including without limitation the Suiza IP that
is confidential in nature.
4.19 BROKERS OR FINDERS. Except as set forth in Section 4.19 of the
Disclosure Letter, none of the Suiza Parties, or their Affiliates or agents have
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement or the Contemplated Transactions for which any Suiza Party,
Holdings, the Company or the ▇▇▇▇ Party or any of their Affiliates will be
liable.
4.20 COMPETING INTERESTS. Except as set forth in Section 4.20 of the
Disclosure Letter, neither the Suiza Parent nor any Person that controls, is
controlled by or is under common control with the Suiza Parent, nor, to Suiza's
Knowledge, any Affiliate of any Suiza Company owns, directly or indirectly, an
interest in any Person that is a competitor, customer or supplier of any Suiza
Company or that otherwise has material business dealings with any Suiza Company,
other than ownership of less than 1% of publicly traded securities of such
Person.
4.21 INVESTMENT INTENT. The Suiza Parent is acquiring its Member Units
pursuant to the Mergers for its own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities Act.
4.22 PRODUCT WARRANTY AND PRODUCT LIABILITY. There are no material
product warranty or product liability claims pending or, to Suiza's Knowledge,
threatened against the Suiza Parent or any Suiza Company. The Suiza Parent has
made available to the ▇▇▇▇ Parent a complete and accurate list of all warranty
information provided to or relied upon by their respective customers. Section
4.22 of the Disclosure Letter sets forth a complete and accurate summary of
product warranty or product liability claims over $100,000 made against the
Suiza Parent or any Suiza Company within the past two years.
4.23 HOLDINGS AND THE COMPANY. Except for the negotiation and execution
of this Agreement and the other documents expressly contemplated hereby, and
except for its obligations hereunder and thereunder, neither Holdings nor the
Company nor any subsidiary thereof has engaged in any business activities or
entered into any agreement or arrangement, and Holdings and the Company and
their subsidiaries have no liabilities or obligations of any nature (whether
known or unknown and whether absolute, accrued, contingent or otherwise).
4.24 YEAR 2000 COMPLIANCE. Except as set forth in Section 4.24 of the
Disclosure Letter, to Suiza's Knowledge, the properties and assets of each Suiza
Company, including, but not limited to, computer hardware, microprocessor driven
equipment, software and data, owned or used by any Suiza Company, will
accurately process, in all material respects, date and time data after December
31, 1999, and no Suiza Company will suffer a material loss of functional ability
when processing dates and related data outside the 1900-1999 year range.
4.25 NO MISREPRESENTATIONS. The representations, warranties and
statements made by Suiza in or pursuant to this Agreement are true, complete and
correct in all material respects and do not contain any untrue statement of a
material fact or omit to state any material fact necessary
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to make any such representation, warranty or statement, under the circumstances
in which it is made, not misleading.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF VESTAR
Vestar represents and warrants to the Suiza Parties as follows:
5.1 ORGANIZATION AND GOOD STANDING.
(a) Vestar is a limited liability company duly organized,
validly existing, and in good standing under the laws of its state of
formation, with full power and authority to conduct its business as it
is now being conducted
(b) Vestar has made available to the Suiza Parent complete and
correct copies of its Organizational Documents, as currently in effect.
5.2 AUTHORITY; NO CONFLICT; CONSENTS.
(a) This Agreement constitutes the legal, valid and binding
obligation of Vestar, enforceable against it in accordance with its
terms except to the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance,
fraudulent transfer, moratorium or other laws relating to or affecting
creditors' rights generally and by general equity principles.
(b) Vestar has the requisite limited liability company right,
power, authority and capacity to execute and deliver this Agreement and
to perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement by Vestar have been duly
authorized by all necessary limited liability company action, on the
part of such entity and its owners.
(c) Except as disclosed in Section 5.2 of the Disclosure
Letter, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions
will, directly or indirectly:
(i) conflict with any provision of the Organizational
Documents of Vestar; or
(ii) result in a violation of, or give any
Governmental Body or other Person the right to exercise any
remedy or obtain any relief under, any Legal Requirement or
any Order to which Vestar is subject.
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SECTION 6
REPRESENTATIONS AND WARRANTIES OF SUIZA FOODS
Suiza Foods represents and warrants to the ▇▇▇▇ Parties as follows:
6.1 ORGANIZATION AND GOOD STANDING.
(a) Suiza Foods is a corporation duly organized, validly
existing, and in good standing under the laws of its state of
formation, with full corporate power and authority to conduct its
business as it is now being conducted
(b) Suiza Foods has made available to the ▇▇▇▇ Parents
complete and correct copies of its Organizational Documents, as
currently in effect.
6.2 AUTHORITY; NO CONFLICT; CONSENTS.
(a) This Agreement constitutes the legal, valid and binding
obligation of Suiza Foods, enforceable against such entity in
accordance with its terms except to the extent that its enforceability
may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, fraudulent transfer, moratorium or other laws relating to
or affecting creditors' rights generally and by general equity
principles.
(b) Suiza Foods has the requisite corporate right, power,
authority and capacity to execute and deliver this Agreement and to
perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement by Suiza Foods has been duly
authorized by all necessary corporate action on the part of such entity
and its owners.
(c) Except as disclosed in Section 6.2 of the Disclosure
Letter, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions
will, directly or indirectly:
(i) conflict with any provision of the Organizational
Documents of Suiza Foods; or
(ii) result in a violation of, or give any
Governmental Body or other Person the right to exercise any
remedy or obtain any relief under, any Legal Requirement or
any Order to which Suiza Foods is subject.
SECTION 7
COVENANTS OF ▇▇▇▇ PARTIES PRIOR TO CLOSING DATE
7.1 ACCESS AND INVESTIGATION. Following the date of this Agreement, the
▇▇▇▇ Parties will (a) afford the Suiza Parties and their Representatives and
their lenders and their
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Representatives (collectively, "SUIZA'S ADVISORS") reasonable access during
normal business hours to the personnel, properties, contracts, books and
records, and other documents and data of the ▇▇▇▇ Companies, (b) furnish the
Suiza Parties and Suiza's Advisors with copies of all such contracts, books and
records, and other existing documents and data as the Suiza Parties may
reasonably request with respect to the ▇▇▇▇ Companies, and (c) furnish the Suiza
Parties and Suiza's Advisors with such additional financial, operating, and
other data and information with respect to the ▇▇▇▇ Companies as the Suiza
Parties and Suiza's Advisors may reasonably request, including financial
statements.
7.2 OPERATION OF THE BUSINESS OF THE ▇▇▇▇ COMPANIES. Between the date
of this Agreement and the Closing Date, each ▇▇▇▇ Company will, and the ▇▇▇▇
Parent will cause the ▇▇▇▇ Companies to:
(a) conduct the business of each ▇▇▇▇ Company only in the
Ordinary Course of Business, including without limitation, not
declaring or paying cash dividends or making cash or other
distributions on equity securities, or redeeming or repurchasing equity
securities;
(b) use their commercially reasonable efforts to preserve
intact the current business organization of each ▇▇▇▇ Company, keep
available the services of the current officers, employees, and agents
of each ▇▇▇▇ Company, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with each ▇▇▇▇ Company;
(c) otherwise report periodically to the Suiza Parent
concerning the status of the business, operations, and finances of the
▇▇▇▇ Companies;
(d) not, (i) change any material Tax elections, (ii)
materially change any method of accounting with respect to any material
Taxes, (iii) materially amend any material Tax Return, or (iv) settle
or compromise any proceeding with respect to any material Tax; and
(e) make all estimated tax payments due during such period in
amounts appropriate under applicable Legal Requirements.
7.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, the ▇▇▇▇
Companies will not, and the ▇▇▇▇ Parent will cause the ▇▇▇▇ Companies not to,
without the prior consent of the Suiza Parent, take any affirmative action, or
fail to take any reasonable action within their or its control, as a result of
which any of the changes or events listed in Section 3.13 will occur.
7.4 NOTIFICATION. Between the date of this Agreement and the Closing
Date, the ▇▇▇▇ Parent will promptly notify the Suiza Parent in writing if the
▇▇▇▇ Parent or any ▇▇▇▇ Company becomes aware of any fact or condition that
causes or constitutes a material breach of any of the representations and
warranties of any ▇▇▇▇ Party as of the date of this Agreement, or if any ▇▇▇▇
Parent or any ▇▇▇▇ Company becomes aware of the occurrence after the date of
this Agreement
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of any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a material breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. During the same period, the
▇▇▇▇ Parent will promptly notify the Suiza Parent of the occurrence of any
material breach of any covenant of the ▇▇▇▇ Parent or any ▇▇▇▇ Company in this
Section 7 or of the occurrence of any event that may make the satisfaction of
the conditions in Section 9 impossible.
7.5 DISTRIBUTIONS AND CERTAIN OTHER RESTRICTED PAYMENTS. Between the
date of this Agreement and the Closing Date, the ▇▇▇▇ Companies will not, and
the ▇▇▇▇ Parent will cause the ▇▇▇▇ Companies not to, (a) declare or pay any
distributions in respect of any equity interests of any ▇▇▇▇ Company or (b)
directly or indirectly purchase, redeem or otherwise acquire or retire any
equity interests of any ▇▇▇▇ Company.
7.6 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 11, the ▇▇▇▇ Parties will not, and will cause
their Representatives not to, directly or indirectly (a) solicit, initiate,
encourage (including by way of furnishing information) or take any action
knowingly to facilitate the submission of any inquiries, proposals or offers
(whether or not in writing) from any person (other than any Suiza Party)
relating to, other than the Contemplated Transactions, (i) any acquisition or
purchase of 5% or more of the assets of the ▇▇▇▇ Parent or any other direct or
indirect subsidiary of the ▇▇▇▇ Parent that owns any of the packaging assets
contemplated to be part of the Contemplated Transactions, (ii) any direct or
indirect acquisition or purchase of any equity securities of any ▇▇▇▇ Parent or
any other direct or indirect subsidiary of the ▇▇▇▇ Parent that owns any of the
packaging assets contemplated to be part of the Contemplated Transactions, (iii)
any merger, consolidation, business combination, sale of substantially all
assets, recapitalization, liquidation, dissolution or similar transaction
involving the ▇▇▇▇ Parent or any other direct or indirect subsidiary of the ▇▇▇▇
Parent that owns any of the packaging assets contemplated to be part of the
Contemplated Transactions or (iv) any other transaction the consummation of
which would or would reasonably be expected to impede, interfere with, prevent
or materially delay the Contemplated Transactions or which would or would
reasonably be expected to materially dilute the benefits to the Suiza Parties of
the Contemplated Transactions (collectively, the "▇▇▇▇ TRANSACTION PROPOSALS"),
or agree to or endorse any ▇▇▇▇ Transaction Proposal, or (b) enter into or
participate in any discussions or negotiations regarding any of the foregoing,
or furnish to any other person any information with respect to its business,
properties or assets in connection with the foregoing, or otherwise cooperate in
any way with, or knowingly assist or participate in, facilitate or encourage,
any effort or attempt by any other person (other than any Suiza Party) to do or
seek any of the foregoing. If Vestar or the ▇▇▇▇ Parent receives or becomes
aware of a ▇▇▇▇ Transaction Proposal after the date hereof, Vestar or the ▇▇▇▇
Parent shall provide the Suiza Parent with prompt written notice thereof and
shall promptly inform the Suiza Parent of the terms and conditions of such
proposal and the identity of the persons making it. Vestar and the ▇▇▇▇ Parent
will immediately cease and cause their advisors, agents and other intermediaries
to cease any and all existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing. Vestar and
the ▇▇▇▇ Parent agrees not to release any third party from, or waive any
provisions of, any confidentiality or standstill agreement to which Vestar or
the ▇▇▇▇ Parent is a party.
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7.7 COMMERCIALLY REASONABLE EFFORTS. Between the date of this Agreement
and the Closing Date, the ▇▇▇▇ Parent and each ▇▇▇▇ Company will use
commercially reasonable efforts to cause the conditions in Section 9 to be
satisfied. None of the ▇▇▇▇ Parties shall have any obligation to comply with any
request or requirement imposed by any Governmental Body in connection therewith
if the ▇▇▇▇ Parties, in the exercise of their reasonable discretion, elect not
to do so. Without limiting the generality of the foregoing, the ▇▇▇▇ Parties
shall not be obligated to comply with any request by, or any requirement of, any
Governmental Body (i) to dispose of any assets or operations; or (ii) to comply
with any restriction on the manner in which it conducts its operations.
7.8 ASSISTANCE WITH PERMITS AND FILINGS. The ▇▇▇▇ Parent and each ▇▇▇▇
Company will furnish the Suiza Parent with all information that is required for
inclusion in any application or filing to be made by any Suiza Party or its
affiliates to any Governmental Body in connection with the Contemplated
Transactions. The ▇▇▇▇ Parent and each ▇▇▇▇ Company will use commercially
reasonable efforts to assist the Suiza Parent in obtaining any Governmental
Authorizations, or any Consents related thereto, that the Suiza Parent, Holdings
or the Company will require in connection with the Contemplated Transactions.
7.9 CONFIDENTIALITY. The ▇▇▇▇ Parent and each ▇▇▇▇ Company will
maintain in confidence, and will cause their respective Representatives to
maintain in confidence, any information furnished to them by or on behalf of
either of the Suiza Parent, any Suiza Company or Suiza's Representatives in
connection with this Agreement or the Contemplated Transactions to the extent
required by, and in accordance with, the provisions of the letter dated March
23, 1999 executed by the ▇▇▇▇ Parent and the Suiza Parent.
7.10 ASSIGNMENT OF INDEMNIFICATION RIGHTS. The ▇▇▇▇ Parties shall use
commercially reasonable efforts to cause any and all contracts under which the
▇▇▇▇ Parent is, or may in the future be, entitled to indemnification payments
from an unaffiliated third party in connection with the assets or operations of
the ▇▇▇▇ Parent, to be assigned to a ▇▇▇▇ Company.
7.11 APPRAISAL. The parties hereto agree to engage a reputable
appraiser to appraise the fair market values of (i) the fully diluted capital
stock of Franklin and (ii) the fully diluted Member Units.
SECTION 8
COVENANTS OF SUIZA PARTIES PRIOR TO CLOSING DATE
8.1 ACCESS AND INVESTIGATION. Following the date of this Agreement, the
Suiza Parties will (a) afford the ▇▇▇▇ Parties and their Representatives and
their lenders and their Representatives (collectively, "▇▇▇▇'▇ ADVISORS")
reasonable access during normal business hours to the personnel, properties,
contracts, books and records, and other documents and data of the Suiza
Companies, (b) furnish the ▇▇▇▇ Parties and ▇▇▇▇'▇ Advisors with copies of all
such contracts, books and records, and other existing documents and data as the
▇▇▇▇ Parties may
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reasonably request with respect to the Suiza Companies, and (c) furnish the ▇▇▇▇
Parties and ▇▇▇▇'▇ Advisors with such additional financial, operating, and other
data and information with respect to the Suiza Companies as the ▇▇▇▇ Parties may
reasonably request, including financial statements.
8.2 OPERATION OF THE BUSINESS OF THE SUIZA COMPANIES. Between the date
of this Agreement and the Closing Date, each Suiza Company will, and the Suiza
Parent will cause the Suiza Companies to:
(a) conduct the business of each Suiza Company only in the
Ordinary Course of Business, including without limitation, not
declaring or paying cash dividends or making cash or other
distributions on equity securities, or redeeming or repurchasing equity
securities; except as described in Schedule 8.2;
(b) use their commercially reasonable efforts to preserve
intact the current business organization of each Suiza Company, keep
available the services of the current officers, employees, and agents
of each Suiza Company, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with each Suiza Company;
(c) otherwise report periodically to the ▇▇▇▇ Parent
concerning the status of the business, operations, and finances of the
Suiza Companies; and
(d) not, (i) change any material Tax elections, (ii)
materially change any method of accounting with respect to any material
Taxes, (iii) materially amend any material Tax Return, or (iv) settle
or compromise any proceeding with respect to any material Tax.
8.2A OPERATION OF THE BUSINESS OF FRANKLIN. Between the date of this
Agreement and the Closing Date, Franklin will conduct its business only in the
Ordinary Course of Business, including not declaring or paying cash dividends or
making cash or other distributions on equity securities, or redeeming or
repurchasing equity securities, except as described in Schedule 8.2A;
8.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, the Suiza
Parent and the Suiza Companies will not, and the Suiza Parent will cause the
Suiza Companies not to, without the prior consent of the ▇▇▇▇ Parent, take any
affirmative action, or fail to take any reasonable action within their or its
control, as a result of which any of the changes or events listed in Sections
4.13 or 4.13A will occur.
8.4 NOTIFICATION. Between the date of this Agreement and the Closing
Date, the Suiza Parent will promptly notify the ▇▇▇▇ Parent in writing if the
Suiza Parent or Suiza Company becomes aware of any fact or condition that causes
or constitutes a material breach of any of the representations and warranties of
any Suiza Party as of the date of this Agreement, or if the Suiza Parent or
Suiza Company becomes aware of the occurrence after the date of this
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Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a material breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. During the same
period, the Suiza Parent will promptly notify the ▇▇▇▇ Parent of the occurrence
of any material breach of any covenant of the Suiza Parent or Suiza Company in
this Section 8 or of the occurrence of any event that may make the satisfaction
of the conditions in Section 10 impossible.
8.5 DISTRIBUTIONS AND CERTAIN OTHER RESTRICTED PAYMENTS. Between the
date of this Agreement and the Closing Date, the Suiza Companies will not, and
the Suiza Parent will cause the Suiza Companies not to, (a) declare or pay any
distributions in respect of any equity interests of any Suiza Company or (b)
directly or indirectly purchase, redeem or otherwise acquire or retire any
equity interests of any Suiza Company.
8.6 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 11, the Suiza Parties will not, and will cause
their Representatives not to, directly or indirectly (a) solicit, initiate,
encourage (including by way of furnishing information) or take any action
knowingly to facilitate the submission of any inquiries, proposals or offers
(whether or not in writing) from any person (other than any ▇▇▇▇ Party) relating
to, other than the Contemplated Transactions, (i) any acquisition or purchase of
5% or more of the assets of the Suiza Parent or any other direct or indirect
subsidiary of Suiza Foods that owns any of the packaging assets contemplated to
be part of the Contemplated Transactions, (ii) any direct or indirect
acquisition or purchase of any equity securities of Suiza Parent or any other
direct or indirect subsidiary of Suiza Foods that owns any of the packaging
assets contemplated to be part of the Contemplated Transactions, (iii) any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Suiza Parent or any other direct or indirect subsidiary of Suiza Foods that owns
any of the packaging assets contemplated to be part of the Contemplated
Transactions or (iv) any other transaction the consummation of which would or
would reasonably be expected to impede, interfere with, prevent or materially
delay the Contemplated Transactions or which would or would reasonably be
expected to materially dilute the benefits to the ▇▇▇▇ Parties of the
Contemplated Transactions (collectively, the "SUIZA TRANSACTION PROPOSALS"), or
agree to or endorse any Suiza Transaction Proposal, or (b) enter into or
participate in any discussions or negotiations regarding any of the foregoing,
or furnish to any other person any information with respect to its business,
properties or assets in connection with the foregoing, or otherwise cooperate in
any way with, or knowingly assist or participate in, facilitate or encourage,
any effort or attempt by any other person (other than any ▇▇▇▇ Party) to do or
seek any of the foregoing. If Suiza Foods or the Suiza Parent receives or
becomes aware of a Suiza Transaction Proposal after the date hereof, Suiza Foods
or the Suiza Parent shall provide the ▇▇▇▇ Parent with prompt written notice
thereof and shall promptly inform the ▇▇▇▇ Parent of the terms and conditions of
such proposal and the identity of the persons making it. Suiza Foods and the
Suiza Parent will immediately cease and cause their advisors, agents and other
intermediaries to cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Suiza Foods and the Suiza Parent agree not to release any third party
from, or waive any provisions of, any confidentiality or standstill agreement to
which Suiza Foods or the Suiza Parent is a party.
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8.7 COMMERCIALLY REASONABLE EFFORTS. Between the date of this Agreement
and the Closing Date, the Suiza Parties will use commercially reasonable efforts
to cause the conditions in Section 10 to be satisfied. None of the Suiza Parties
shall have any obligation to comply with any request or requirement imposed by
any Governmental Body in connection therewith if the Suiza Parties, in the
exercise of their reasonable discretion, elect not to do so. Without limiting
the generality of the foregoing, the Suiza Parties shall not be obligated to
comply with any request by, or any requirement of, any Governmental Body (i) to
dispose of any assets or operations; or (ii) to comply with any restriction on
the manner in which it conducts its operations.
8.8 ASSISTANCE WITH PERMITS AND FILINGS. The Suiza Parent and each
Suiza Company will furnish the ▇▇▇▇ Parent with all information that is required
for inclusion in any application or filing to be made by any ▇▇▇▇ Party or its
affiliates to any Governmental Body in connection with the Contemplated
Transactions. The Suiza Parent and each Suiza Company will use commercially
reasonable efforts to assist the ▇▇▇▇ Parent in obtaining any Governmental
Authorizations, or any Consents related thereto, that either ▇▇▇▇ Parent,
Holdings or the Company will require in connection with the Contemplated
Transactions.
8.9 CONFIDENTIALITY. Suiza Foods, the Suiza Parent and each Suiza
Company will maintain in confidence, and will cause their respective
Representatives to maintain in confidence, any non-public information furnished
to them by or on behalf of the ▇▇▇▇ Parent, any ▇▇▇▇ Company or ▇▇▇▇'▇
Representatives in connection with this Agreement or the Contemplated
Transactions to the extent required by, and in accordance with, the provisions
of the letter dated March 23, 1999 executed by the ▇▇▇▇ Parent and the Suiza
Parent. In the case of Suiza Foods, Suiza Foods hereby agrees to be bound by the
terms of such letter as if Suiza Foods were a party thereto.
8.10 TENDER OFFER. After the date hereof (the "COMMENCEMENT DATE"),
Suiza Foods may cause PCI to commence a tender offer to purchase all of the PCI
Notes for cash at a purchase price that is mutually agreeable to Suiza Foods,
the ▇▇▇▇ Parent and Vestar (the "TENDER OFFER"). Pursuant to the Tender Offer,
PCI would agree to purchase the PCI Notes that are validly tendered and not
withdrawn prior to the expiration date set forth in the Offer to Purchase (the
"INITIAL EXPIRATION DATE"). PCI may, at any time and from time to time until
July 31, 1999 (assuming all the conditions to the Tender Offer have not been
met), extend the Initial Expiration Date. The date that is the later of the
Initial Expiration Date and the latest time and date to which the Tender Offer
may be extended is called the "EXPIRATION DATE." The consummation of the Tender
Offer would be conditioned upon a mutually agreeable minimum principal amount of
the PCI Notes having been validly tendered and not withdrawn at the Expiration
Date and upon the satisfaction of such conditions as shall be mutually agreed
among Suiza Foods, the ▇▇▇▇ Parent and Vestar. If the Tender Offer is commenced,
PCI shall comply with, and make any filings or take any other actions required
to be taken under state or federal law in connection with the commencement and
consummation of the Tender Offer. If the Tender Offer is commenced, concurrently
with the Tender Offer Suiza intends to cause PCI to solicit and obtain the
consent (the "CONSENTS") of the holders of a majority in principal amount of the
PCI Notes to the adoption of amendments to the covenants and the provisions of
the Indenture governing the PCI Notes to be mutually agreed among Suiza Foods,
the ▇▇▇▇ Parent
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and Vestar (the "PROPOSED AMENDMENTS"). The purchase of PCI Notes pursuant to
the Tender Offer, if any, shall be funded out of the proceeds from the financing
referred to in Section 9.10 and Section 10.8. If the Tender Offer is not made,
or the Tender Offer's minimum tender condition or any other condition is not
met, or the Tender Offer is successful but less than all the PCI Notes are
tendered and purchased, the PCI Notes not repurchased shall remain outstanding
as indebtedness of PCI.
8.11 ASSIGNMENT OF INDEMNIFICATION RIGHTS. The Suiza Parties shall use
commercially reasonable efforts to cause any and all contracts under which
Franklin is, or may in the future be, entitled to indemnification payments from
an unaffiliated third party in connection with the assets or operations of
Franklin, to be assigned to a Suiza Company.
8.12 CONTRIBUTION BY SUIZA PARENT. Prior to the Closing, Suiza Foods
shall cause Franklin to transfer to a Franklin Company all assets used or held
by Franklin in connection with its plastics packaging business, and all of its
liabilities associated with such assets, pursuant to a ▇▇▇▇ of Sale, Assignment
and Assumption Agreement in the form attached as Exhibit F hereto.
8.13 APPRAISAL. The parties hereto agree to engage a reputable
appraiser to appraise the fair market values of (i) the fully diluted capital
stock of Franklin and (ii) the fully diluted Member Units.
SECTION 9
CONDITIONS PRECEDENT TO THE SUIZA PARTIES' OBLIGATION TO CLOSE
The obligation of the Suiza Parties to complete the Contemplated
Transactions, and take the other actions required to be taken by them at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by the Suiza Parent, in
whole or in part):
9.1 ACCURACY OF REPRESENTATIONS. All of the representations and
warranties of any ▇▇▇▇ Party in this Agreement must have been accurate in all
material respects as of the date of this Agreement and must be accurate in all
material respects as of the Closing Date as if made on the Closing Date, except
to the extent that any such representation or warranty is made as of a specified
date, in which case such representation and warranty shall be true and correct
in all material respects as of such date; and the ▇▇▇▇ Parent shall have
delivered to the Suiza Parent a closing certificate, executed by an officer of
the ▇▇▇▇ Parent and dated the Closing Date, to that effect.
9.2 ▇▇▇▇'▇ PERFORMANCE.
(a) All of the covenants and obligations that the ▇▇▇▇ Parent
or any ▇▇▇▇ Company is required to perform or to comply with pursuant
to this Agreement at or prior to the Closing must have been duly
performed and complied with in all material respects;
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and the ▇▇▇▇ Parent shall have delivered to the Suiza Parent a closing
certificate, executed by an officer of the ▇▇▇▇ Parent and dated the
Closing Date, to that effect.
(b) Each document required to be delivered by the ▇▇▇▇ Parent
or any ▇▇▇▇ Company pursuant to Section 2.5 must have been delivered.
9.3 ABSENCE OF MATERIAL ADVERSE EFFECTS. Since the date of this
Agreement, no ▇▇▇▇ Material Adverse Effect shall have occurred.
9.4 CONSENTS. Any Material Consents that the Suiza Parent, any Suiza
Company, the ▇▇▇▇ Parent, any ▇▇▇▇ Company or the Company are required to obtain
to consummate the Contemplated Transactions must have been obtained and must be
in full force and effect. Without limiting the generality of the foregoing, all
filings pursuant to the New Jersey Industrial Site Recovery Act, the Connecticut
Transfer Act and the HSR Act shall have been made by the Suiza Parties and the
▇▇▇▇ Parties, and the required waiting period under the HSR Act shall have
expired or been terminated without any threat or commencement of antitrust
proceedings with respect to the Contemplated Transactions and without any
request or requirement upon any Suiza Party or any of its affiliates to comply
with any request or requirement imposed by the FTC, the DOJ or any other
Governmental Body in connection with the HSR Act.
9.5 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or threatened against the Suiza Parent, or against any
Person affiliated with the Suiza Parent, any Proceeding (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that may have the effect of preventing or
making illegal any of the Contemplated Transactions.
9.6 NO PROHIBITION. Neither the consummation nor the performance of any
of the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time) result in a material violation of, or cause the Suiza
Parent or any Person affiliated with the Suiza Parent to suffer any material
adverse effect under, any applicable Legal Requirement or Order.
9.7 LEGAL OPINION. The ▇▇▇▇ Parent shall have delivered to the Suiza
Parent a legal opinion of the ▇▇▇▇ Parent's counsel, substantially in the form
attached hereto as Exhibit D.
9.8 CAPITAL CONTRIBUTION. Vestar shall have contributed $60.8 million
in cash to Holdings.
9.9 CASH PAYMENT. The Company or Holdings shall have distributed to the
Suiza Parent the payment required by Section 2.2(c), payable in immediately
available funds, in accordance with payment instructions from the Suiza Parent
delivered to the Company or Holdings at least two days prior to the Closing.
9.10 FINANCING. The Company or Holdings shall have received financing
in the amounts and in all material respects on the other terms and conditions
set forth in the executed commitment letter from Bankers Trust Company and the
executed "highly confident" letter from
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, each delivered in connection
with the Proposed Transaction and made available to the parties hereto.
9.11 FIRPTA CERTIFICATE. The ▇▇▇▇ Parent shall have delivered to the
Suiza Parent at the Closing a certificate complying with the Code and Treasury
Regulations, in form and substance reasonable satisfactory to the Suiza Parent,
duly executed and acknowledged, certifying that the transactions contemplated
hereby are exempt from withholding under Section 1445 of the Code.
9.12 DISCHARGE OF INDEBTEDNESS Holdings and the Company shall have
fully discharged the ▇▇▇▇ Indebtedness listed in Section 10.11(a) of the
Disclosure Letter and the Suiza Indebtedness listed in Section 10.11(b) of the
Disclosure Letter.
9.13 SUIZA BANK CONSENT. The Suiza Parties shall have received the
consent, termination and release of First Union National Bank, as agent, to
release the liens on the stock and assets of the Suiza Companies, pledged as
security in connection with the Credit Agreement dated as of May 22, 1998 by and
among Suiza Foods, the lenders named therein and First Union National Bank, as
agent.
SECTION 10
CONDITIONS PRECEDENT TO THE ▇▇▇▇ PARTIES' OBLIGATION TO CLOSE
The obligation of the ▇▇▇▇ Parties to complete the Contemplated
Transactions and take the other actions required to be taken by them at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by the ▇▇▇▇ Parent, in
whole or in part):
10.1 ACCURACY OF REPRESENTATIONS. All of the Suiza Parties'
representations and warranties in this Agreement must have been accurate in all
material respects as of the date of this Agreement and must be accurate in all
material respects as of the Closing Date as if made on the Closing Date, except
to the extent that any such representation or warranty is made as of a specified
date, in which case such representation and warranty shall be true and correct
in all material respects as of such date; and the Suiza Parent shall have
delivered to the ▇▇▇▇ Parent a closing certificate, executed by an officer of
the Suiza Parent and dated the Closing Date, to that effect.
10.2 SUIZA'S PERFORMANCE.
(a) All of the covenants and obligations that the Suiza Parent
or any Suiza Company is required to perform or to comply with pursuant
to this Agreement at or prior to the Closing must have been duly
performed and complied with in all material respects; and the Suiza
Parent shall have delivered to the ▇▇▇▇ Parent a closing certificate,
executed by an officer of the Suiza Parent and dated the Closing Date,
to that effect.
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(b) Each document required to be delivered by the Suiza Parent
or any Suiza Company pursuant to Section 2.5 must have been delivered.
10.3 ABSENCE OF MATERIAL ADVERSE EFFECTS. Since the date of this
Agreement, no Suiza Material Adverse Effect shall have occurred.
10.4 CONSENTS. Any Material Consents that the Suiza Parent, any Suiza
Company, any ▇▇▇▇ Company, Holdings or the Company are required to obtain to
consummate the Contemplated Transactions must have been obtained and must be in
full force and effect. Without limiting the generality of the foregoing, all
filings pursuant to the New Jersey Industrial Site Recovery Act, the Connecticut
Transfer Act and HSR Act shall have been made by the Suiza Parties and the ▇▇▇▇
Parties, and the required waiting period under the HSR Act shall have expired or
been terminated without any threat or commencement of antitrust proceedings with
respect to the Contemplated Transactions and without any request or requirement
upon any ▇▇▇▇ Party or any of their affiliates to comply with any request or
requirement imposed by the FTC, the DOJ or any other Governmental Body in
connection with the HSR Act.
10.5 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or threatened against the ▇▇▇▇ Parent, or against any Person
affiliated with the ▇▇▇▇ Parent, any Proceeding (a) involving any challenge to,
or seeking damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing or making illegal
any of the Contemplated Transactions.
10.6 NO PROHIBITION. Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time) result in a material violation of, or cause the
▇▇▇▇ Parent or any Person affiliated with the ▇▇▇▇ Parent to suffer any material
adverse effect under, any applicable Legal Requirement or Order.
10.7 LEGAL OPINION. The Suiza Parent shall have delivered to the ▇▇▇▇
Parent a legal opinion of Suiza Parent's counsel, in form and substance
reasonably acceptable to the ▇▇▇▇ Parent's legal counsel, with respect to the
matters referred to in Exhibit E.
10.8 FINANCING. The Company shall have received financing in the
amounts and in all material respects on the other terms and conditions set forth
in the executed commitment letter from Bankers Trust Company and the executed
"highly confident" letter from ▇▇▇▇▇▇▇▇▇ Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation, each delivered in connection with the Proposed Transaction and made
available to the parties hereto.
10.9 FIRPTA CERTIFICATE. The Suiza Parent shall have delivered to the
▇▇▇▇ Parent at the Closing a certificate complying with the Code and Treasury
Regulations, in form and substance reasonably satisfactory to the ▇▇▇▇ Parent,
duly executed and acknowledged, certifying that the transactions contemplated
hereby are exempt from withholding under Section 1445 of the Code.
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10.10 DISCHARGE OF INDEBTEDNESS. Holdings and the Company shall have
fully discharged the ▇▇▇▇ Indebtedness listed in Section 10.10(a) of the
Disclosure Letter and the Suiza Indebtedness listed in Section 10.10(b) of the
Disclosure Letter.
10.11 SUIZA BANK CONSENT. The Suiza Parties shall have received the
consent, termination and release of First Union National Bank, as agent, to
release the liens on the stock and assets of the Suiza Companies, pledged as
security in connection with the Credit Agreement dated as of May 22, 1998 by and
among Suiza Foods, the lenders named therein and First Union National Bank, as
agent.
SECTION 11
TERMINATION
11.1 TERMINATION EVENTS. This Agreement may, by notice given prior to
or at the Closing, be terminated:
(a) by the Suiza Parent or the ▇▇▇▇ Parent if a material
breach of any provision of this Agreement has been committed by the
other party, and such breach has not been cured within thirty days of
the breaching party first having knowledge of such breach, or waived by
the nonbreaching party.
(b) (i) by the Suiza Parent if satisfaction of any condition
in Section 9 is or becomes impossible (other than through the failure
of the Suiza Parent or Suiza Company to comply with its obligations
under this Agreement) and the Suiza Parent has not waived such
condition, or (ii) by the ▇▇▇▇ Parent, if satisfaction of such
condition in Section 10 is or becomes impossible (other than through
the failure of the ▇▇▇▇ Parent or any ▇▇▇▇ Company to comply with their
respective obligations under this Agreement) and the ▇▇▇▇ Parent has
not waived such condition;
(c) by mutual consent of the Suiza Parent and the ▇▇▇▇ Parent;
or
(d) by the Suiza Parent or the ▇▇▇▇ Parent if the Closing has
not occurred (other than through the failure of any party seeking to
terminate this Agreement or its affiliates to comply fully with its
obligations under this Agreement) on or before July 31, 1999 or such
later date as the parties may agree upon.
11.2 EFFECT OF TERMINATION. Each party's right of termination under
Section 11.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 11.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 7.9, 8.9 and 13.1 will survive; provided,
however, that if this Agreement is terminated by a party because of the breach
of the Agreement by the other party or one of its affiliates, the terminating
party's right to pursue all legal remedies will survive such termination
unimpaired.
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SECTION 12
INDEMNIFICATION; REMEDIES
12.1 REPRESENTATIONS; SURVIVAL. Except for the express representations
and warranties contained in Sections 3, 4, 5 and 6 and in any certificate
delivered pursuant to this Agreement, none of the parties to this Agreement are
making any representation or warranty whatsoever, express or implied, including
but not limited to any implied warranty or representation as to condition,
merchantability or suitability, as to any of the properties or assets of the
▇▇▇▇ Companies or the Suiza Companies. It is understood that, except as
otherwise specified in this Agreement and except to the extent included within
or incorporated into the Disclosure Letter, any cost estimates, projections or
other predictions, any data, any financial information or any memoranda or
offering materials or presentations provided or addressed to any party to this
Agreement or any other Person are not and shall not be deemed to be or to
include representations or warranties of any party to this Agreement. Except as
otherwise provided in this Section 12.1, all representations and warranties in
this Agreement and any other certificate or document delivered pursuant to this
Agreement will terminate eighteen months after the Closing; provided, however,
that (a) if any breach of the representations and warranties set forth in
Sections 3.1, 3.2, 3.8, 3.10, 3.11, 3.12 or 3.16 or in Sections 4.1, 4.2, 4.8,
4.10, 4.11, 4.12 or 4.16 constitutes a violation of any Legal Requirement, then
such representations and warranties and any claim for indemnification applicable
to such a violation shall survive for the applicable statute of limitation with
respect thereto; and (b) with respect to the representations and warranties set
forth in Sections 3.3, 3.13(a), 3.19, 4.3, 4.13(a), 4.13A, 4.19 and 4.23, such
representations and warranties and any claim for indemnification with respect
thereto will survive until the expiration of the applicable statute of
limitations.
12.2 INDEMNIFICATION AND PAYMENT OF DAMAGES WITH RESPECT TO BREACHES BY
▇▇▇▇ PARTIES. Notwithstanding any investigation by any Suiza Parties or their
Representatives, the parties hereto agree to cause Holdings, in accordance with
Section 12.11, to indemnify, defend and hold harmless the Company, the Suiza
Parent, Suiza Foods and their respective Representatives, equity owners,
controlling persons, and Affiliates (collectively, "SUIZA'S INDEMNIFIED
PERSONS") for, and will pay to Suiza's Indemnified Persons the amount of, any
loss, liability, claim, damage (including incidental damages, but excluding
consequential damages and damages for business interruption and lost profits),
expense (including costs of investigation and defense and reasonable attorneys'
fees) or diminution of value, whether or not involving a third-party claim
(collectively, "DAMAGES"), arising, directly or indirectly, from or in
connection with:
(a) any breach of any representation or warranty made by any
▇▇▇▇ Party in this Agreement or in any certificate delivered by any
▇▇▇▇ Party pursuant to this Agreement that survives the Closing in
accordance with Section 12.1 or any allegation by a third party that,
if true, would constitute such a breach; provided that any claim for
indemnification pursuant to this subparagraph (a) is made within the
time period specified in Section 12.1 for the survival of the
applicable representation or warranty that has been breached or is the
subject of the third party claim;
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(b) any breach by the ▇▇▇▇ Parent or any ▇▇▇▇ Company of any
covenant or obligation of such Person in this Agreement;
(c) any Proceeding commenced by any third party after Closing
relating to actions or omissions of the ▇▇▇▇ Parent or any ▇▇▇▇ Company
that occurred prior to Closing, except to the extent reduced by
insurance in accordance with the provisions of Section 12.6; or
(d) any claim by any Person, including, without limitation,
for brokerage or finder's fees or commissions or similar payments based
upon any agreement or understanding alleged to have been made by any
such Person with the ▇▇▇▇ Parent or any ▇▇▇▇ Company (or any Person
acting on their behalf) in connection with any of the Contemplated
Transactions.
12.3 INDEMNIFICATION AND PAYMENT OF DAMAGES WITH RESPECT TO BREACHES BY
SUIZA PARTIES. Notwithstanding any investigation by the ▇▇▇▇ Parties or their
Representatives, the parties hereto agree to cause Holdings, in accordance with
Section 12.11, to indemnify, defend and hold harmless the Company, the ▇▇▇▇
Parent, Vestar and their respective Representatives, equity owners, controlling
persons, and affiliates (collectively, "▇▇▇▇'▇ INDEMNIFIED PERSONS") for, and
will pay to ▇▇▇▇'▇ Indemnified Persons the amount of, any Damages arising,
directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by any
Suiza Party in this Agreement or in any certificate delivered by any
Suiza Party pursuant to this Agreement that survives the Closing in
accordance with Section 12.1 or any allegation by a third party that,
if true, would constitute such a breach; provided that any claim for
indemnification pursuant to this subparagraph (a) is made within the
time period specified in Section 12.1 for the survival of the
applicable representation or warranty that has been breached or is the
subject of the third party claim;
(b) any breach by the Suiza Parent or any Suiza Company of any
covenant or obligation of such Person in this Agreement;
(c) any Proceeding commenced by any third party after Closing
relating to actions or omissions of the Suiza Parent or any Suiza
Company that occurred prior to Closing, except to the extent reduced by
insurance in accordance with the provisions of Section 12.6; or
(d) any claim by any Person, including, without limitation,
for brokerage or finder's fees or commissions or similar payments based
upon any agreement or understanding alleged to have been made by any
such Person with the Suiza Parent or any Suiza Company (or any Person
acting on their behalf) in connection with any of the Contemplated
Transactions.
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12.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY HOLDINGS AND THE
COMPANY. Holdings and the Company will, jointly and severally, indemnify, defend
and hold harmless Suiza's Indemnified Persons and ▇▇▇▇'▇ Indemnified Persons
for, and will pay to Suiza's Indemnified Persons and ▇▇▇▇'▇ Indemnified Persons
the amount of, any Damages arising, directly or indirectly, from or in
connection with the operation of the business of Holdings and the Company and
their subsidiaries following the Closing; provided, however, that this Section
12.4 shall not be available to the extent that such Damages arise from or in
connection with any action or event that gives rise to an indemnifiable claim
under Section 12.2 or Section 12.3, as the case may be.
12.5 CERTAIN OTHER INDEMNIFIABLE MATTERS.
(a) The Suiza Parent and Suiza Foods shall, jointly and severally,
indemnify, defend and hold harmless Holdings and the Company from, and
will pay to Holdings and the Company the amount of, any Damages arising
directly or indirectly, from or in connection with (i) any Taxes with
respect to any and all Taxes of any member of a consolidated, combined
or unitary group of which any Suiza Company (or any predecessor) is or
was a member on or prior to the Closing Date by reason of the liability
of any Suiza Company pursuant to Treasury Regulation Section
1.1502-6(a) (or any analogous or similar state, local or foreign law or
regulation), as a transferee or successor, by contract or otherwise;
(ii) any Taxes of any Franklin Company with respect to any Tax period,
or portion thereof, beginning on or after January 1, 1999 and ending on
or prior to the Closing Date, other than the state taxes measured by
income (whether or not denominated as income taxes), if any, with
respect to a tax period, or portion thereof, beginning after June 30,
1999 and prior to the Closing Date but excluding income Taxes resulting
from the transactions contemplated pursuant to this Agreement.
(b) The parties agree to cause Holdings, in accordance with
Section 12.11, to indemnify, defend and hold harmless the Suiza
Indemnified Persons for, and will pay to Suiza's Indemnified Persons
the amount of, any Damages arising directly or indirectly, from or in
connection with any liability or obligations of any ▇▇▇▇ Party, or the
successor or assignee of any ▇▇▇▇ Party, owed or claimed to be owed to
B. ▇▇▇▇▇▇ ▇▇▇▇▇, his heirs, successors and assigns, currently existing
or accruing hereafter, pursuant to the Settlement Agreement and Mutual
Release dated September 15, 1998, by and among Vestar ▇▇▇▇ LLC and its
affiliates, ING Equity Partners, L.P. I, ▇▇. ▇▇▇▇▇ and other
stockholders of ▇▇▇▇ Holdings; the Master Reorganization Agreement
dated October 15, 1997 by and between Vestar ▇▇▇▇ LLC and ▇▇▇▇
Holdings; the Amended and Restated Warrant to Purchase Shares of Class
A Common Stock of ▇▇▇▇ Holdings dated October 15, 1997 and held by ▇▇.
▇▇▇▇▇; the Agreement dated as of April 28, 1999 among Vestar ▇▇▇▇ LLC,
Vestar, the ▇▇▇▇ Parent, ▇▇▇▇ Plastics, ▇▇. ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇; the
Agreement dated as of April 28, 1999 among Vestar ▇▇▇▇ LLC, Vestar, the
▇▇▇▇ Parent, ▇▇▇▇ Plastics, ▇▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇;
and pursuant to any other liabilities or obligations of any ▇▇▇▇ Party,
Holdings, the Company or any of its subsidiaries, including ▇▇▇▇
Plastics LLC, to ▇▇. ▇▇▇▇▇, whether contained in a written agreement or
otherwise, other than obligations to pay compensation (including
salary, severance and awards under any compensation or incentive plans
or programs) and
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provide perquisites and employee benefits under the Amended and
Restated Employment Agreement dated September 15, 1998, as amended on
April 28, 1999, by and between ▇▇▇▇ Plastics, Inc. and ▇▇. ▇▇▇▇▇.
(c) The provisions of Section 12.6 shall not apply to this
Section 12.5.
12.6 LIMITATIONS ON AMOUNT.
(a) In determining the amount of Damages hereunder, any
insurance proceeds that are realized or that could reasonably be
expected to be realized by such Indemnified Person (if a claim were
properly pursued under the relevant insurance arrangements), as well as
any costs associated with obtaining such insurance proceeds, will be
considered.
(b) The maximum aggregate amount to which Suiza's Indemnified
Persons will be entitled to indemnification under paragraph (a) of
Section 12.2 is limited to $21 million, and the maximum aggregate
amount to which ▇▇▇▇'▇ Indemnified Persons will be entitled to
indemnification under paragraph (a) of Section 12.3 is limited to $63
million.
(c) Notwithstanding the foregoing, the limitations set forth
in Section 12.6(b) will not apply to Damages arising from or in
connection with a breach or alleged breach of the representations and
warranties of the ▇▇▇▇ Parties set forth in Section 3.3, 3.8, 3.13(a)
or 3.19 or of the Suiza Parties set forth in Sections 4.3, 4.8,
4.13(a), 4.13A, 4.19, 4.23, 8.2(a) or 8.2A.
12.7 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person under
Section 12.2, 12.3, 12.4 or 12.5 of notice of the commencement of any
Proceeding against it, such Indemnified Person will, if a claim is to
be made against an indemnifying party under such Section, give notice
to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any Indemnified
Person, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying
party's failure to give such notice.
(b) If any Proceeding referred to in Section 12.7(a) is
brought against an Indemnified Person and it gives notice to the
indemnifying party of the commencement of such Proceeding, the
indemnifying party will, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such Proceeding and the
Indemnified Person determines in good faith that joint representation
would be inappropriate, or (ii) the indemnifying party fails to provide
reasonable assurance to the Indemnified Person of its financial
capacity to defend such Proceeding and provide indemnification with
respect to such Proceeding), assume the defense of such Proceeding with
counsel satisfactory to the Indemnified Person and, after notice from
the indemnifying party to the Indemnified Person of its election to
assume the defense of such Proceeding and an acknowledgment
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of its indemnification obligation with respect thereto, the
indemnifying party will not, as long as it diligently conducts such
defense, be liable to the Indemnified Person under this Section 12 for
any fees of other counsel or any other expenses with respect to the
defense of such Proceeding, in each case subsequently incurred by the
Indemnified Person in connection with the defense of such Proceeding,
other than reasonable costs of investigation. If the indemnifying party
assumes the defense of a Proceeding in accordance with the preceding
sentence, (i) no compromise or settlement of such claims may be
effected by the indemnifying party without the Indemnified Person's
consent (which consent shall not be unreasonably withheld) unless (A)
there is no finding or admission of any violation of Legal Requirements
or any violation of the rights of any Person and no effect on any other
claims that may be made against the Indemnified Person, and (B) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party and (ii) the Indemnified Person will have no
liability with respect to any compromise or settlement of such claims
effected without its consent (which consent shall not be unreasonably
withheld). If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not,
within 20 days after the Indemnified Person's notice is given, give
notice to the Indemnified Person of its election to assume the defense
of such Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or settlement
reasonably effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a
result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may, by
notice to the indemnifying party, assume the exclusive right to defend,
compromise, or settle such Proceeding, but the indemnifying party will
not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
(d) To the extent that Holdings or the Company is entitled to
indemnification from the Suiza Parent or the ▇▇▇▇ Parent pursuant to
this Section 12, Holdings or the Company may offset such claim against
distributions otherwise payable to such indemnifying party under the
Holdings LLC Agreement.
12.8 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
12.9 MITIGATION. Upon and after becoming aware of any event that could
reasonably be expected to give rise to any Damages that are indemnifiable under
this Section 12, the Indemnified Party shall make reasonable efforts to mitigate
such Damages.
12.10 EXCLUSIVE REMEDY. The parties acknowledge and agree that, upon
and following the Closing, the indemnification rights provided in this Section
12 shall be the sole and exclusive
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remedy available to the parties for any claim or cause of action arising out of
or in respect of any breach of this Agreement or any other matter indemnifiable
hereunder.
12.11 PAYMENTS IN PREFERRED UNITS.
(a) If Damages arise, directly or indirectly, from or in
connection with anything described in paragraphs (a) through (d) of
Section 12.2 or in Section 12.5(b), the ▇▇▇▇ Parent shall have the
option to pay the Damages of Suiza's Indemnified Persons in cash;
provided that such option must be exercised in connection with a breach
of Section 3.3, 3.13(a), 3.19 or the indemnity provided in Section
12.5(b) and to the extent that the ▇▇▇▇ Parent, Vestar or their
controlled Affiliates are entitled to and receive cash indemnification
payments for Damages from an unaffiliated third party, which the ▇▇▇▇
Parent, Vestar or their controlled Affiliates (as the case may be)
shall use commercially reasonable efforts to collect. To the extent
such option is not exercised, Holdings shall reimburse Suiza's
Indemnified Persons in cash for all of their cash out-of-pocket Damages
and shall issue to the Suiza Parent Preferred Units having an aggregate
liquidation preference equal to (A) the aggregate amount of all Damages
referred to in the first sentence of this Section 12.11(a) multiplied
by (B) the quotient of the percentage of Member Units owned by the
Suiza Parent divided by the percentage of Member Units owned by the
▇▇▇▇ Parent and Vestar, collectively (rounded to the nearest $1,000).
The Suiza Parent will be entitled to indemnification under this Section
12.11(a) with respect to payments made under paragraph (a) of Section
12.2 or with respect to any Damages suffered by Holdings or the Company
itself arising, directly or indirectly, from or in connection with
anything described in paragraph (a) of Section 12.2 only to the extent
and in the amount that, at any point in time and on a cumulative basis,
the aggregate amount of the Damages to the Suiza Parent exceeds $5
million; provided, however, that such limitations shall not apply to
Damages arising from or in connection with a breach or alleged breach
of the representations and warranties of the ▇▇▇▇ Parties set forth in
Section 3.3, 3.8, 3.13(a) or 3.19 or the indemnity provided in Section
12.5(b).
(b) If Damages arise, directly or indirectly, from or in
connection with anything described in paragraphs (a) through (d) of
Section 12.3 or in Section 12.5(a), the Suiza Parent shall have the
option to pay the Damages of ▇▇▇▇'▇ Indemnified Persons in cash;
provided that such option must be exercised in connection with a breach
of Section 4.3, 4.13(a), 4.13A, 4.19, 4.23, 8.2(a), 8.2A or the
indemnity provided in Section 12.5(a) and to the extent that Suiza
Foods or its controlled Affiliates are entitled to and receive cash
indemnification payments for Damages from an unaffiliated third party,
which Suiza Foods or its controlled Affiliates (as the case may be)
shall use commercially reasonable efforts to collect. To the extent
such option is not exercised, Holdings shall reimburse ▇▇▇▇'▇
Indemnified Persons in cash for all of their cash out-of-pocket Damages
and shall issue to the ▇▇▇▇ Parent and Vestar Preferred Units having an
aggregate liquidation preference equal to (A) the aggregate amount of
all Damages referred to in the first sentence of this Section 12.11(b)
multiplied by (B) the quotient of the percentage of Member Units owned
by the ▇▇▇▇ Parent and Vestar, collectively, divided by the percentage
of Member Units owned by the Suiza Parent (rounded to the nearest
$1,000). Any Preferred Units distributed to the ▇▇▇▇ Parent and Vestar
shall be distributed pro rata
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to each of them in accordance with their relative percentage of Member
Units held by them at such time. The ▇▇▇▇ Parent and Vestar will be
entitled to indemnification under this Section 12.11(b) with respect to
payments made under paragraph (a) of Section 12.3 or with respect to
any Damages suffered by Holdings or the Company itself arising,
directly or indirectly, from or in connection with anything described
in paragraph (a) of Section 12.3 only to the extent and in the amount
that, at any point in time and on a cumulative basis, the aggregate
amount of the Damages to the ▇▇▇▇ Parent and Vestar exceeds $5 million;
provided, however, that such limitations shall not apply to Damages
arising from or in connection with a breach or alleged breach of the
representations and warranties of the Suiza Parties set forth in
Sections 4.3, 4.8, 4.13(a), 4.13A, 4.19, 4.23, 8.2(a), 8.2A or the
indemnity provided in Section 12.5(a).
(c) The parties to this Agreement agree to cause Holdings to
issue the Preferred Units that are required to be issued pursuant to
this Section 12.11.
SECTION 13
POST CLOSING COVENANTS
13.1 NONDISCLOSURE.
(a) The ▇▇▇▇ Parties and the Suiza Parties acknowledge and
agree that all customer, prospect and marketing lists, sales data,
intellectual property, proprietary information, trade secrets and other
confidential information of the ▇▇▇▇ Companies (collectively, "▇▇▇▇
CONFIDENTIAL INFORMATION") are valuable assets of the ▇▇▇▇ Companies
and will be owned exclusively by the Company following the Closing. The
Suiza Parties agree to, and agree to cause their respective
Representatives to, treat the ▇▇▇▇ Confidential Information as
confidential and not to disclose such information or make use of such
information for their own purposes or for the benefit of any other
Person (other than the Suiza Companies or, after the Closing, Holdings,
the Company and its subsidiaries). The foregoing confidentiality
obligations will not apply to information that (a) is at the time of
receipt or thereafter becomes publicly known through no wrongful act of
any Suiza Party, (b) is received from a third party not under an
obligation to keep such information confidential and without breach of
this Agreement or (c) is required to be disclosed pursuant to any
Proceedings or an Order.
(b) The Suiza Parties and the ▇▇▇▇ Parties acknowledge and
agree that all customer, prospect and marketing lists, sales data,
intellectual property, proprietary information, trade secrets and other
confidential information of the Suiza Companies (collectively, "SUIZA
CONFIDENTIAL Information") are valuable assets of the Suiza Companies
and will be owned exclusively by the Company following the Closing. The
▇▇▇▇ Parties agree to, and agree to cause their respective
Representatives to, treat the Suiza Confidential Information as
confidential and not to disclose such information or make use of such
information for their own purposes or for the benefit of any other
Person (other than the ▇▇▇▇ Companies or, after the Closing, Holdings,
the Company and its subsidiaries). The foregoing confidentiality
obligations will not apply to information
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that (a) is at the time of receipt or thereafter becomes publicly known
through no wrongful act of any ▇▇▇▇ Party, (b) is received from a third
party not under an obligation to keep such information confidential and
without breach of this Agreement or (c) is required to be disclosed
pursuant to any Proceedings or an Order.
13.2 RECORDS RETENTION. Suiza Foods, the Suiza Parent, the ▇▇▇▇ Parent,
Holdings, the Company and its subsidiaries agree that so long as any books,
records and files, including Tax Records (as defined below) relating to the
Suiza Companies, the ▇▇▇▇ Companies, Holdings, the Company or any of its
subsidiaries that are retained by the Suiza Parent relating to Holdings, the
Company or any subsidiary, or Business Records of the ▇▇▇▇ Companies that are
delivered to the control of Holdings, the Company or its subsidiaries pursuant
to this Agreement, or Business Records of the Suiza Companies that are delivered
to the control of Holdings, the Company or its subsidiaries pursuant to this
Agreement (collectively, "BUSINESS RECORDS"), remain in existence and available,
each of the parties hereto (at its expense) shall have the right upon prior
notice to inspect and make copies of the same at any time during business hours
for any proper purpose. Each party hereto shall undertake reasonable measures
(a) to preserve in good order to the extent required by law the Business Records
relating to the Suiza Companies, the ▇▇▇▇ Companies, Holdings and the Company,
(b) not destroy or allow the destruction of any such Business Records without
first offering in writing to deliver them to the other party, (c) retain to the
extent required by law and provide the other parties with any records or other
information relating to liability for Taxes, and (d) provide the other parties
with any final determination of any such amount required to be shown on any Tax
Return of the other parties for any period. Without limiting the generality of
the foregoing, each of the parties hereto shall retain until the expiration of
the applicable statutory period of limitations (including any extensions),
complete copies of all returns, supporting work schedules and other records or
information (collectively, "TAX RECORDS"), delivered to such party, or retained
by such party, pursuant to this Agreement, which are relevant to such Tax Return
for all tax periods or portions thereof ending before or including the Closing
Date.
13.3 ALLOCATION OF PURCHASE PRICE. The parties will agree on the
allocation of value among the assets of the ▇▇▇▇ Companies and the Suiza
Companies as necessary or desirable.
13.4 RELEASE OF ENCUMBRANCES. Immediately following the Closing,
Holdings and the Company will cause any Encumbrances, other than Permitted
Encumbrances, on the Company's assets or the assets of any subsidiary of the
Company, securing any of the ▇▇▇▇ Indebtedness and Suiza Indebtedness to be
released.
13.5 PAYMENT OF TAXES. Holdings and the Company shall, jointly and
severally, pay the amount of any Taxes of any ▇▇▇▇ Company with respect to any
Tax period beginning after December 31, 1998 and with respect to any Tax of the
▇▇▇▇ Parent for any Tax period, or portion thereof, ending on or prior to the
Closing Date; provided, that, any state income tax resulting from the
transactions contemplated pursuant to this Agreement (other than a transfer tax
measured on a basis of income) shall be considered an indemnifiable Damage
subject to the provisions of Section 12.11(a). Holdings and the Company shall,
jointly and severally, pay (i) the amount of any Taxes of any PCI Company with
respect to any Tax period beginning after December 31, 1998, (ii) the amount of
any state taxes measured by income (whether or not
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denominated as income taxes), if any, with respect to a tax period, or portion
thereof, beginning after June 30, 1999 and prior to the Closing Date, of any
Franklin Company; provided that, for purposes of calculating the state taxes,
Suiza Foods will use commercially reasonable efforts to cause amortization
deductions to be claimed as a deduction on the tax return, and (iii) the amount
of any transfer taxes incurred by any Franklin Company as a result of the
Contemplated Transactions (provided, that with respect to (i), (ii) and (iii) no
payment shall be made for income taxes as a result of the transactions
contemplated pursuant to this Agreement), provided, that, for purposes of the
calculation of any Taxes of any Suiza Company, any losses, credits or deductions
including any net operating loss carryovers of the Suiza Companies shall be
deemed to offset income other than as a result of the Contemplated Transactions.
This Section 13.5 is intended to provide a mechanism for the cash payment of any
such Taxes, and is not intended to relieve any party from its economic
responsibility to other parties for indemnification against such Taxes, as is
provided for in Sections 12.2 and 12.3 of this Agreement. The covenant for
payment under this Section 13.5 shall not be limited or reduced under any
section of this Agreement.
13.6 EMPLOYEE BENEFITS. Immediately following the Closing, Holdings and
the Company and its subsidiaries will provide health and welfare benefits to
their employees. To the extent permitted by applicable tax-qualification
requirements, employees who are participants in the Suiza Foods 401(k) Plan as
of the Effective Time and who are employees of the Company or its subsidiaries
immediately after the Effective Time ("TRANSFERRED EMPLOYEES") shall be offered
the option of distribution of their Suiza Foods 401(k) Plan accounts, and any
non-vested amounts in such accounts shall be fully vested (regardless of whether
they elect a distribution). The Company or its subsidiaries shall provide the
Transferred Employees the opportunity to participate in a 401(k) plan as soon as
practicable after the Effective Time, which plan shall provide credit for
vesting and eligibility purposes for service previously credited under the Suiza
Foods 401(k) Plan, and shall, to the extent permitted by applicable tax
qualification requirements, permit direct rollovers from the Suiza Foods 401(k)
Plan, including rollovers of any outstanding plan loans.
SECTION 14
GENERAL PROVISIONS
14.1 EXPENSES.
(a) For investment banking services rendered in connection
with the Contemplated Transactions, Holdings and the Company have
entered into and will perform their obligations under the VCP
Management Agreement.
(b) If this Agreement is not terminated pursuant to Section
11, and the Closing occurs, then:
(i) except as otherwise expressly provided in this
Agreement, Holdings and the Company, jointly and severally,
will bear all fees and expenses incurred by any ▇▇▇▇ Party
(the "▇▇▇▇ Expenses") and all fees and expenses (other
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than the fees and expenses referred to in Section 4.19)
incurred by any Suiza Party (the "Suiza Expenses") in
connection with the preparation, execution, and performance of
this Agreement and the Contemplated Transactions, including
all fees and expenses of each of their Representatives; and
(ii) prior to the Closing, the ▇▇▇▇ Parent and the
Suiza Parent will agree on a good faith estimate of the ▇▇▇▇
Expenses and the Suiza Expenses, and Holdings and the Company,
jointly and severally, will reimburse the ▇▇▇▇ Companies for
such estimated ▇▇▇▇ Expenses and the Suiza Companies for such
estimated Suiza Expenses immediately after the Closing. Within
60 days after the Closing, the ▇▇▇▇ Parent and the Suiza
Parent will agree on the actual ▇▇▇▇ Expenses and the actual
Suiza Expenses and make any payments that may be necessary to
reconcile any difference between the estimated and actual
amounts; and
(iii) Suiza Foods will bear all reasonable fees and
expenses incurred by ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ for legal
representation in connection with this Agreement and the
Contemplated Transactions.
(c) If this Agreement is terminated pursuant to Section 11,
then:
(i) except as otherwise expressly provided in this
Agreement, the ▇▇▇▇ Parent will bear all ▇▇▇▇ Expenses; and
(ii) except as otherwise expressly provided in this
Agreement, the Suiza Parent will bear all Suiza Expenses.
14.2 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the
Suiza Parent and the ▇▇▇▇ Parent agree to consult with each other in issuing any
press release or otherwise making any public statement with respect to the
transactions contemplated by this Agreement, and none of the parties to this
Agreement will issue any press release or make any public statement prior to
such consultation, except as may be required by Legal Requirements.
14.3 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), or (c) when received
by the addressee, if sent by a nationally recognized overnight delivery service,
in each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
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If to any ▇▇▇▇ Party: with a copy to:
▇▇▇▇ Plastics Holdings, Inc. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Vestar Packaging LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Suiza Party: with a copy to:
Suiza Foods Corporation ▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Suite 2800
Attention: President and General Counsel ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
14.4 ATTORNEY'S FEES AND COSTS. In the event of a breach by any party
to this Agreement and commencement of a subsequent legal action in a court of
law or forum of arbitration, or in the event legal counsel is consulted in the
event of any such breach or in anticipation of any such prospective legal
action, the prevailing party in any such dispute shall be entitled to
reimbursement of reasonable attorney's fees and expenses.
14.5 FURTHER ASSURANCES. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
14.6 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in a writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party
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or of the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
14.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter, except as expressly agreed in any writing dated
as of the date of this Agreement or in a later writing which expressly refers to
this Agreement. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
14.8 ASSIGNMENTS, SUCCESSORS AND NO THIRD PARTY RIGHTS. No party may
assign any of its rights under this Agreement or its Interests without the prior
consent of the other parties. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
14.9 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
14.10 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
14.11 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
14.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE
OF DELAWARE APPLICABLE TO CONTRACTS ENTERED INTO AND TO BE PERFORMED IN THE
STATE OF DELAWARE.
14.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
SUIZA FOODS CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
PLASTIC CONTAINERS, INC., a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
CONTINENTAL PLASTIC CONTAINERS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
FRANKLIN PLASTICS, INC., a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ALLENTOWN PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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77
ATLANTA CONTAINER, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
▇▇▇▇▇▇▇ COUNTY CONTAINER CORP.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
FIRST CAPITAL PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
FLORIDA PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ILLINOIS PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
KENTWOOD PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
LIQUITAINE ACQUISITION CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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78
MAINE PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
MARLBOROUGH PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
MIDDLESEX PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
NEW JERSEY PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
NORTH CAROLINA PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
OHIO STATE PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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FRANKLIN PLASTICS, INC., a Massachusetts corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
RICHMOND CONTAINER, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
▇▇▇▇▇▇ ACQUISITION CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
▇▇▇▇▇▇▇ PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
VANGUARD MANUFACTURING, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
CONSOLIDATED PLASTECHS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
VESTAR PACKAGING LLC
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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▇▇▇▇ PLASTICS HOLDINGS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
▇▇▇▇ PLASTICS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
S-W REALTY CO.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
▇▇▇▇ INTERMEDIATE, INC.
By:
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Name:
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Title:
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PLASTIC CONTAINERS, INC., an Alabama corporation
By:
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Name:
--------------------------------
Title:
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▇▇▇▇ PLASTICS WEST, INC.
By:
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Name:
--------------------------------
Title:
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PROPAK INDUSTRIAL, INC.
By:
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Name:
--------------------------------
Title:
-------------------------------
74
81
JUICE TREE, INC.
By:
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Name:
--------------------------------
Title:
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CONSOLIDATED CONTAINER HOLDINGS LLC
By: Franklin Plastics, Inc.,
its Manager
By:
----------------------------------
Name:
--------------------------------
Title:
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CONSOLIDATED CONTAINER COMPANY LLC
By: Consolidated Container Holdings LLC,
its Manager
By: Franklin Plastics, Inc.,
its Manager
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
▇▇▇▇ PLASTICS GROUP LLC
By: Consolidated Container Company LLC,
its Manager
By: Consolidated Container Holdings LLC,
its Manager
By: Franklin Plastics, Inc., its Manager
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
75
82
EXHIBIT E
Legal opinions of counsel to the Suiza Parties will be delivered with respect to
the matters referred to in:
1. The first sentence of Section 4.1(a);
2. Section 4.2(b);
3. to the knowledge of such counsel, Section 4.2(c);
4. to the knowledge of such counsel, Section 4.2(d);
5. the first sentence of Section 6.1(a);
6. Section 6.2(b);
7. to the knowledge of such counsel, Section 6.2(c); and
8. that Holdings LLC, Franklin, or Holdings LLC and Franklin between them
should be entitled to a current federal income tax deduction for the amount
of any bond tender premium paid in connection with a tender offer for the
PCI Notes in accordance with Section 8.10.
F-1