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EXHIBIT 2
STOCK AND MEMBERSHIP INTEREST PURCHASE AGREEMENT
DATED AS OF OCTOBER 30, 2000
BY AND AMONG
THE STOCKHOLDERS OF REDI-CUT FOODS, INC.,
THE MEMBERS OF KANSAS CITY SALAD, L.L.C.,
THE MEMBERS OF K.C. SALAD REAL ESTATE, L.L.C.,
K.C. SALAD HOLDINGS, INC.
AND
PERFORMANCE FOOD GROUP COMPANY,
AS PURCHASER
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STOCK AND MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of October 30, 2000, among the
stockholders (individually a "Stockholder" and collectively the "Stockholders")
of Redi-Cut Foods, Inc., an Illinois corporation ("Redi-Cut"), the members (the
"KC Salad Members") of Kansas City Salad, L.L.C., an Illinois limited liability
company ("KC Salad"), the members (the "KC Real Estate Members") of K.C. Salad
Real Estate, L.L.C., a Delaware limited liability company ("KC Real Estate"),
Performance Food Group Company, a Tennessee corporation ("Purchaser") and K.C.
Salad Holdings, Inc., a Missouri corporation ("Acquisition Sub"). The KC Salad
Members and the KC Real Estate Members are individually referred to herein as a
"Member" and collectively the "Members". Redi-Cut, KC Salad and KC Real Estate
are referred to herein collectively as the "Company".
R E C I T A L S
A. The Stockholders own all of the issued and outstanding capital stock
of Redi-Cut consisting of shares of Class A Common Stock, no par value per share
(the "Class A Shares"), and Class B Common Stock, no par value per share (the
"Class B Shares"), of Redi-Cut (the Class A Shares and Class B Shares are
collectively referred to as the "Shares") in the amounts set forth on EXHIBIT A
attached hereto. The KC Salad Members own all of the membership interests of KC
Salad (the "KC Salad Membership Interests") in the amounts set forth on EXHIBIT
B attached hereto. The KC Real Estate Members own all the membership interests
of KC Real Estate in the amounts set for on EXHIBIT C attached hereto (the "KC
Real Estate Membership Interests"). The KC Salad Membership Interests and the KC
Real Estate Membership Interests are collectively referred to herein as the
"Membership Interests."
B. Redi-Cut and KC Salad are engaged in the business of processing,
marketing, distributing and selling fresh-cut produce (the "Business"). KC Real
Estate owns real estate and equipment used by KC Salad in the Business.
C. Purchaser desires to acquire the Shares of Redi-Cut and the
Acquisition Sub desires to acquire Membership Interests of KC Salad and KC Real
Estate; and the Stockholders desire to have Purchaser acquire the Shares and the
Members desire to have Acquisition Sub acquire the Membership Interests, on the
terms and subject to the conditions herein contained (the "Acquisition").
A G R E E M E N T S
Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
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ARTICLE I
Purchase and Sale of Shares and Membership Interests
1.1 Transfer of Shares and Membership Interests. On the terms and
subject to the conditions set forth in this Agreement, at the Closing (as
defined herein), the Stockholders and Members agree to sell, transfer and convey
to Purchaser and Acquisition Sub, and Purchaser and Acquisition Sub agree to
purchase and acquire from the Stockholders and Members, free and clear of all
liens, claims, charges, restrictions, security interests, equities, proxies,
pledges, voting trusts, voting agreements or encumbrances of any kind ("Claims")
the Shares and Membership Interests, which constitute all the issued and
outstanding shares of capital stock and membership interests of the Company. The
aggregate purchase price for the Shares and Membership Interests shall equal the
Consideration (as defined herein). The Consideration shall be allocated among
the Stockholders and Members in accordance with SCHEDULE 1.1.
1.2 Consideration.
(A) The "Consideration" means (i) $132,500,000 (of which $125
million relates to the Shares and $7.5 million relates to the KC
Salad Membership Interests), plus (ii) one-half the amount of the
Net Book Value (but in no event to exceed $600,000), plus (iii) the
Net Working Capital Adjustment (which may be a negative number), plus
(iv) the amount of Cash and Cash Equivalents, minus (v) the amount
of Funded Debt (capitalized terms are defined below).
(B) The "Net Book Value" means the amount by which the
aggregate book value of KC Real Estate's assets, plus the book value
of KC Equipment exceeds the aggregate book amount of the liabilities
of KC Real Estate, all determined in accordance with SCHEDULE 1.2(B).
(C) The "Net Working Capital Adjustment" means the amount of
Net Working Capital as of the close of business on the day
immediately preceding the Closing Date minus $1,463,230.00.
(D) "Net Working Capital" means, as of any date:
(i) (A) accounts and notes receivable (net of allowances
for doubtful accounts) but excluding intercompany
receivables plus (B) inventories plus (C) prepaid
expenses plus (D) prepaid insurance plus (E)
deposits,
minus
(ii) (A) trade accounts and notes payable plus (B)
employee payroll deductions plus (C) accrued payroll
taxes plus (D) accrued expenses plus (E) accrued
Illinois Personal Property Tax Replacement Income
Tax,
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in each case, of Redi-Cut and KC Salad, as of such date, determined on
a combined basis, in accordance with the Company's accounting
practices, applied on a basis consistent with the preparation of (i)
the audited financial statements as of and for the year ended December
31, 1999, in the case of Redi-Cut and (ii) the unaudited financial
statements as of and for the year ended December 31, 1999, in the case
of KC Salad, both of which are included in the Disclosure Schedule (as
herein defined); provided, however that there shall be no accrual for
bonuses, obligations under the Company's profit sharing plan or accrued
vacation pay. Notwithstanding the foregoing, "Net Working Capital"
shall not include any Cash and Cash Equivalents, property, plant and
equipment, intangible assets, deferred compensation liability, vacation
accrual or expense, debt issuance cost, Funded Debt or prepaid
commissions associated with the McDonald's obligation which appears on
the Financial Statements as prepaid expenses.
(E) "Cash and Cash Equivalents" means the sum (expressed in
United States dollars) of all cash and marketable securities
(including the cash surrender value of the insurance policies set forth
on SCHEDULE 1.2(E) and including any amounts owed to the Company by
any of the Members or Stockholders which would be assets of the
Company under U.S. generally accepted accounting principles ("GAAP"),
consistently applied, as of the close of business on the day
immediately preceding the Closing Date.
(F) "Funded Debt" means, without duplication, the outstanding
principal amount of, accrued and unpaid interest on and other payment
obligations (including any prepayment premiums payable as a result
of the consummation of the Acquisition) arising under any obligations
of the Company consisting of indebtedness for borrowed money to
financial institutions (other than any operating leases but including
lease obligations that are treated as liabilities on the balance
sheet in accordance with GAAP), guarantees by the Company of
indebtedness or obligations of persons and entities other than the
Company immediately prior to the Closing (other than the guarantee by
Redi-Cut of the obligations related to the issuance of the Tax-Exempt
Multi-Modal Industrial Development Revenue Bonds for K.C. Salad Real
Estate, L.L.C. (the "KC Real Estate Guaranty") and any guarantee by
the Company that would otherwise constitute Funded Debt and that
relates to the guarantee of obligations that will be discharged at
or prior to Closing) and the note payable to a former shareholder of
the Company, including the obligations set forth in SCHEDULE 1.2(F)
attached hereto.
(G) "KC Equipment" means that equipment used in the operation
of the business conducted by KC Salad which is not owned by and
reflected on the books of KC Real Estate and is set forth on SCHEDULE
2.3(FF).
1.3 Manner of Payment of the Consideration; Delivery of Shares.
(A) For purposes of the Closing, the Stockholders'
Representative (as herein defined) shall make a good-faith estimate
of the Consideration (the "Estimated Consideration"), based upon the
most recent financial information available as of the date of such
estimate. At the Closing, the Purchaser shall pay the Estimated
Consideration as follows:
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(i) the Purchaser shall deliver to First Union National
Bank, as escrow agent (the "Escrow Agent") that number
of shares of common stock, par value $.01 per share, of
the Purchaser (the "Purchaser's Common Stock") that
shall equal $10,000,000 (based on the average of the
closing price for the Purchaser's Common Stock on the
NASDAQ (or if not traded on the NASDAQ, such exchange
that the stock is traded on) for the ten (10)
consecutive trading days ending five (5) days prior to
the Closing Date) (the "Escrow") as a deposit into
escrow pursuant to an Escrow Agreement to be dated as of
the Closing Date among the Stockholders, Members,
Purchaser and the Escrow Agent, in the form set forth as
EXHIBIT D attached hereto (the "Escrow Agreement"), to
secure the Stockholders' and Members' obligations under
Article VII of this Agreement;
(ii) the Purchaser and Acquisition Sub shall deliver to the
Stockholders and the Members that number of shares of
Purchaser's Common Stock that shall equal $12,500,000
(based on the average of the closing price for the
Purchaser's Common Stock on the NASDAQ (or if not traded
on the NASDAQ, such exchange that the stock is traded
on) for the ten (10) consecutive trading days ending
five (5) days prior to the Closing Date), such shares to
be allocated among the Stockholders and Members in
accordance with SCHEDULE 1.1; provided, however, if
Purchaser finances the Acquisition with proceeds from an
offering of its common stock, and the Stockholders and
Members are required to execute lockup agreements in
connection with such offering, the portion of the
Consideration paid pursuant to this subsection (ii) in
shares of Purchaser's Common Stock shall be reduced to
$7,500,000 (the "Stock Consideration"); and
(iii) the Purchaser and Acquisition Sub shall pay to the
Stockholders and Members the Estimated Consideration
less the Stock Consideration by wire transfer of
immediately available funds to the account or accounts
designated prior to Closing in a written notice from the
Stockholders' Representative to Purchaser. The Estimated
Consideration less the Stock Consideration shall be
allocated among the Stockholders and Members in
accordance SCHEDULE 1.1.
(B) In the event that the Closing occurs after January 2,
2001, Purchaser shall pay the Stockholders and Members, as
additional Consideration, an amount equal to the following:
$132,500,000 x .07 x N
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where N equals the number of days between January 2, 2001 and the
Closing Date.
(C) At the Closing, each Stockholder shall deliver to
Purchaser the certificate or certificates representing the Shares,
duly endorsed or accompanied by a duly executed stock power
transferring such Shares to Purchaser, and each Member shall deliver
to Acquisition Sub such documents as may be reasonably requested by
Purchaser reflecting the transfer of the Membership Interests to
Acquisition Sub.
(D) At the Closing, the Company shall pay to the holders of
the Funded Debt the amount of the Funded Debt by wire transfer of
immediately available funds in accordance with the Payoff Letters (as
defined herein).
(E) Following the Closing, the parties shall determine the
final Consideration, taking into account the adjustments required
pursuant to Section 1.2 and employing the procedures and criteria set
forth in Section 1.4. If, based on the Consideration, as finally
determined:
(i) the Consideration exceeds the Estimated
Consideration, Purchaser and Acquisition Sub shall
forthwith (but in any event within five (5)
business days following the final determination of
the Consideration in accordance with Sections 1.2
and 1.4), pay the excess to the Stockholders and
Members by wire transfer of immediately available
funds; or
(ii) the Estimated Consideration exceeds the
Consideration, the Stockholders and Members shall
forthwith (but in any event within five (5)
business days following the final determination of
the Consideration in accordance with Sections 1.2
and 1.4), pay the excess to the Purchaser by wire
transfer of immediately available funds;
in either case together with interest on such excess from the Closing
Date until the date of payment in full, at the rate of eight and
one-half percent (8.5%) per annum (based on a year consisting of 365
days) to such account or accounts as shall be designated by the persons
or entities entitled to payment.
1.4 Determination of Net Working Capital and Cash and Cash Equivalents.
(A) In order to determine the Consideration, the Stockholders'
Representative shall determine Net Working Capital, Cash and Cash
Equivalents and the Net Book Value. The Net Working Capital shall be
determined from a statement of assets and liabilities of Redi-Cut and
KC Salad as of the close of business on the day immediately preceding
the Closing Date (the "Statement of Working Capital"). The Statement
of Working Capital shall be prepared by or at the direction of the
Stockholders' Representative and shall reflect only the assets and
liabilities of Redi-Cut and KC Salad
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constituting the Net Working Capital. The Net Book Value shall be
determined from a statement of assets and liabilities of KC Real
Estate as of the close of business on the day immediately preceding
the Closing Date and shall include the book value of the KC Equipment
as reflected on the books of Redi-Cut or KC Salad as of such time
(the "Closing Balance Sheet"). The Stockholders' Representative
shall use reasonable efforts to cause the Statement of Working Capital
and the Closing Balance Sheet and its determination of Net Working
Capital, Net Book Value and Cash and Cash Equivalents to be delivered
to Purchaser within ninety (90) days following the Closing Date.
(B) The Statement of Working Capital and the Closing Balance
Sheet, as prepared by the Stockholders' Representative, and its
determination of Net Working Capital, Net Book Value and Cash and
Cash Equivalents shall be conclusive and binding upon the parties
hereto unless Purchaser shall deliver written notice of a dispute that
the Statement of Working Capital or the Closing Balance Sheet or the
Stockholders' Representative's determination of Net Working Capital,
Net Book Value or Cash and Cash Equivalents is not prepared in
accordance with the requirements of this Article I (a "Dispute
Notice"), such Dispute Notice to be delivered to the Stockholders'
Representative within thirty (30) days (the "Dispute Period") following
receipt by Purchaser of the Statement of Working Capital and the
Closing Balance Sheet, and the Stockholders' Representative's
determination of Net Working Capital, Net Book Value and Cash and
Cash Equivalents. The Dispute Notice shall set forth, in reasonable
detail, the items and amounts with which Purchaser disagrees, and
Purchaser and the Stockholders' Representative shall, within thirty
(30) days following receipt by the Stockholders' Representative of
such Dispute Notice, attempt to resolve such dispute and agree in
writing upon the final content of the Statement of Working Capital
and/or the Closing Balance Sheet and the final determination of Cash
and Cash Equivalents, Net Book Value and Net Working Capital.
(C) If the Stockholders' Representative and Purchaser are
unable to resolve any such dispute within the thirty (30) day period
following Purchaser's delivery of a Dispute Notice, the Chicago office
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (the "Arbitrating Accountant") shall be
engaged as arbitrator hereunder to settle such dispute as soon as
practicable. In connection with the resolution of any such dispute,
the Arbitrating Accountant shall have access to all documents,
records, work papers, facilities and personnel necessary to perform
its function as arbitrator. The Arbitrating Accountant's function
shall be to review only those items which are in dispute and to resolve
the dispute with respect to such items. The Arbitrating Accountant's
award with respect to any such dispute shall be final and binding
upon the parties hereto, and judgment may be entered on the award. The
fees and expenses of the Arbitrating Accountant shall be allocated
between the Stockholders and Members, on the one hand, and Purchaser,
on the other hand, so that the amount of fees and expenses paid by
Purchaser shall be equal to the product of (x) and (y), where (x) is
the aggregate amount of such fees and expenses, and where (y) is a
fraction, the numerator of which is the amount in dispute that is
ultimately unsuccessfully disputed by Purchaser (as determined by the
Arbitrating Accountant), and the denominator of which is the total
value in dispute. Upon the resolution of such dispute, (1) the
Statement of Working Capital and/or the Closing
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Balance Sheet shall be revised to reflect such resolution, (2) any
adjustment to the Consideration and additional payments resulting
from such adjustment shall be made in accordance with Section 1.3(E)
and (3) concurrent with the resolution of such dispute and the
making of the required payments, if any, the Stockholders'
Representative, on behalf of the Stockholders and Members, and
Purchaser shall execute a mutual release, in form and substance
satisfactory to each of them, relating only to the resolution of such
dispute.
(D) Purchaser and Acquisition Sub shall (at no charge to the
Stockholders' Representative) make available to the Stockholders'
Representative and its accountants and other representatives, such
information, books, records, and personnel of the Company and to
provide such assistance as the Stockholders' Representative shall
reasonably request at any time during (A) the preparation by the
Stockholders' Representative of the Statement of Working Capital and
Closing Balance Sheet and (B) the resolution of any dispute relating
thereto.
1.5 Time and Place of Closing. The transaction contemplated by this
Agreement shall be consummated (the "Closing") at 10:00 a.m., at the offices of
Altheimer & ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on December 15,
2000, or at such other time or place, as shall be mutually agreed upon by the
Stockholders' Representative and Purchaser; provided, however, that the date of
the Closing shall be automatically extended from time to time for so long as any
of the conditions set forth in Sections 4.1 and 4.2 hereof shall not be
satisfied or waived, subject, however, to the provisions of Section 8.2;
provided further, however, that Purchaser may elect, on two (2) days prior
notice, to extend the date of Closing to a date later than December 15, 2000,
provided that such date shall not extend beyond January 31, 2001. The date on
which the Closing occurs in accordance with the preceding sentence is referred
to in this Agreement as the "Closing Date."
1.6 Purchaser's Guarantee. Purchaser guarantees performance by
Acquisition Sub of its obligations hereunder.
ARTICLE II
Representations and Warranties
2.1 General Statement. The parties make only the representations and
warranties which are set forth in this Article II. All representations and
warranties of the Stockholders and Members are made subject to the exceptions
noted in the schedule delivered by the Stockholders and Members to Purchaser
concurrently herewith and identified by the parties as the "Disclosure
Schedule." Any disclosure set forth on any particular schedule of the Disclosure
Schedule shall be deemed disclosure in reference to all schedules comprising the
Disclosure Schedule to which such disclosure is clearly applicable based solely
upon such disclosure.
2.2 Representations and Warranties of Purchaser and Acquisition Sub.
Purchaser and Acquisition Sub jointly and severally represent and warrant to the
Stockholders and Members as follows:
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(A) Corporate. Purchaser is a corporation duly organized,
validly existing and in good standing, under the laws of the State
of Tennessee. Acquisition Sub is a corporation duly organized,
validly existing and in good standing, under the laws of the State
of Missouri.
(B) Power and Authority. Purchaser and Acquisition Sub each
has full corporate power and authority to enter into and perform this
Agreement and all other documents and agreements to which it is a
party to be executed or delivered by Purchaser or Acquisition Sub
pursuant to this Agreement (collectively, the "Purchaser Ancillary
Documents"). The execution and delivery of this Agreement and Purchaser
Ancillary Documents by Purchaser and Acquisition Sub and the
performance by them of all of their obligations under this Agreement
and Purchaser Ancillary Documents have been duly approved prior to
the date of this Agreement by all corporate action of their respective
boards of directors. The approval of the shareholders of Purchaser for
Purchaser to execute this Agreement or consummate the transactions
contemplated hereby is either not required or has been duly given.
This Agreement and Purchaser Ancillary Documents each have been duly
executed and delivered by Purchaser and Acquisition Sub and constitute
a valid and legally binding obligation of Purchaser and Acquisition
Sub, enforceable against them in accordance with its terms, except
(i) to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally and (ii) that the
availability of equitable remedies, including specific performance,
is subject to the discretion of the court before which any
proceeding thereof may be brought.
(C) Consents. Except for filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended ("HSR Act"), no consent,
authorization, order or approval of, or filing or registration with,
any governmental authority is required for or in connection with the
consummation by Purchaser or Acquisition Sub of the transactions
contemplated hereby.
(D) Conflicts Under Constituent Documents or Laws. Neither the
execution and delivery of this Agreement or Purchaser Ancillary
Documents by Purchaser or Acquisition Sub, nor the consummation by
Purchaser or Acquisition Sub of the transactions contemplated hereby,
will conflict with or result in a breach of any of the terms,
conditions or provisions of Purchaser's or Acquisition Sub's Charter or
by-laws or of any statute or administrative regulation, or of any
order, writ, injunction, judgment or decree of any court or
governmental authority or of any arbitration award to which Purchaser
or Acquisition Sub is a party or by which Purchaser or Acquisition
Sub is bound.
(E) Conflicts Under Contracts. Neither Purchaser nor
Acquisition Sub is a party to, or bound by, any unexpired, undischarged
or unsatisfied material contract, agreement, indenture, mortgage,
debenture, note or other instrument under the terms of which
performance by Purchaser or Acquisition Sub according to the terms of
this Agreement will be a default or an event of acceleration, or
grounds for termination, which default, acceleration or termination
would have a Material Adverse Effect (as
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defined herein) with respect to Purchaser or Acquisition Sub, or
whereby timely performance by Purchaser or Acquisition Sub according
to the terms of this Agreement may be prohibited, prevented or delayed.
(F) Brokers. Neither Purchaser, Acquisition Sub, nor any of
their Affiliates has dealt with any person or entity who is entitled
to a broker's commission, finder's fee, investment banker's fee or
similar payment for arranging the transactions contemplated hereby
or introducing the parties to each other. As used herein, an
"Affiliate" of any person or entity shall mean any other person or
entity which controls such person or entity, which such person or
entity controls, or which is under common control with such person
or entity. For purposes of the preceding sentence, the term "control"
means the power, direct or indirect, to direct or cause the direction
of the management and policies of a person or entity through voting
securities, contract or otherwise.
(G) Acquisition Sub. Acquisition Sub has been organized solely
for the purpose of consummating the transactions contemplated hereby,
has conducted no business or operations of any nature and has incurred
no obligations or liabilities other than those created by or in
connection with this Agreement.
(H) Accredited Investor. Purchaser is an "accredited investor"
within the meaning of Rule 501(a) of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act") and is acquiring the
Shares and Membership Interests for its own account for investment
and with no present intention of distributing or reselling such Shares
and Membership Interests or any part thereof in any transaction which
would constitute a "distribution" within the meaning of the Securities
Act. Purchaser understands that the Shares and Membership Interests
have not been registered under the Securities Act or any state
securities laws and are being transferred to Purchaser, in part, in
reliance on the foregoing representation.
(I) WARN Act. Purchaser has no present plans or intention to
carry out, following the Closing, any plant closing or mass layoff
at any Company facility which would violate the federal Worker
Adjustment and Retraining Notification Act (assuming for purposes of
this subsection that no notice would be given in connection with any
such closing or layoff).
(J) Solvency. After giving effect to the consummation of the
transactions contemplated hereby and the incurrence of any indebtedness
in connection therewith, the Company shall not: (i) be insolvent
either because their respective financial condition is such that the
sum of their respective debts is greater than the fair value of their
respective assets or because the present fair salable value of their
respective assets will be less than the amount required to pay their
respective probable liability on their respective debts (including
any legal liability whether matured or unmatured, liquidated, absolute,
fixed, or contingent with any contingent liability evaluated in light
of all the facts and circumstances existing at the time of such
valuation as the amount that can reasonably be expected to become an
actual or matured liability) as they become absolute and matured; (ii)
have unreasonably small capital with which to continue as a going
concern and will
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not lack sufficient capital for their respective needs and anticipated
needs; or (iii) have incurred or plan to incur debts beyond their
respective ability to pay as they become absolute and matured. For
purposes of the representation and warranty contained in this Section
2.2(J), Purchaser shall be entitled to assume that the representations
and warranties of the Company regarding the Company's liabilities are
true and correct in all respects and that there has been and will be
no material change, in the aggregate of the assets or liabilities of
the Company following the date hereof, except to the extent Purchaser
has knowledge to the contrary.
(K) Equity/Debt Commitments. At the Closing, Purchaser and
Acquisition Sub will have sufficient funds available to consummate
the Acquisition and to pay the Consideration to the Stockholders and
Members, to redeem or otherwise pay all of the Funded Debt, to pay
all Purchaser's and Acquisition Sub's fees and expenses related to the
transactions contemplated by this Agreement and to generally provide
working capital for the operations of the Company following the
Closing. To this end, Purchaser has obtained debt financing commitments
from responsible financial institutions. A complete and accurate copy
of such irrevocable written debt financing commitments (the "Purchaser
Financing Comments") are attached hereto as SCHEDULE 2.2(K).
(L) Knowledge of Misrepresentation. Neither Purchaser nor
Acquisition Sub has knowledge that any representation or warranty of
the Shareholders or Members in this Agreement or in the Disclosure
Schedule is not true and correct in any material respect, and neither
Purchaser nor Acquisition Sub has knowledge of any material errors
in, or material omissions from, the Disclosure Schedule.
2.3 Representations and Warranties of the Stockholders and the Members.
Stockholders and the Members, jointly and severally, represent and warrant to
Purchaser and Acquisition Sub that, except as set forth in the Disclosure
Schedule:
(A) Due Incorporation; Subsidiaries. Redi-Cut is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Illinois. KC Salad is a limited liability company
duly organized, validly existing and in good standing under the laws
of the State of Illinois. KC Real Estate is a limited liability
company duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has full power and authority
to carry on its business as now conducted and possesses all material
governmental and other permits, licenses and other authorizations to
own, lease or operate its assets and properties as now owned, leased
and operated and to carry on its business as now conducted. Neither
Redi-Cut, KC Salad nor KC Real Estate has any subsidiaries or owns,
directly or indirectly, any capital stock or equity interest in
another organization or entity.
(B) Good Standing. The Company is duly licensed or qualified
as a foreign corporation or a foreign limited liability company, as
the case may be, and is in good standing, under the laws of all
jurisdictions where the nature of its business or the nature or
location of its assets require such qualification and where the failure
to so qualify would reasonably be expected to have a Material Adverse
Effect. For the purposes of
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this Agreement, the term "Material Adverse Effect" means a material
adverse effect on the assets, liabilities, financial condition,
operations or the present or future relationships with customers of
the Company, taken as a whole, or Purchaser, as applicable, excluding
therefrom any change or effect (i) resulting from general economic
conditions, relating to the Company's or Purchaser's industry, as
applicable, or (ii) resulting from the public announcement of the
transactions contemplated by the Agreement, or (iii) with respect to
the Company, resulting from or related to actions taken by Purchaser,
Acquisition Sub, or any of their Affiliates or, with respect to
Purchaser, resulting from or related to actions taken by the Company
or any of its Affiliates.
(C) Power and Authority. The Stockholders and the Members have
full power and authority to enter into and perform this Agreement
and all other documents and agreements to which each is a party to
be executed or delivered by the Stockholders or the Members pursuant
to this Agreement (collectively, the "Company Ancillary Documents").
The execution and delivery of this Agreement and the Company Ancillary
Documents by the Stockholders and the Members and the performance of
all of their obligations under this Agreement and the Company Ancillary
Documents have been duly approved prior to the date of this Agreement
by all requisite action of the Stockholders of Redi-Cut and the
Members of KC Salad and KC Real Estate. This Agreement and the Company
Ancillary Documents have been duly executed and delivered by the
Stockholders and Members and constitute a valid and legally binding
obligation of the Stockholders and the Members, enforceable against
them in accordance with its terms, except (i) to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors'
rights generally and (ii) that the availability of equitable remedies,
including specific performance, is subject to the discretion of the
court before which any proceeding thereof may be brought.
(D) Consents. Except for filings under the HSR Act, no
consent, authorization, order or approval of, or filing or registration
with, any governmental authority is required for or in connection with
the consummation by the Stockholders and Members of the transaction
contemplated hereby. All consents, approvals, authorizations or orders
of third parties necessary for the authorization, execution and
performance of this Agreement by the Stockholders and the Members are
listed on the Disclosure Schedule.
(E) Conflicts Under Constituent Documents or Laws. Neither the
execution and delivery of this Agreement nor the Company Ancillary
Documents by the Stockholders or Members, nor the consummation by the
Stockholders or Members of the transaction contemplated hereby, will
(i) violate, conflict with or result in a breach of any of the terms,
conditions or provisions or constitute a default under or otherwise
give any person the right to terminate or result in the creation of
any lien or security interest under any agreement, indenture,
instrument, lease, security agreement, mortgage or lien to which the
Company, the Stockholders or the Members is bound in each case where
such violation, conflict, breach, default or resulting lien or security
interest could reasonably be expected to have a Material Adverse
Effect, (ii) violate any provision of Redi-Cut's
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Articles of Incorporation or by-laws or KC Salad's or KC Real Estate's
Articles of Organization, Certificate of Formation or Operating
Agreement, (iii) violate or conflict with any statute or administrative
rule or regulation, or any order, writ, injunction, judgment or decree
of any court or governmental authority or any arbitration award to
which any Stockholder or Member or the Company is a party or by which
any Stockholder or Member or the Company is bound or (iv) violate
any other contractual or legal obligation or restriction to which the
Company, any Stockholder or Member is subject, where such violation
could reasonably be expected to have a Material Adverse Effect.
(F) Capitalization. The authorized capital stock of Redi-Cut
consists of 500,000 Shares, of which 100,000 are designated Class A
Voting Shares and 400,000 are designated Class B Non-Voting Shares.
2,000 Class A Voting Shares are issued and outstanding and 43,627
Class B Non-Voting Shares are issued and outstanding. All of the
membership interests of KC Salad are issued and outstanding and are
owned of record by the KC Salad Members as set forth in the Disclosure
Schedule. All the membership interests of KC Real Estate are issued
and outstanding and are owned of record by the KC Real Estate Members
as set forth in the Disclosure Schedule. There are no other shares
of capital stock of Redi-Cut authorized, issued or outstanding and
there are no other membership interests of KC Salad or KC Real Estate.
All of the issued and outstanding Shares and Membership Interests
have been validly issued, are fully paid and nonassessable, and are
owned of record by the Stockholders and Members as set forth in the
Disclosure Schedule free and clear from all Claims. Except as set forth
in the Disclosure Schedule, there are no outstanding subscriptions,
options, warrants, rights (including preemptive rights), calls,
convertible securities or other agreements or commitments of any
character relating to the issued or unissued capital stock or other
securities of the Company to which the Company, any Stockholder or
Member is bound relating to any shares of capital stock of the Company
whether or not outstanding. Except as set forth in the Disclosure
Schedule, there are no voting trusts or voting agreements with respect
to the shares of capital stock of Redi-Cut or the membership interests
of KC Salad or KC Real Estate which affect any shareholder's or
member's power to exercise full voting rights with respect thereto.
(G) Financial Statements; No Undisclosed Liabilities.
(i) The Disclosure Schedule contains complete and
accurate copies of the balance sheet and statements
of income, cash flows and stockholders' equity, and
notes to financial statements, of Redi-Cut as of
and for the years ended December 31, 1998 and 1999
(the "Audited Financial Statements"), as audited
by ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇ Chtd. and ▇▇▇▇▇▇▇▇▇▇,
Melvoin and ▇▇▇▇▇▇▇ LLP, respectively. The
Disclosure Schedule also contains complete and
accurate copies of the unaudited balance sheets
and statements of income, cash flows and members'
equity, and notes to financial statements, of KC
Salad as of and for the years ended December 31,
1998 and 1999 (the "Unaudited Financial
Statements"). The
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Disclosure Schedule also contains complete and
accurate copies of the balance sheet and statement
of income for each of Redi-Cut and KC Salad as of
and for the nine (9) month period ended September
30, 2000 (the "Interim Financial Statements"). The
Audited Financial Statements, the Unaudited
Financial Statements and the Interim Financial
Statements are collectively referred to herein as
the "Financial Statements." The Financial
Statements present fairly, in all material respects,
the financial position of Redi-Cut and KC Salad as
of the dates thereof and the results of operations
and cash flows (except with respect to cash flows
for the Interim Financial Statements) of Redi-Cut
and KC Salad for the periods covered by said
statements, in accordance with GAAP consistently
applied, except as disclosed therein, and, in the
case of the Interim Financial Statements, except for
(x) normal year-end adjustments and (y) the omission
of footnote disclosures required by GAAP.
(ii) Except as set forth in the Disclosure Schedule or
as disclosed in the Financial Statements (including
the notes thereto) and except for liabilities
incurred in the ordinary course of business, as of
the date hereof, the Company does not have any
liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, that would be
required by GAAP to be reflected on a balance
sheet of Redi-Cut or KC Salad (including the notes
thereto). The Disclosure Schedule contains a list
of the Company's payables as of September 30, 2000.
(H) Title to Assets. The Company has good, valid and
marketable title to all properties and assets reflected in the Interim
Financial Statements, real, personal and mixed, tangible and
intangible, and none of such properties or assets is subject to any
Claim of any kind except for the following: (i) statutory liens for
taxes not yet due; (ii) statutory liens of landlords, liens of
carriers, warehousemen, mechanics and materialmen incurred in the
ordinary course of business for sums not yet due; (iii) liens incurred
or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of
social security or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return of money bonds and similar
obligations; (iv) minor irregularities of title which do not in the
aggregate materially detract from the value or use of the Company's
assets; and (v) assets disposed of in the ordinary course of business
since the date of the Interim Financial Statements.
(I) Taxes.
(i) Redi-Cut has been a validly electing S Corporation
within the meaning of Internal Revenue Code
Sections 1361 and 1362 at all times since January
1, 1987 and will be an S Corporation up to and
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including the Closing Date. KC Salad and KC Real
Estate have each filed as a partnership for all
years since their dates of organization. The
Company has duly filed all tax reports and returns
required to be filed by it and has (or by the
Closing Date will have) paid all taxes shown to be
due and payable on such reports and returns
required to be paid by it and has properly accrued
in the Financial Statements in accordance with
GAAP for all taxes accrued on or with respect to
the business of the Company; and true and correct
copies of all tax reports and returns filed with
taxing authorities relating to such taxes and
other charges for the period since December 31, 1997
have been heretofore made available to Purchaser.
The reserves for taxes contained in the Financial
Statements and carried on the books of the Company
are proper in accordance with GAAP as of the date of
the Financial Statements. Since December 31, 1999,
the Company has not incurred any tax liabilities
other than in the ordinary course of business; there
are no tax liens (other than liens for current taxes
not yet due) upon any properties or assets of the
Company (whether real, personal or mixed, tangible
or intangible), and, except as reflected in the
Financial Statements, there are no pending or
threatened questions or examinations relating to,
or claims asserted for, taxes or assessments
against the Company. The United States federal and
state income tax returns of the Company have been
audited by the Internal Revenue Service or relevant
state tax authorities or are closed by the
applicable statute of limitations for all taxable
years through 1996. The Company has not granted or
been requested to grant any extension of the
limitation period applicable to any claim for taxes
or assessments with respect to taxes.
(ii) The Company is in compliance with and their records
contain all information and documents necessary to
comply with all applicable tax information
reporting and tax withholding requirements under
applicable law and such records identify with
specificity all accounts subject to backup
withholding under Section 3406 of the Code;
(iii) The Company is not required to include in income
any amount for an adjustment pursuant to Section
481(a) of the Code or the regulations thereunder
or any similar provision of state law;
(iv) None of the Company, any Stockholder or Member is
a "foreign person" for purposes of Section 1445 of
the Code;
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(v) No claim has ever been made by an authority in a
jurisdiction where any Company does not file tax
returns that it is or may be subject to taxation
by that jurisdiction;
(vi) The Company has withheld and paid all taxes required
to have been withheld and paid in connection with
amounts paid or owed to any employee, independent
contractor, creditor, stockholder, member or other
third party;
(vii) Redi-Cut has not filed a consent under Code Section
341(f) concerning collapsible corporations;
(viii) The Company has disclosed on its federal income
tax returns all positions taken therein that could
give rise to a substantial understatement of federal
income tax within the meaning of Code Section 6662;
and
(ix) Redi-Cut has not been a United States real property
holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(A)(ii).
(J) Absence of Certain Changes. Since December 31, 1999, the
Company has not:
(i) suffered any Material Adverse Effect or suffered
any material casualty loss (whether or not insured);
(ii) made any change in its business or operations or
in the manner of conducting its business other
than changes in the ordinary course of business or
changes which could not reasonably be expected to
have a Material Adverse Effect;
(iii) incurred any obligations or liabilities (whether
absolute, accrued, contingent or otherwise and
whether due or to become due), except items
incurred in the ordinary course of business and
consistent with past practice;
(iv) paid, discharged or satisfied any claim, lien,
encumbrance or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become
due), other than claims, encumbrances or liabilities
which were paid, discharged or satisfied in the
ordinary course of business and consistent with past
practice;
(v) except as reflected in the Interim Financial
Statements, written down the value of any inventory,
or written off as uncollectible any notes or
accounts receivable or any portion thereof, except
for
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immaterial write-downs and write-offs made in the
ordinary course of business, consistent with past
practice and at a rate no greater than during the
twelve (12) months ended December 31, 1999;
(vi) canceled any debts or claims, or waived any rights,
of substantial value;
(vii) sold, transferred or conveyed any of its properties
or assets (whether real, personal or mixed, tangible
or intangible), except in the ordinary course of
business and consistent with past practice;
(viii) disposed of or permitted to lapse, or otherwise
failed to preserve the rights of the Company to
use any patent, trademark, trade name, logo or
copyright or any such application, or disposed of
or permitted to lapse any license, permit or other
form of authorization, or disposed of or disclosed
to any person any trade secret, formula, process
or know-how, except where such disposal lapse,
disclosure or failure to preserve the rights of
the Company could not reasonably be expected to
have a Material Adverse Effect;
(ix) granted, other than in the ordinary course of
business consistent with past practice, any increase
in the compensation of any officer, director,
employee or agent (including, without limitation,
any increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or adopted any
such plan or other arrangements, and no such
increase, or the adoption of any such plan or
arrangement, is planned or required;
(x) made any capital expenditures or commitments in
excess of $100,000 in the aggregate for replacements
or additions to property, plant, equipment or
intangible capital assets, except as reflected on
the Interim Financial Statements or the attached
SCHEDULE 2.3(J)(X) OR 2.3(FF);
(xi) made any change in any method of accounting or
accounting practice, or experienced any change in
any assumptions underlying or methods of calculating
any bad debt, contingency or other reserves, except
as reflected in the Interim Financial Statements;
(xii) paid, loaned or advanced any amount (which amount
remains unpaid) to or in respect of, or sold,
transferred or leased any properties or assets
(real, personal or mixed, tangible or intangible)
to, or entered into any agreement, arrangement or
transaction with, any of the Stockholders or
Members or the officers, directors, managers or
employees of the Company, any Affiliates or
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associates of any Stockholders or Members or the
Company or any of their respective officers,
directors, managers or employees, or any business
or entity in which any of such persons has any
direct or material indirect interest, except for
compensation to the officers and employees of the
Company in the ordinary course of business and
advances to officers and employees in the ordinary
course of business for travel and expense
disbursements in accordance with past practice,
but not in excess of $10,000 for any individual at
any one time outstanding and except for
distributions and dividends paid to the Stockholders
and Members;
(xiii) agreed, whether in writing or otherwise, to take
any action described in this Section 2.3(J).
(K) Contracts. The Company is not a party to, or bound by,
any:
(i) agreement (other than at-will employment
arrangements) for the employment on a full or
part-time basis or any contract with officers,
employees, agents, advisors, salesman, sales
representatives, distributors or dealers providing
for annual compensation in excess of $50,000;
(ii) consulting agreement;
(iii) collective bargaining agreement;
(iv) plan, contract or arrangement (other than the
Pension Plans and Welfare Plans, each as defined
herein) providing for bonuses, commissions, options,
deferred compensation, retirement payments, profit
sharing, medical and dental benefits or the like
covering any person;
(v) lease or sublease, either as lessee or sublessee,
lessor or sublessor, of personal property or
intangibles, where the lease or sublease provides
for an annual rent in excess of $50,000 or has an
unexpired term as of the Closing Date in excess of
one (1) year;
(vi) agreement of agency, representation or distribution
which cannot be canceled by the Company without
payment or penalty upon notice of ninety (90) days
or less;
(vii) service agreement affecting any of the Company's
assets where the annual service charge is in
excess of $50,000 and has an unexpired term as of
the Closing Date in excess of one (1) year;
(viii) guarantee, loan or credit agreement;
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(ix) partnership or joint venture agreement;
(x) licensing agreement, either as licensor or
licensee;
(xi) agreement which restricts or purports to restrict
the Company from carrying on its business any
where in the world;
(xii) severance or termination agreements; or
(xiii) any other agreement which provides for the
receipt or expenditure of more than $150,000, for
any individual agreement, except agreements for
the purchase or sale of goods or rendering of
services in the ordinary course of business.
All such agreements described in this Section 2.3(K) are referred to
herein as "Material Contracts." All Material Contracts are binding upon
the Company that is a party thereto, and, to the knowledge of the
Company, the other contracting parties thereto, and, assuming that no
default by the other parties thereto has occurred and that such
contract is enforceable against such other parties, each Material
Contract is in full force and effect. No material default by the
Company has occurred and, to the knowledge of the Company, no material
default by the other contracting parties has occurred under any of the
Company's contracts having a value greater than $150,000, and, to the
knowledge of the Stockholders and Members, any other Material Contract.
All obligations of the Company under the Lease, dated July 25, 1990,
between Chicago Title and Trust Company, as Trustee, and the Company
for premises located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, will
have been satisfied as of Closing.
(L) Conflicts Under Material Contracts. The Company is not a
party to, or bound by any unexpired, undischarged or unsatisfied
Material Contract under the terms of which performance by the
Company, the Stockholders or Members according to the terms of this
Agreement will be a default or an event of acceleration, or grounds
for termination, which default, acceleration or termination could
reasonably be expected to have a Material Adverse Effect, or whereby
timely performance by the Company, the Stockholders or Members of
this Agreement may be prohibited, prevented or delayed. There are no
renegotiations or attempts to renegotiate, or outstanding rights to
renegotiate, any amounts paid or payable to the Company under current
or completed contracts, agreements or commitments with any person or
entity having the contractual or statutory right to demand or require
such renegotiation other than renegotiations in the ordinary course
with respect to contracts, commitment or agreements having a value
of less than $150,000. No such person or entity has made demand for
such renegotiation other than renegotiations in the ordinary course
with respect to contracts, commitment or agreements having a value
of less than $150,000.
(M) Permits. The Company possesses all licenses, permits,
registrations and government approvals (the "Permits") (other than
Environmental Permits (as defined
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herein)) which are required in order for the Company to conduct its
business as presently conducted, except where the failure to possess
such Permits would not reasonably be expected to have a Material
Adverse Effect.
(N) Employees and Fringe Benefit Plans.
(i) The Disclosure Schedule identifies all employee
handbooks, policy manuals and job application forms used
by the Company, copies of which have been made available
to Purchaser. Also shown on the Disclosure Schedule are
the names and dates of hire of each regular employee of
the Company and each such person's rate of compensation
and accrued vacation pay. No officer or employee of the
Company earning more than $75,000 on an annual basis has
notified the Company, any Stockholders or any Member of
an intention to terminate employment or to seek a
material change in his terms of employment.
(ii) The Disclosure Schedule contains a complete list of
"Plans" consisting of each:
(a) "employee welfare benefit plan," as defined in
Section 3(1) of the Employee Retirement Income Security
Act of 1974 ("ERISA"), which is maintained or
administered by the Company, or to which the Company
contributes, and which covers any employee or former
employee of the Company or under which the Company has
any liability (a "Welfare Plan");
(b) "employee pension benefit plan," as defined in
Section 3(2) of ERISA which is maintained or administered
by the Company, or to which the Company contributes, and
which covers any employee or former employee of the
Company or under which the Company has any liability (a
"Pension Plan"); and
(c) each plan or arrangement (written or oral)
providing on an insured or self-insured basis, workers'
compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement
benefits or deferred compensation, profit sharing,
bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation or
post retirement insurance, compensation or benefits which
(a) is not a Welfare Plan or Pension Plan, (b) is
entered into, maintained, contributed to or required to
be contributed to, as the case may be, by the Company or
under which the Company has any material liability, and
(c) covers any employee or former employee of the Company
(collectively, "Benefit Arrangements").
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(iii) Neither the Company nor any other entity required to be
aggregated with the Company under Sections 414(b), (c),
(m) or (o) of the Code has ever participated in,
contributed to, withdrawn from or has any liability to
the Pension Benefit Guaranty Corporation or any other
person, plan or entity under or with respect to (i) a
Pension Plan subject to Title IV of ERISA or Section 412
of the Code, or (ii) a multiemployer pension plan, as
defined in Section 3(37) of ERISA.
(iv) With respect to the Plans, a copy of each Plan and any
amendment(s) thereto, together with (i) any written
descriptions or summaries thereof, (ii) all trust
agreements, insurance contracts, annuity contracts or
other funding instruments, and (iii) the last five annual
reports (IRS Form 5500 Series, together with all required
schedules) prepared in connection with any such Plan
have been made available to Purchaser. The Plans comply,
to the extent applicable, with the requirements of ERISA
and the Code, and any Plan intended to be qualified
under Section 401(a) of the Code has complied in all
material respects with such qualification requirements
for all years such Plan has been maintained, and has been
determined by the Internal Revenue Service (the "IRS")
to be so qualified or the remedial amendment period under
Section 401(b) of the Code has not expired. All material
reports and information required by law to be filed with
the United States Department of Labor ("DOL"), or the
IRS, or to plan participants or their beneficiaries with
respect to the Plans have been timely filed or
distributed. All statements, notices and disclosures
made on documents or forms required to be filed with the
DOL or the IRS or distributed to participants or to
their beneficiaries have been true and accurate and
complete in all material respects. With respect to any
Welfare Plan, the Company has complied in all material
respects with any applicable notice and contribution
requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and the
regulations thereunder. Neither a Plan nor the Company
has incurred any material liability, penalty or tax
under Chapter 43 of Subtitle D of the Code or Section
502(i) of ERISA, the Company has no liability with respect
to any prohibited transaction (as defined in Section 4975
of the Code or Section 406 of ERISA) with respect to any
of the Plans. Each of the Plan, in all material respects,
has been maintained and administered in accordance with
its terms and with the requirements prescribed by any
and all statutes, orders, rules and regulations including,
but not limited to, ERISA and the Code which are
applicable to such Plans. No event has occurred for which,
and no condition or set of circumstances exists under
which the Company or an officer, director or manager
thereof, or any of the Plans, reasonably could
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be subject to any material liability, penalty or lost
income tax deduction whether or not assessed, pending,
or threatened, directly or indirectly, under any
applicable statute, order or governmental rules and
regulations including but not limited to, ERISA and the
Code. There are no claims, and the Company does not
anticipate any material claims against or otherwise
involving any of the Plans, and no suit, action or other
litigation (excluding claims for benefits incurred in
the ordinary course of plan activities) has been brought
against or with respect to any of the Plans. All
contributions, reserves or premium payments required to
be made as of the date hereof have been made or are
reflected in the Financial Statements. None of the Plans
listed on the Disclosure Schedule which are Welfare Plans
provide for continuing benefits or coverage after
termination or retirement from employment, except as
required by applicable state law other than state laws
regarding the enforcement of contracts or for COBRA
continuation coverage under Section 4980B of the Code
and part 6 of Title I of ERISA.
(v) To the knowledge of the Stockholders and Members, no
employee of the Company is obligated under any agreement
or judgment that would conflict with such employee's
obligation to use his best efforts to promote the
interests of the Company or would conflict with the
Company's business as conducted or proposed to be
conducted. To the knowledge of the Stockholders and
Members, no employee of the Company is in violation of
the terms of any employment agreement or any other
agreement relating to such employee's relationship with
any previous employer and no litigation is pending or
threatened with regard thereto.
(O) Litigation and Claims. There is no claim, action, suit,
investigation, litigation or proceeding, in law or in equity, and there
are no proceedings or governmental investigations before any commission or
other administrative authority, pending or, to the knowledge of any
Stockholder or Member, threatened against the Company, any Stockholder or
Member or, to the knowledge of the Company, otherwise affecting the
Company, any Stockholders or Members, in each case, with respect to the
properties, assets, personnel or business activities of the Company or
that could affect the transactions contemplated hereby.
(P) Decrees, Orders or Arbitration Awards. There is no decree, order
or arbitration award (or agreement entered into in any administrative,
judicial or arbitration proceeding) between any of the Company, any
Stockholder or any Member and any governmental authority with respect to
or affecting the properties, assets, personnel or business activities of
the Company.
(Q) Laws. Except for laws, rules and regulations relating to taxes,
employees or the environment (which are exclusively provided for in
Sections 2.3(I), 2.3(N), 2.3(R)
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and 2.3(Y) hereof, respectively), the Company is not, and within the last
three (3) years has not been, in violation of, or delinquent in respect
to, any decree, order or arbitration award or law, statute, or regulation
of or agreement with, or any Permit from, any Federal, state or local
governmental authority (collectively "Laws") to which the property,
assets, personnel or business activities of the Company, the Stockholders
or the Members are subject, which violation or delinquency could
reasonably be expected to have a Material Adverse Effect. None of the
Company, any Stockholder or any Member has received any notice of, or
notice of any investigation of, a violation of any applicable Law, or any
other Law relating to or affecting the operations or properties of the
Company.
(R) Environmental Matters.
Definitions
"Hazardous Material" is any material or substance that is prohibited
or regulated by any Environmental Law or that has been designated by any
Governmental Authority to be radioactive, toxic, hazardous or otherwise a
danger to health, reproduction or the environment.
"Governmental Authority" is any local, state, provincial, federal,
or international governmental authority or agency which has had or now has
jurisdiction over any portion of the subject of this Agreement or any
Business Facility of the Company.
"Business Facility" is the real property including the land, the
improvements thereon, and the ground water and surface water thereof, that
the Company has at any time owned, operated, occupied, controlled or
leased.
"Disposal Site" is a landfill, disposal agent, waste hauler or
recycler of Hazardous Materials.
"Environmental Laws" are all laws, rules, regulations, orders,
treaties, statutes, and codes promulgated by any Governmental Authority
which prohibit, regulate or control any Hazardous Material or any
Hazardous Materials Activity, including, without limitation, petroleum,
and constituents thereof, and including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, the Resource Recovery and Conservation Act of 1976, the Federal
Water Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act, the Clean Water Act, comparable laws, rules,
regulations, orders, treaties, statutes, and codes of other Governmental
Authorities, the regulations, policies, and publications promulgated
pursuant to any of the foregoing, and all amendments and modifications of
any of the foregoing in effect as of the date hereof.
"Hazardous Material Activity" is the transportation, transfer,
recycling, storage, use, treatment, manufacture, investigation, removal,
remediation, release, exposure of
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others to, sale, or distribution of any Hazardous Material or any product
containing a Hazardous Material.
"Environmental Permit" is any approval, permit, license, clearance
or consent required to be obtained from any private person or any
Governmental Authority with respect to a Hazardous Materials Activity
which is or was conducted by the Company.
(i) Environmental Representations: The Company, the
Stockholders and the Members hereby represent and
warrant, to the best of their knowledge, as to any
Business Facility not currently occupied by the Company,
and hereby represent and warrant as to any Business
Facility currently occupied by the Company that:
(a) Condition of Property: No Hazardous Material is
present on any Business Facility in violation of any
Environmental Law. There are no underground storage
tanks, asbestos or PCBs present in violation of
Environmental Law on any Business Facility.
(b) Hazardous Materials Activities: To the knowledge
of the Company, the Company has conducted all
Hazardous Material Activities relating to the Company
in compliance with all applicable Environmental Laws.
The Hazardous Material Activities of the Company prior
to the Closing have not resulted in the exposure of
any person to a Hazardous Material in a manner which
has caused an adverse health effect to said person.
(c) Permits: The Disclosure Schedule accurately
describes all of the Environmental Permits currently
held by the Company and relating to the Business, and
the Environmental Permits listed on the Disclosure
Schedule are all of the Environmental Permits
necessary for the continued conduct of any Hazardous
Material Activity of the Company as such activities
are currently being conducted. All such Environmental
Permits are valid and in full force and effect. The
Company has complied in all material respects with all
covenants and conditions of any Environmental Permit
which is or has been in force with respect to the
Company's Hazardous Material Activities. To the best
knowledge of the Company, no circumstances exist which
could cause any Environmental Permit to be revoked,
modified, or rendered non-renewable upon payment of
the permit fee or which could impose upon the Company
the obligation to obtain any additional Environmental
Permit. All Environmental Permits and all other
consents and clearances required by any Environmental
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Law or any agreement to which the Company is bound as
a condition to the performance and enforcement of this
Agreement, including without limitation, all so-called
"RCRA" environmental clearances required by any
Governmental Authority have been obtained or will be
obtained prior to the Closing at no cost to Purchaser
or Acquisition Sub.
(d) Environmental Litigation: No action, proceeding,
revocation proceeding, amendment procedure, writ,
injunction or claim is pending, or to the Company's,
the Stockholder's or any Member's knowledge
threatened, concerning or relating to any
environmental matter related to any Business Facility,
any Environmental Permit or any Hazardous Material
Activity of the Company.
(e) Offsite Hazardous Material Disposal: During the
last five years, the Company has transferred or
released Hazardous Materials only to those Disposal
Sites described on the Disclosure Schedule; and no
action, proceeding, liability or claim exists or, to
the best knowledge of the Company is threatened,
against any Disposal Site or against the Company with
respect to any transfer or release of Hazardous
Materials relating to the Company to a Disposal Site.
(f) Environmental Liabilities: The Company has no
knowledge of any fact or circumstance which could
involve the Company in any environmental litigation or
impose upon the Purchaser or the Company any
environmental liability which could have a Material
Adverse Effect.
(g) Reports and Records: The Company has delivered to
Purchaser or made available for inspections by
Purchaser and its agents and employees all records
concerning the Hazardous Material Activities of the
Company and all environmental audits and environmental
assessments of any Business Facility conducted at the
request of, or otherwise available to, the Company.
The Company has complied with all environmental
disclosure obligations imposed by Environmental Law
upon the Company with respect to this transaction by
applicable law.
(S) Assets. The Disclosure Schedule contains depreciation schedules
reflecting as of September 30, 2000 all material fixed assets,
improvements to the Company's facilities and other tangible assets owned
by the Company, which schedules are accurate and complete in all material
respects. There has been no material change in such assets since September
30, 2000. Other than assets leased by the Company, such assets constitute
substantially all of the assets that are necessary to the continued
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operation of the Company as such operations are currently conducted. To
the Company's knowledge, all plants, structures, machinery and equipment
currently used in the operation of the Business are in operating condition
and repair, normal wear and tear excepted, and are adequate for the uses
for which they are intended. The Company has not received any notification
within the last three (3) years of any violation of any applicable
ordinance or regulation of building, zoning or other law, in respect of
its plants, structures, properties or operations. None of such real
property is currently the subject of any eminent domain, condemnation or
similar proceeding and to the Company's knowledge, no such proceeding is
threatened. The Company is now in possession of each parcel of such real
property, there is no adverse claim against such real property and there
are no pending or, to the Company's knowledge, threatened proceedings
which might interfere with Purchaser's or Acquisition Sub's quiet
enjoyment of such real property.
(T) Intellectual Property. The Disclosure Schedule lists each: (i)
registration of and application to register any trademark, service ▇▇▇▇,
slogan, trade name, trade dress and the like (collectively, and together
with the associated goodwill of each, "Trademarks"); (ii) patent on and
pending application to patent any technology or design; (iii) registration
of and application to register any copyright; and (iv) license of rights
in computer software, Trademarks, patents and copyrights, whether to or by
the Company. The scheduled rights are referred to herein collectively as
the "Intellectual Property." No Stockholder or Member has any knowledge:
(i) that any other person, firm, corporation, limited liability company,
association or other entity claims the right to use in connection with
similar or closely related goods and in the same geographic area, any ▇▇▇▇
which is identical or confusingly similar to any of the Trademarks; (ii)
of any claim that any third party asserts ownership rights in any of the
Intellectual Property; (iii) of any claim that the Company's use of any
Intellectual Property infringes any right of any third party; and (iv)
that third party is infringing any of the Company's rights in any of the
Intellectual Property.
(U) Brokers. Except for U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. ("U.S.
Bancorp"), neither the Stockholders or Members, the Company nor any of
their Affiliates, have dealt with any person, firm or corporation who is
entitled to a broker's commission, finder's fee, investment banker's fee
or similar payment from Purchaser or the Company for arranging the
transaction contemplated hereby or introducing the parties to each other.
The Stockholders and Members shall be responsible for payment of any and
all fees and expenses of U.S. Bancorp.
(V) Accounts Receivable. All accounts and notes receivable of the
Company at the Closing, whether reflected in the Interim Financial
Statements or otherwise (herein called the "Receivables"), represent sales
actually made in the ordinary course of business consistent with past
practice; none of the Receivables is subject to any counterclaim or
set-off other than normal sales adjustments, credits or allowances
consistent with past practice; and to the Company's knowledge, all the
Receivables are collectible in the ordinary course of business at the
aggregate amounts thereof net of any reserve reflected in the Financial
Statements. The Company has timely filed all
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Perishable Agricultural Commodities Act claims. Attached to the Disclosure
Schedule is an aging of the Company's Receivables as of October 27, 2000.
(W) Orders, Commitments and Returns. The aggregate of all accepted
and unfilled orders for the sale of merchandise entered into by the
Company does not exceed an amount which can reasonably be expected to be
filled in the ordinary course of business on a schedule which will
maintain satisfactory customer relationships, and the aggregate of all
contracts or commitments for the purchase of products by the Company does
not exceed an amount which is reasonable for its anticipated volumes of
business (all of which orders, contracts and commitments were made in the
ordinary course of business). As of the date of this Agreement, there are
no asserted, or if unasserted, sustainable, claims to return merchandise
of the Company by reason of alleged overshipments, defective merchandise,
breach of warranty or otherwise. There is no merchandise in the hands of
customers under any understanding that such merchandise is returnable
other than pursuant to the standard returns policy set forth in the
Company's contracts. The Company does not know or have reason to believe
that either the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby will result in any
cancellations or withdrawals of accepted and unfilled orders for the sale
of the Company's merchandise.
(X) Customers and Suppliers. The Disclosure Schedule hereto contains
an accurate and complete list of the names and addresses of the 20 largest
customers to whom the Company has sold or leased products or services
during the year ended December 31, 1999 and the nine (9) months ended
September 30, 2000 and the 20 largest suppliers from whom the Company has
purchased supplies during the year ended December 31, 1999 and the nine
(9) months ended September 30, 2000. To the knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the Company has not received any written or oral
notification from any customer or supplier whose name appears on such list
that such customer or supplier will not continue as a customer or supplier
of the Company after the Closing. No customer, or group of related
customers, accounted for more than 5% of the Company's revenues for the
year ended December 31, 1999 or the nine (9) months ended September 30,
2000.
(Y) Labor Matters. Except as disclosed on the Disclosure Schedule,
there are no collective bargaining agreements in effect between the
Company and labor unions or organizations representing any of the
Company's employees. During the past seven years, there has been no
request for collective bargaining or for an employee election from any
employee, union or the National Labor Relations Board. The Company is in
compliance in all material respects with all federal, state and local laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor
practice. There is no unfair labor practice complaint against the Company
pending or, to the knowledge of the Company, threatened before the
National Labor Relations Board or the United States Department of Labor.
There is no labor strike, slowdown or stoppage in progress or, to the
knowledge of the Stockholders and Members, threatened against or involving
the Company. No grievance or arbitration proceeding is pending and no
claim therefor exists. No private
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agreement restricts the Company from relocating, closing or terminating
any of its operations or facilities. The Company has not in the past five
years experienced any labor strike, slowdown or stoppage.
(Z) Inventory. All inventory of the Company, whether reflected in
the Financial Statements or otherwise, is of good and merchantable quality
and is usable and saleable in the ordinary course of business, except for
items of obsolete materials and materials of below standard quality, all
of which have either been written down in the Interim Financial Statements
to realizable market value or acquired after September 30, 2000. The
present quantities of all inventory of the Company are reasonable in the
present circumstances of its business. The Company is not under any
liability or obligation with respect to the return of inventory or
merchandise in the possession of wholesalers, retailers or other customers
in excess of its historical experience.
(AA) Corporate Records. The Company has made available to Purchaser
for its review true complete and correct copies of the following items, as
amended and presently in effect, for the Company: (a) Articles of
Incorporation and Articles of Organization, (b) Bylaws and Operating
Agreement, (c) minute books, and (d) stock registration books. The minute
books contain a record of all material actions taken by the shareholders,
directors, members and managers at a meeting or without a meeting from the
date of the Company's incorporation or formation to the date hereof. The
stock registration books are complete and accurate in all material
respects and contain a complete record of all transactions in Redi-Cut's
capital stock from the date of its incorporation to the date hereof.
(BB) Relationships with Related Persons. The Stockholders and
Members do not have, and no Affiliate of the Stockholders and Members or
the Company has (nor during the period beginning December 31, 1999 through
and including the date hereof had), any interest in any property, real or
personal, tangible or intangible, used in or pertaining to the business of
the Company. Except as set forth on the Disclosure Schedule, during the
period beginning December 31, 1999 through and including the date hereof,
none of the Stockholders and Members nor any Affiliate of the Stockholders
and Members or the Company, individually or collectively, owns or has
owned of record or as a beneficial owner, an equity interest or any other
financial or profit interest in any firm, corporation or any other entity
or person which (i) has had business dealings or material financial
interest in any transaction with the Company, or (ii) which is in
competition with the Company with respect to any line of the products or
services of the Company in any market presently served by the Company. The
Stockholders and Members, in their capacity as such, do not have any
claims against the Company.
(CC) Purchaser's Prospectus; Securities Representations. Each
Stockholder and Member has received and reviewed a copy of the prospectus
dated December 14, 1998, including all supplements thereto (as
supplemented, "Purchaser Prospectus") contained in Purchaser's shelf
Registration Statement on Form S-4. Each Stockholder and Member (i) has
such knowledge, sophistication and experience in business and financial
matters such that they are capable of evaluating the merits and risks of
an investment in the shares of
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Purchaser's Common Stock, (ii) fully understands the provisions of Rule
145 promulgated under the Securities Act of 1933, (iii) can bear the
economic risk of any investment in the shares of Purchaser's Common Stock;
and (iv) can afford a complete loss of such investment. Each Stockholder
and Member has had an adequate opportunity to ask questions and receive
answers (and has asked such questions and received answers to such
Stockholder's and Member's satisfaction) from the officers of Purchaser
concerning the business, results of operations and financial condition of
Purchaser. No Stockholder or Member has any contract, understanding,
agreement or arrangement, written or oral, with any other person to sell,
transfer or grant participations in any shares of Purchaser's Common Stock
to be acquired by such Stockholder or Member hereunder.
(DD) Insurance. The Disclosure Schedule sets forth a complete and
accurate list of the policy numbers, deductibles, carriers and effective
and termination dates of all policies of fire, liability, workmen's
compensation, health, title and other forms of insurance presently in
effect with respect to the Company. All such policies are valid,
outstanding and enforceable policies; and will remain in full force and
effect at least through the respective dates set forth in the Disclosure
Schedule without the payment of additional premiums. The Company has not
been refused any insurance, nor has its coverage been limited, by any
insurance carrier to which it has applied for insurance or with which it
has carried insurance during the last three (3) years. The Disclosure
Schedule contains an accurate and complete description of any provision
contained in the policies identified on the Disclosure Schedule which
provides for retrospective premium adjustment. The Disclosure Schedule
identifies all risks which the Company has designated as being
self-insured and the amount of reserve set aside by the Company to cover
such risk.
(EE) Product Warranties. The Company has not given or made any
warranties to third parties with respect to any products supplied which
may still be in effect at any time after the date hereof, except for
warranties imposed by law. There have been no claims or investigations
made with respect to any product warranties which have not been fully
settled and resolved or any unresolved warranty claims which have not been
adequately reserved against on the Financial Statements.
(FF) Capital Expenditures. The capital expenditures made by the
Company with respect to its Kansas City, Missouri facility are set forth
on SCHEDULE 2.3(FF).
2.4 Limitation on Warranties. Purchaser and Acquisition Sub acknowledge
that they have conducted an independent investigation of the financial
condition, assets, liabilities, properties and projected operations of the
Company in making their determination as to the propriety of the transaction
contemplated by this Agreement and, in entering into this Agreement and
Purchaser Ancillary Documents, have relied solely on the results of said
investigation and on the representations and warranties of the Company expressly
contained in Section 2.3 of this Agreement. EXCEPT AS EXPRESSLY SET FORTH IN
SECTION 2.3, THE STOCKHOLDERS AND MEMBERS MAKE NO EXPRESS OR IMPLIED WARRANTY OF
ANY KIND WHATSOEVER, INCLUDING ANY REPRESENTATION AS TO PHYSICAL CONDITION OR
VALUE OF ANY OF THE ASSETS OF THE COMPANY OR THE
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FUTURE PROFITABILITY OR FUTURE EARNINGS PERFORMANCE OF THE COMPANY. ALL IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY
EXCLUDED. In addition, the parties acknowledge and agree that it is the
intention of KC Salad to transfer the real property located at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ to a wholly-owned subsidiary of KC Salad and to
distribute on or prior to Closing the membership interests of such subsidiary to
the KC Members. Notwithstanding anything herein to the contrary, the parties
agree that the foregoing transfer of property and distribution of membership
interests shall not constitute a breach of the representations and warranties
contained in Section 2.3.
2.5 Definition of Knowledge. For the purposes of this Agreement, the
knowledge of the Company, Stockholders or Members shall be deemed to mean, and
shall be limited to, the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇,
after review of such person's own files and inquiry of those other officers and
employees of the Company who would reasonably be expected to have knowledge of
the specific matter at issue.
ARTICLE III
Conduct Prior to the Closing
3.1 General. The Company, Stockholders, Members, Purchaser and Acquisition
Sub shall have the rights and obligations with respect to the period between the
date hereof and the Closing Date which are set forth in the remainder of this
Article III.
3.2 Company Obligations. The following are the Company's obligations:
(A) The Company shall give to Purchaser's officers, employees,
agents, attorneys, consultants, accountants and lenders reasonable access
during normal business hours to all of the directors, officers, managers,
properties, books, contracts, records and personnel of or with respect to
the Company and shall furnish to Purchaser and such persons as Purchaser
shall designate to the Company such information as Purchaser or such
persons may at any time and from time to time reasonably request. All
contacts of Purchaser with respect to the Business (including with
employees, customers and suppliers) shall be coordinated through ▇▇▇▇▇
▇▇▇▇▇▇, or such other person designated by the Company in writing to
Purchaser.
(B) The Company shall carry on its business in the usual and
ordinary course of business, consistent with past practices; provided,
however, that nothing contained in this Agreement shall prohibit the
Company, whether or not in the usual and ordinary course of business and
whether or not consistent with past practice to distribute cash and life
insurance policies (or the cash surrender value of such policies) to the
Stockholders and Members.
(C) After the date hereof and prior to the Closing Date, the
Stockholders and Members agree (a) that they shall, and shall direct and
use their best efforts to cause the Company and its directors, officers,
managers, employees, advisors, accountants and attorneys (the
"Representatives"), not to initiate, solicit or encourage, directly or
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indirectly, any inquiries or the making or implementation of any proposal
or offer with respect to a merger, acquisition, consolidation or similar
transaction involving the Company, or any purchase of all or any
significant portion of the assets or any equity securities of the Company
(any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions
with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort to attempt to make or implement an Acquisition
Proposal. The Stockholders and Members further agree that they will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties other than Purchaser
conducted heretofore with respect to any of the foregoing and will take
the necessary steps to inform the individuals or entities referred to
above of the obligations undertaken in this Section 3.2(C). The
Stockholders' Representative will notify Purchaser immediately if any such
inquiries or proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be initiated
or continued with, it. The Stockholders and Members agree that Purchaser
will be entitled to specifically enforce its rights under this Section
3.2(C) to recover damages by reason of any breach of the provisions
therein and to exercise all other rights existing in its favor. The
Stockholders and Members further agree and acknowledge that money damages
may not be an adequate remedy for the breach of such provision and that
Purchaser may in its sole discretion apply to any court of law or equity
of competent jurisdiction for specific performance or injunctive relief in
order to enforce or prevent any violations of this covenant.
(D) The Company will use its best efforts to maintain, preserve,
renew and keep in full force and effect the existence, rights and
franchises of the Company, to preserve the business organizations of the
Company intact, to keep available to Purchaser the Company's officers and
employees, and to preserve for Purchaser the present relationships of the
Company with its suppliers and customers and others having business
relationships with it.
(E) The Company will not (i) grant any increase in the wages or
salary of any officer, employee or agent of the Company, except normal
wage or salary increases for employees in the ordinary course of business
consistent with past practice; (ii) except pursuant to existing
compensation arrangements, by means of any bonus or pursuant to any plan
or arrangement or otherwise, increase by any amount or to any extent the
benefits or compensation of any such officer, employee or agent; (iii)
enter into any employment agreement, sales agency contract or other
arrangement with respect to the performance of personal services providing
for annual compensation in excess of $50,000 which is not terminable by it
without liability on not more than 30 days notice; (iv) enter into or
extend any labor contract with any hourly-paid employees or any union; or
(v) agree to take any such action.
(F) Consistent with its obligation to act in the ordinary course of
business consistent with past practice, the Company will not terminate
(except by its own terms)
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or materially modify any material lease, license, permit, contract or
other agreement to which it is a party without prior notice to Purchaser.
(G) Except for sales to customers and purchases from suppliers in
the ordinary course of business and except for transactions related to
outfitting and opening the Kansas City, Missouri or ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Park facilities, which transactions shall not involve expenditures that
exceed $250,000, the Company will not, without the Purchaser's prior
written consent, which shall not be unreasonably withheld, enter into any
transaction involving more than $150,000 or a commitment extending more
than three months.
(H) [Intentionally deleted]
(I) Redi-Cut will not amend its Articles of Incorporation or bylaws,
KC Salad will not amend its Articles of Organization or Operating
Agreement and KC Real Estate will not amend its Certificate of Formation
or Operating Agreement.
(J) The Company will not enter into any agreement to do any of the
foregoing referenced in subsections (E) through (I).
(K) From the date hereof and until the Closing Date, the
Stockholders and Members shall have the continuing obligation to
supplement or amend promptly the Disclosure Schedules being delivered
pursuant to this Agreement with respect to any matter hereafter of which
the Stockholders or Members have knowledge which, if existing or known at
the date of this Agreement would have been required to be set forth or
described in the Disclosure Schedules and any such supplements or
amendments shall be deemed to be part of this Agreement and the Disclosure
Schedules attached hereto.
(L) At least 15 days prior to the Closing Date, the Stockholders and
Members shall deliver to Purchaser the list of names and addresses of
those persons who were, in the Company's reasonable judgment, "affiliates"
(each such person, an "Affiliate Stockholder") of the Company within the
meaning of Rule 145 of the rules and regulations promulgated under the
Securities Act of 1933, as amended ("Rule 145"). The Company shall provide
Purchaser such information and documents as Purchaser shall request and
shall deliver or cause to be delivered to Purchaser prior to the Closing
Date, from each of the Affiliate Stockholders identified in the foregoing
list an Affiliate Letter in the form attached hereto as EXHIBIT G.
Purchaser shall be entitled to place legends as specified in such
Affiliate Letters on the certificates evidencing any Purchaser's Common
Stock to be received by such Affiliate Shareholders pursuant to the terms
of this Agreement and to issue appropriate stop transfer instructions to
the transfer agent for the Purchaser's Common Stock consistent with the
terms of such Affiliate Letters, all as detailed in EXHIBIT G.
(M) At or prior to Closing, the Company shall terminate all of its
deferred compensation and change of control agreements including
agreements with ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ (collectively, the "Deferred
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Compensation Agreements") and the Stockholders and Members shall satisfy
all obligations thereunder, and none of the Purchaser, Acquisition Sub or
the Company shall have any liability therefor.
(N) At or prior to Closing, the Company shall pay all bonuses and
satisfy all obligations under the Company's profit sharing plan which are
or will be due for the year 2000.
(O) At Purchaser's expense, within seven days prior to the Closing,
the Stockholders and Members shall furnish to Purchaser an owner's title
insurance commitment issued by a title insurance company reasonably
acceptable to Purchaser, which shall show the state of title to the real
property of the Company, and shall require the issuance of an ALTA 1970
Form B Title Insurance Policy in favor of the Company with only such
exceptions as Purchaser shall approve in writing, which approval shall not
be unreasonably withheld. In addition, at Purchaser's expense, within
seven days prior to the Closing, the Stockholders and Members shall obtain
an as-built Class "A" survey of the real property of the Company which
shall indicate the exact metes, bounds, and acreage of such real property
and shall show the exact location of all buildings, encroachments,
easements, utility lines, rights-of-way, setback lines and encumbrances
affecting such real property.
(P) Prior to Closing, the Company shall terminate the Kansas City
Salad, L.L.C. 401(k) Plan and Trust (the "KC Salad 401(k) Plan").
(Q) Prior to Closing, the partners of F.C. Limited Partnership
("FCLP") shall contribute $50,000 to the capital of FCLP (the "Capital
Contribution") and shall maintain such contribution for so long as
Redi-Cut or any of its Affiliates leases real property from FCLP.
(R) The Stockholders and Members agree, if requested by Purchaser,
to execute lockup agreements in connection with an offering of Purchaser's
Common Stock for such period of time, not to exceed 180 days, as may be
requested by the underwriters, provided that the directors and executive
officers of Purchaser are subject to the same lockup restrictions; and
provided further that if any such director or executive officer is
released from any such restriction, the Stockholders and Members shall
also be released from such restrictions to the same extent as such
executive officer or director at the same time.
(S) The parties acknowledge and agree that it is the intention of KC
Salad to transfer the real property located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ to a wholly-owned subsidiary of KC Salad and to distribute on
or prior to Closing the membership interests of such subsidiary to the KC
Members. Notwithstanding anything herein to the contrary, the parties
agree that the foregoing transfer of property and distribution of
membership interests shall not constitute a breach of the obligations
contained in this Section 3.2.
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3.3 Purchaser's and Acquisition Sub's Obligations. Purchaser and
Acquisition Sub shall continue to be bound by the terms and provisions of the
Confidentiality Agreement, dated August 1, 2000, between U.S. Bancorp ▇▇▇▇▇
▇▇▇▇▇▇▇ Inc., on behalf of the Company, and Purchaser ("Confidentiality
Agreement"). The Confidentiality Agreement is hereby incorporated into this
Agreement by reference and made a part of this Agreement and shall survive the
execution of this Agreement notwithstanding the terms thereof. Except as
specifically provided in this Section 3.3, if there shall be a conflict between
the provisions of this Agreement and the provisions of the Confidentiality
Agreement, the provisions of the Confidentiality Agreement shall control. The
provisions of this Section 3.3 shall terminate as of the Closing.
3.4 Joint Obligations. The following shall apply with equal force to the
Company, the Stockholders and the Members, on the one hand, and Purchaser and
Acquisition Sub, on the other hand:
(A) Each of the parties hereto shall use its best efforts to take,
or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate the transaction
contemplated hereby as soon as practicable. The Company, Stockholders and
Members shall use commercially reasonable best efforts to obtain the
consents to the consummation of the transaction contemplated hereby under
or with respect to each lease, agreement, Permit, Environmental Permit,
and other instrument, which is enumerated in SCHEDULE 3.4(A) attached
hereto and Purchaser and Acquisition Sub shall cooperate with the Company
with respect thereto.
(B) Each party shall promptly give the other party written notice
of the existence or occurrence of any condition which would make any
representation or warranty herein contained of either party untrue or
which might reasonably be expected to prevent the consummation of the
transaction contemplated hereby.
(C) No party shall intentionally perform any act which, if
performed, or omit to perform any act which, if omitted to be performed,
would prevent or excuse the performance of this Agreement by any party
hereto or which would result in any representation or warranty herein
contained of said party being untrue in any material respect as if
originally made on and as of the Closing Date.
(D) The parties shall forthwith (and in any event not later than
five (5) days after the date hereof) make all filings and perform all acts
required by them respectively under the HSR Act, at each party's own
expense, except that Purchaser shall be responsible for paying the filing
fee for Purchaser as the acquiring person. Purchaser and the Company shall
coordinate and cooperate with one another in exchanging such information
and assistance as may reasonably be necessary in connection with the
parties obligations under this Section 3.4(D).
(E) Purchaser, Acquisition Sub, the Company, the Stockholders and
the Members will duly comply with all laws applicable to them and their
respective business and operations and all laws, compliance with which is
required for the valid consummation of the transactions contemplated by
this Agreement.
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ARTICLE IV
Conditions to Closing
4.1 Conditions to the Stockholders' and Members' Obligations. The
obligation of the Stockholders and Members to close the transaction contemplated
hereby is subject to the fulfillment of all of the following conditions on or
prior to the Closing Date, upon the non-fulfillment of any of which, this
Agreement may, at the Stockholders' and Members' option, be terminated pursuant
to and with the effect set forth in Article VIII:
(A) The representations and warranties made by Purchaser and
Acquisition Sub shall be true and correct as if originally made on and as
of the Closing Date except to the extent such representations and
warranties are made on or as of a specified date and except to the extent
the failure of such representations and warranties to be true and correct
as of such dates could not reasonably be expected to have a Material
Adverse Effect; and the Stockholders and Members shall have received a
certificate of a duly authorized officer of Purchaser and Acquisition Sub
signed on behalf of Purchaser and Acquisition Sub (as applicable) to such
effect.
(B) All obligations of Purchaser and Acquisition Sub to be performed
hereunder through, and including on, the Closing Date (including all
obligations which Purchaser and Acquisition Sub would be required to
perform at the Closing if the transaction contemplated hereby was
consummated) shall have been performed in all material respects; and the
Stockholders and Members shall have received a certificate of an officer
of Purchaser and Acquisition Sub signed on behalf of Purchaser and
Acquisition Sub (as applicable) to such effect.
(C) No suit, proceeding or investigation shall have been commenced
by any governmental authority or any other person on any grounds to
restrain, enjoin or hinder the consummation of the transaction
contemplated hereby, which suit, proceeding or investigation could
reasonably be expected to result in damages in excess of $1,500,000 or the
restraint or prohibition of the transactions contemplated hereby, in each
case in the reasonable opinion of counsel for the Stockholders and
Members.
(D) Purchaser and Acquisition Sub shall have delivered to the
Stockholders and Members the written opinion of Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC,
counsel for Purchaser and Acquisition Sub, dated as of the Closing Date,
in substantially the form of EXHIBIT E attached hereto.
(E) The waiting period applicable to the transaction contemplated
hereby under the HSR Act and the rules and regulations thereunder shall
have expired or been earlier terminated.
4.2 Conditions to Purchaser's and Acquisition Sub's Obligations. The
obligation of Purchaser and Acquisition Sub to close the transaction
contemplated hereby is subject to the fulfillment of all of the following
conditions on or prior to the Closing Date, upon the
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non-fulfillment of any of which, this Agreement may, at Purchaser's option, be
terminated pursuant to and with the effect set forth in Article VIII:
(A) The representations and warranties made by the Stockholders and
Members shall be true and correct as if originally made on and as of the
Closing Date, except to the extent such representations and warranties are
made on or as of a specified date and except to the extent the failure of
such representations and warranties to be true and correct could not
reasonably be expected to have a Material Adverse Effect; and Purchaser
and Acquisition Sub shall have received a certificate of the Stockholders
and Members to such effect.
(B) All obligations of the Stockholders and Members to be performed
hereunder through, and including on, the Closing Date (including all
obligations which the Stockholders and Members would be required to
perform at the Closing if the transaction contemplated hereby was
consummated) shall have been performed in all material respects; and
Purchaser and Acquisition Sub shall have received a certificate of the
Stockholders and Members to such effect.
(C) No suit, proceeding or investigation shall have been commenced
by any governmental authority or any other person on any grounds to
restrain, enjoin or hinder the consummation of the transaction
contemplated hereby, which suit, proceeding or investigation could
reasonably be expected to result in damages in excess of $1,500,000 or the
restraint or prohibition of the transactions contemplated hereby, in each
case in the reasonable opinion of legal counsel to Purchaser and
Acquisition Sub.
(D) The Company shall have delivered to Purchaser and Acquisition
Sub the written opinion of Altheimer & ▇▇▇▇, counsel to the Stockholders
and Members dated as of the Closing Date, in substantially the form of
EXHIBIT F attached hereto.
(E) The waiting period applicable to the transaction contemplated
hereby under the HSR Act and the rules and regulations thereunder shall
have expired or been earlier terminated.
(F) Since December 31, 1999, the Company shall not have suffered a
Material Adverse Effect.
(G) The Affiliate Stockholders shall have delivered to Purchaser the
Affiliate Letters, in substantially the form of EXHIBIT G attached hereto.
(H) Purchaser shall have received from the Company executed
counterparts of the consents referred to in SCHEDULE 3.4(A) hereof and all
other consents not set forth in the Disclosure Schedule which are material
to the Business that are required for the consummation of the transactions
contemplated hereby, all of which consents shall be in form and substance
reasonably satisfactory to Purchaser.
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(I) Purchaser shall have received from the Stockholders and Members
terminations of the Deferred Compensation Agreements and releases of the
Company from all obligations thereunder.
(J) Purchaser shall have received from each Stockholder an executed
338(h)(10) Election (as defined herein) form, which Purchaser shall
immediately execute.
(K) Purchaser shall have received a release, in form and substance
reasonably acceptable to Purchaser (the "Release"), releasing Redi-Cut
from all obligations under that certain Reimbursement Agreement, dated as
of October 1, 1991, among Redi-Cut, F.C. Limited Partnership and LaSalle
National Bank (the "Reimbursement Agreement") and that certain Placement
and Remarketing Agreement, dated September 25, 1991, among F.C. Limited
Partnership, Redi-Cut and Illinois Development Finance Authority (the
"Placement Agreement").
(L) Purchaser shall have received evidence, reasonably satisfactory
to it, of the termination of the KC Salad 401(k) Plan.
(M) Purchaser shall have received evidence, reasonably satisfactory
to it, of the Capital Contribution.
(N) Purchaser shall have received Suitability Questionnaires from
each Stockholder and Member, in substantially the form of EXHIBIT N
hereto.
(O) Each of Redi-Cut, KC Salad and KC Real Estate shall have been
released from all their guaranty obligations; other than the KC Real
Estate Guaranty and any other guaranty obligation where the obligation
that is guaranteed is an obligation of one or more of Redi-Cut, KC Salad
or KC Real Estate.
(P) Purchaser shall have received title insurance commitments or
other evidence reasonably satisfactory to Purchaser, confirming that the
Company has valid and enforceable leasehold interest in and to all real
estate located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ and there
are no exceptions to title with respect to such property that would
reasonably be expected to (y) materially and adversely affect the intended
use of such property by Purchaser, or (z) impose significant financial
obligations upon Redi-Cut by virtue of the Amended and Restated Lease
between F.C. Limited Partnership and Redi-Cut.
ARTICLE V
Closing
5.1 Form of Documents. At the Closing, the parties shall deliver the
documents, and shall perform the acts, which are set forth in this Article V.
All documents which the Company, the Stockholder and the Members shall deliver
shall be in form and substance reasonably satisfactory to Purchaser and its
counsel. All documents which Purchaser and Acquisition Sub
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shall deliver shall be in form and substance reasonably satisfactory to the
Stockholders and Members and their counsel.
5.2 Purchaser's and Acquisition Sub's Deliveries. Subject to the
fulfillment or waiver of the conditions set forth in Section 4.2, Purchaser and
Acquisition Sub shall execute and/or deliver to the Stockholders and Members
and/or the Escrow Agent all of the following:
(A) the Estimated Consideration to be paid at Closing as provided in
Section 1.3(A);
(B) evidence of payment in full of the Funded Debt in accordance
with the Payoff Letters as provided in Section 1.3(D);
(C) the Escrow Agreement;
(D) a certified copy of Purchaser's Charter and by-laws and a
certified copy of Acquisition Sub's Articles of Incorporation and by-laws;
(E) a certificate of good standing of Purchaser, issued not earlier
than fourteen (14) days prior to the Closing Date by the Secretary of
State of Tennessee and a certificate of good standing of Acquisition Sub,
issued not earlier than fourteen (14) days prior to the Closing Date by
the Secretary of State of Missouri;
(F) an incumbency and specimen signature certificate with respect to
the officers of Purchaser and Acquisition Sub executing this Agreement,
and any other document delivered hereunder, on behalf of Purchaser or
Acquisition Sub; and
(G) a certified copy of resolutions of Purchaser's and Acquisition
Sub's boards of directors, authorizing the execution, delivery and
performance of this Agreement and Purchaser Ancillary Documents, and any
other document delivered by Purchaser or Acquisition Sub hereunder.
5.3 Deliveries of Stockholders and Members. Subject to the fulfillment or
waiver of the conditions set forth in Section 4.1, the Stockholders and Members
shall execute or deliver to Purchaser and Acquisition Sub all of the following:
(A) a certified copy of the Articles of Incorporation and by-laws of
Redi-Cut, the Articles of Organization and the Operating Agreement of KC
Salad and the Certificate of Formation and the Operating Agreement of KC
Real Estate;
(B) certificates of good standing, issued not earlier than fourteen
(14) days prior to the Closing Date by the Secretary of State of Illinois,
in the case of Redi-Cut, and by the Secretary of State of Illinois and
Missouri in the case of KC Salad and by the Secretary of State of Delaware
and Illinois in the case of KC Real Estate;
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(C) payoff letters and discharge documents from the lenders
providing Funded Debt, which payoff letters and discharge documents shall
(i) reflect the amounts required in order to pay in full all obligations
of the Company to each such lender as of the Closing Date, and (ii)
provide that, upon payment in full of the amounts indicated, all claims,
encumbrances, security interests and other charges of such lender in and
to the properties and assets of the Company shall be terminated and of no
further force and effect, and that such lender shall forthwith execute and
deliver to Purchaser any and all terminations and releases (including
UCC-3 termination statements) necessary to evidence the foregoing
termination (the "Payoff Letters"); and
(D) the Escrow Agreement.
5.4 Other Deliveries. In addition, at the Closing, the parties shall
execute and deliver to the persons to be party thereto:
(A) an Employment Agreement between Redi-Cut and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, in
the form of EXHIBIT H;
(B) an Employment Agreement between Redi-Cut and ▇▇▇▇▇ ▇▇▇▇▇▇, in
the form of EXHIBIT I;
(C) an Employment Agreement between Redi-Cut and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, in
the form of EXHIBIT J;
(D) an Employment Agreement between Redi-Cut and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
in the form of EXHIBIT K;
(E) a Non-Competition Agreement among the Purchaser, the Company and
each Stockholder and Member named therein, in the form of EXHIBIT L; and
(F) the Amended and Restated Lease between F.C. Limited Partnership
and Redi-Cut, in the form of EXHIBIT M.
ARTICLE VI
Post-Closing Agreements
6.1 Post-Closing Agreements. From and after the Closing, the parties shall
have the respective rights and obligations which are set forth in the remainder
of this Article VI.
6.2 Inspection of Records. Purchaser and the Company shall each make their
respective books and records (including work papers in the possession of their
respective accountants) with respect to the Company available for inspection by
the Stockholders and Members or by their representatives, for reasonable
business purposes at all reasonable times during normal business hours, for a
seven (7) year period following the Closing Date, with respect to all
transactions of the Company occurring prior to and relating to the Closing, and
the
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historical financial condition, assets, liabilities, operations and cash flows
of the Company. As used in this Section 6.2, the right of inspection includes
the right to make extracts or copies at the Members' and Stockholders' expense.
6.3 Third Party Claims. The parties shall cooperate with each other with
respect to the defense of any claims or litigation made or commenced by third
parties following the Closing Date which are not subject to the indemnification
provisions contained in Article VII, provided that the party requesting
cooperation shall reimburse the other party for the other party's reasonable
out-of-pocket costs and expenses of furnishing such cooperation.
6.4 Further Assurances. The parties shall execute such further documents,
and perform such further acts, as may be reasonably necessary to comply with the
terms of this Agreement and consummate the transaction contemplated hereby.
6.5 Post-Closing Tax Returns.
(A) Each of the Stockholders, Members and Purchaser agrees to
allocate the Consideration and the liabilities of the Company existing
immediately prior to the Closing to the assets of the Company as provided
on SCHEDULE 6.5(A) (which allocation shall be prepared by the
Stockholders' Representative and delivered to Purchaser not later than
sixty (60) days following Closing and agreed to by Purchaser, which
agreement shall not be unreasonably withheld). The allocation shall be
prepared in accordance with the valuation method listed on SCHEDULE
6.5(A). Each of the Stockholders, Members, the Company, Acquisition Sub
and Purchaser (as applicable) shall complete and file Internal Revenue
Service Form 8594 and/or Form 8023, as appropriate (and any similar form
required by state, local or foreign law) using the allocation of the
Consideration and liabilities agreed between the Purchaser and
Stockholders' Representative, and none of them shall take a position on
any tax return, report or filing contrary with such allocation.
(B) Any tax returns of the Company with respect to a period ending
on or prior to or including the Closing Date not filed as of the Closing
Date shall be prepared and filed by the Stockholders' Representative, at
the Stockholders' and Members' expense. Purchaser shall provide, and cause
the Company to provide, to the Stockholders' Representative (at no charge)
such assistance (including the assistance of employees of the Company, the
provision of information and any required consents, powers of attorney or
authorization) as shall be reasonably required to allow the Stockholders'
Representative to prepare and file any tax returns described in this
Section 6.5(B). The Stockholders' Representative will permit Purchaser to
review and comment on such tax return, but the Stockholders'
Representative is not obligated to follow or use any such comments or
revisions. Without the express written permission of the Stockholders'
Representative (which may be given or withheld in the sole discretion of
the Stockholders' Representative), Purchaser shall not amend, and shall
not permit the Company to amend, any tax return filed prior to the Closing
Date or pursuant to this Section 6.5(B).
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(C) In the event Purchaser or the Company receives notice of any
audit or other inquiry with respect to taxes for a period ending on or
prior to the Closing Date which could (depending upon its resolution)
affect the tax liability of the Stockholders or Members, the Purchaser and
the Company shall (i) promptly inform the Stockholders' Representative of
such notice, (ii) allow the Stockholders' Representative to manage,
control and defend (in his sole discretion) at his expense such audit or
inquiry and (iii) provide, and cause the Company to provide, to the
Stockholders' Representative such assistance and access to information as
shall be reasonably requested by the Stockholders' Representative in
connection with such audit or inquiry. Purchaser acknowledges and agrees
that the Stockholders' Representative shall have all necessary authority
to execute any IRS closing agreement or tax returns with respect to any
audit or inquiry. Purchaser shall be entitled to participate in such audit
or inquiry, at its expense, provided, that the Stockholders'
Representative shall have the sole discretion to settle, compromise or
litigate any matter described in this subsection (C), provided that
neither Purchaser nor any of its Affiliates shall have any liability or
obligation with respect to such matter.
6.6 Section 338(h)(10) Election. With respect to the Acquisition:
(A) Purchaser and the Stockholders shall make an election under
Section 338(h)(10) of the Code and the Treasury Regulations promulgated
thereunder (and any comparable election under state, local or foreign tax
law) for Redi-Cut (the "Section 338(h)(10) Election"). The parties shall
report, in connection with the determination of income, franchise or other
taxes measured by net income, the transactions being undertaken pursuant
to this Agreement in a manner consistent with the Section 338(h)(10)
Election.
(B) Purchaser, the Stockholders and Redi-Cut shall cooperate fully
with each other with respect to the Section 338(h)(10) Election. In
particular, and not by way of limitation, in order to effect the Section
338(h)(10) Election, Purchaser and the Stockholders shall jointly execute
necessary copies of Internal Revenue Service Form 8023 and all attachments
required to be filed therewith pursuant to applicable Treasury
regulations. Except as provided in this Section 6.6, Purchaser and the
Stockholders shall file, and Purchaser shall cause members of its
affiliated group (within the meaning of Section 1504 of the Code or any
similar group defined under a similar provision of state, local or foreign
law) to file, all returns, statements, forms and schedules in connection
therewith in a manner consistent with such valuations and shall take no
position contrary thereto unless required to do so by applicable law. Any
disputes regarding the preparation, execution or filing of the forms and
documents required in connection with making the Section 338(h)(10)
Election shall be resolved in an arbitration to be conducted by the
Arbitrating Accountant, whose fees shall be borne equally by Purchaser on
the one hand, and the Stockholders on the other hand. Each of the parties
to this Agreement shall be bound by the decision of the Arbitrating
Accountant rendered in such arbitration. To the extent permitted by state,
local or foreign tax laws, the principles of this Section 6.6 shall also
apply with respect to a Section 338(h)(10) Election under state, local or
foreign law.
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6.7 Post Closing Employment. Purchaser has the present intention to
continue the employment of each employee of the Company after the Closing.
6.8 Agreement to Defend and Indemnify. Purchaser shall cause each Company
to indemnify and hold harmless each present and former director, officer,
manager, employee and agent of each Company and each present and former
director, officer, manager, employee, agent or trustee of any employee benefit
plan for employees of such Company (individually, an "Indemnified Employee") and
collectively, the "Indemnified Employees") against any losses, claims, damages,
liabilities, costs, expenses, judgments, fines and amounts paid in settlement in
connection with any threatened, pending or completed claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative ("Indemnifiable Claim"), arising out of or pertaining to any
action or omission occurring prior to the Closing Date (including any which
arise out of or relate to the transaction contemplated by this Agreement),
whether asserted or commenced prior to or following the Closing Date, to the
full extent permitted under applicable law and each Company's Articles of
Incorporation and by-laws, Articles of Organization, Certificate of Formation
and Operating Agreement, as applicable, as currently in effect. The parties
hereto agree that for not less than five (5) years following the Closing Date,
the provisions of each Company's Articles of Incorporation and/or by-laws,
Articles of Organization, Certification of Formation and Operating Agreement, as
applicable, as in effect on the date hereof with respect to indemnification of
officers, directors, employees, and agents of the Company shall not be modified
or amended except as required by law, unless such modification or amendment
expands the rights of the Indemnified Employees to indemnification. Purchaser
shall cause the Company to advance expenses (including attorneys' fees) to each
such Indemnified Employee to the full extent permitted by law. In the event of
any Indemnifiable Claim (whether asserted or commenced before or following the
Closing Date), (a) the Indemnified Employees may retain counsel reasonably
satisfactory to them, and Purchaser shall cause the Company to pay all
reasonable fees and expenses of such counsel for the Indemnified Employees
promptly as statements therefor are received, and (b) Purchaser shall cause the
Company to use its commercially reasonable best efforts to assist in the
vigorous defense of any such matter; provided that the Company shall not be
liable for any settlement effected without its written consent, which consent,
however, shall not be unreasonably withheld. The parties acknowledge and agree
that the provisions of this Section 6.8 are primarily for the benefit of the
Indemnified Employees and the Indemnified Employees shall have third-party
beneficiary rights under this Section 6.8 and shall be entitled to enforce their
rights hereunder.
6.9 Confidential Information. Each Stockholder and Member agrees that such
Stockholder or Member will hold in trust, keep confidential and not disclose to
any third party or make use of the Confidential Information (as defined herein)
of the Company, its Affiliates or their customers. Each Stockholder and Member
further agrees not to cause the transmission, removal, or transport of
Confidential Information from the Company's principal place of business or any
other place of business specified by the Company. Each Stockholder and Member
agrees not to publish, disclose or otherwise disseminate such information
without prior written approval of the Board of Directors of the Company. Each
Stockholder and Member acknowledges that the unauthorized disclosure of
Confidential Information of the Company, its Affiliates or their customers may
be highly prejudicial to their interests, an invasion of privacy,
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an improper disclosure of trade secrets, or a violation of this Section 6.9.
Confidential Information includes all information that has or could have
commercial value or other utility in the business in which the Company, its
Affiliates or customers are engaged or in which they contemplate engaging.
Confidential Information also includes all information of which the unauthorized
disclosure could be detrimental to the interests of the Company, its Affiliates
or customers, whether or not such information is specifically identified as
Confidential Information by the Company, its Affiliates or customers.
Confidential Information includes, but is not limited to any and all information
concerning teaching techniques, processes, formulas, trade secrets, inventions,
discoveries, improvements, research and development and test results, software
programs, specifications, data, marketing plans, business plans, strategies,
forecasts, unpublished financial information, budgets, projections, customer and
supplier identities, processing equipment, and any modifications or enhancements
of any of the foregoing, and all financial information disclosed to any
Stockholder or Member by the Company or its Affiliates, either directly or
indirectly, in writing or orally or by observation, which has actual or
potential economic or proprietary value to the Company or its Affiliates.
Confidential Information shall not include any data or information that (i) is
in the public domain (other than as a result of unauthorized disclosure by such
Stockholder or Member), (ii) is required to be disclosed by law, order or
regulation of a court or tribunal or government authority or (iii) becomes
lawfully available to such Stockholder or Member on a non-confidential basis
from a third party. Notwithstanding the foregoing, this Section 6.9 shall not
apply to the disclosure or use of Confidential Information in connection with
the performance of a Stockholder's or Member's obligations to the Company in
their capacity as an employee of the Company.
6.10 Covenant of Purchaser Regarding Registration Statement. From and
after the Closing Date, Purchaser shall timely file or cause to be filed all
reports required to be filed under the Securities Exchange Act of 1934, as
amended, and will otherwise take all reasonable steps necessary to ensure that
the Stockholders and Members remain eligible to dispose of such shares of
Purchaser's Common Stock acquired hereunder pursuant to Rule 145 of the
Securities Act and within two (2) business days after Closing will file a
supplement to the prospectus contained in the Registration Statement to permit
resales of shares of Purchaser's Common Stock by the Stockholders and Members
pursuant thereto. In the event that the Stockholders and Members cannot dispose
of such shares in compliance with Rule 145 (or any successor similar rule), the
Stockholders and Members, with the consent of Purchaser, may dispose of such
shares pursuant to the Registration Statement. Purchaser shall take all
reasonable actions to maintain the effectiveness of the Registration Statement
for any such resale. Purchaser may postpone for a reasonable period of time (not
to exceed 90 days) the resale of shares pursuant to the Registration Statement
if Purchaser determines in the good faith judgement of its board of directors
that the resale of shares pursuant to the Registration Statement (A) could
reasonably be expected to have a material adverse effect on any plan or proposal
by Purchaser or any of its subsidiaries with respect to any financing,
acquisition, recapitalization or reorganization which is material to Purchaser
or other transaction which is material to Purchaser or (B) could require the
disclosure of material non-public information, the disclosure of which could
reasonably be expected to be materially adverse to the best interests of
Purchaser and its shareholders. Purchaser shall indemnify and hold the
Stockholders and Members harmless for any liability, loss or expense the
Stockholders and Members may suffer arising out of any claim that resales made
pursuant to the Registration Statement were made at a time when the Registration
Statement contained an untrue
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statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein not misleading.
If such indemnification is unavailable or insufficient to hold the Stockholders
and Members harmless as intended, then Purchaser shall contribute to the amounts
suffered by the Stockholders and Members in such proportion as is appropriate to
reflect the relative fault of Purchaser and the Stockholders and Members and
other relevant equitable considerations.
ARTICLE VII
Indemnification
7.1 General. From and after the Closing, the parties shall indemnify each
other as provided in this Article VII.
7.2 Certain Definitions. As used in this Agreement, the following terms
shall have the indicated meanings:
(A) "Damages" shall mean all assessments, levies, losses, fines,
penalties, damages, costs and expenses, including reasonable attorneys',
accountants', investigators' and experts' fees and expenses;
(B) "Indemnified Party" shall mean a person or entity who is
entitled to indemnification from a party hereto pursuant to this Article
VII;
(C) "Indemnifying Party" shall mean a party hereto who is required
to provide indemnification under this Article VII;
(D) "Third Party Claim" shall mean any action, suit, proceeding,
investigation, or like matter which is asserted or threatened by a person
or entity other than the parties hereto, their successors and permitted
assigns, against any Indemnified Party or to which any Indemnified Party
is subject.
7.3 Stockholders' and Members' Indemnification Obligations. Subject to the
limitations set forth in Section 7.4, each Stockholder and Member shall
indemnify, save and keep Purchaser, Acquisition Sub and their directors,
officers, employees, successors and assigns (each a "Purchaser Indemnitee" and
collectively, the "Purchaser Indemnitees") harmless against and from all Damages
sustained or incurred by any Purchaser Indemnitee, as a result of or arising out
of or by virtue of:
(A) any inaccuracy in or breach of any representation or warranty
made by the Stockholder or Members to Purchaser or Acquisition Sub
contained herein or in any closing document delivered to Purchaser in
connection herewith;
(B) the breach by the Company, the Stockholders or Members of, or
failure of the Company, the Stockholders, or Members to comply with any of
the covenants or obligations under this Agreement to be performed by the
Company, the Stockholders or Members prior to or after the Effective Time;
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(C) any tax liability of the Company asserted or assessed against
the Company, or any tax liability of any Stockholder or Member for any
franchise, capital stock or other similar state or local tax asserted or
assessed against the Company, in each case for any period ending on or
before the Closing Date, to the extent such tax liability has not been
previously paid, or for which adequate reserves or provisions have not
been established in the Financial Statements or in the Statement of
Working Capital; or
(D) any cost, expense or liability incurred by Purchaser,
Acquisition Sub or the Company in connection with the release of any
Hazardous Materials into the soil or groundwater of, or originating from,
any Business Facility, or any Hazardous Material Activity, which exists on
the Closing Date and any cost, expense or liability incurred by Purchaser,
Acquisition Sub or the Company in connection with the failure of the
Company, Stockholders or Members to comply with any Environmental Law.
7.4 Limitation on the Stockholders' and Members' Indemnification
Obligations. The Stockholders' and Members' obligations pursuant to the
provisions of Section 7.3 are subject to the following limitations:
(A) the Purchaser Indemnitees shall not be entitled to recover under
Section 7.3 until the aggregate amount which the Purchaser Indemnitees
would recover under Section 7.3, but for this Section 7.4(A), exceeds Five
Hundred Thousand Dollars ($500,000), and then only for the excess over
such amount;
(B) the Purchaser Indemnitees shall not be entitled to recover under
Section 7.3 unless a claim has been asserted by written notice, specifying
the details of the alleged misrepresentation or breach of warranty or
covenant, delivered to the Stockholders' Representative on or prior to the
first (1st) year anniversary of the Closing, except with respect to claims
under Section 7.3(C), which must be asserted on or prior to the fourth
(4th) anniversary of the Closing;
(C) the Purchaser Indemnitees shall not be entitled to recover under
Section 7.3:
(i) WITH RESPECT TO CONSEQUENTIAL DAMAGES AND WITH RESPECT
TO PUNITIVE DAMAGES (it being understood that
consequential damages shall not include any multiple of
lost profits reflecting a decrease in the value of the
Business or any decrease in the share price of
Purchaser.);
(ii) with respect to the failure to obtain any consent, or to
satisfy any conditions imposed incident to the giving of
any consent, required in connection with, or as a
consequence of, the transactions contemplated by this
Agreement;
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(iii) to the extent the subject matter of the claim is covered
by insurance (including title insurance) held by the
Company, Purchaser or Acquisition Sub;
(iv) with respect to any claim or liability to any employee
employed by the Company arising as the result of the
termination of such employee's employment subsequent to
the Closing Date;
(v) the Purchaser Indemnitees shall not be entitled to
recover, or to seek any remedy under this Agreement to
the extent that Purchaser shall have received the
benefit of an adjustment to the Consideration pursuant
to the Net Working Capital Adjustment set forth in
Article I with respect to the matter for which the
Purchaser Indemnitees are seeking indemnification; and
(vi) with respect to any matter or claim for which the
Company receives indemnification from a third party.
(D) the amount of any recovery by the Purchaser Indemnitees pursuant
to Section 7.3 shall be net of any foreign, federal, state and/or local
income tax benefits inuring to the Purchaser Indemnitees as a result of
the state of facts which entitled the Purchaser Indemnitees to recover
pursuant to Section 7.3;
(E) the Purchaser's Common Stock held in Escrow shall constitute the
sole and exclusive source for the satisfaction of the indemnification
obligations and liabilities of the Stockholders and Members under this
Agreement, and any other closing or ancillary document executed and
delivered pursuant to the provisions hereof or thereof, and in no event
shall the aggregate amount of Damages for which the Stockholders and
Members be liable under this Agreement and any other ancillary documents
hereto or thereto exceed the Purchaser's Common Stock held in the Escrow;
it being understood that the entire amount of the Purchaser's Common Stock
held in the Escrow shall be available to Purchaser Indemnitees to satisfy
the indemnification obligations of the Stockholders and Members under this
Agreement without regard to the Stockholder's and Member's allocable right
and interest in the Consideration and the Purchaser's Common Stock held in
the Escrow. Anything to the contrary contained herein notwithstanding,
following the termination of the Escrow, any indemnification obligation of
the Stockholders and Members with respect to a claim pursuant to Section
7.3(C) of this Agreement shall be satisfied by the Stockholders and
Members, jointly and severally; provided that in no event shall the amount
of Damages for which the Stockholders and Members be liable under this
Agreement and any other ancillary documents hereto or thereto exceed in
the aggregate $10,000,000 less amounts paid or satisfied from the Escrow.
(F) Environmental Indemnities. As a condition of any indemnification
obligation under Section 7.3(D) or under 7.3(A) with respect to a breach
of a representation or warranty in Section 2.3(R) (an "Environmental
Claim"), Purchaser
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Indemnitees shall, with respect to each potential or actual Environmental
Claim, give written notice to the Stockholders' Representative promptly
following Purchaser Indemnitees' knowledge of the occurrence of any event
or Purchaser Indemnittees' knowledge of the existence of any condition or
alleged state of facts in respect thereof. In addition:
(i) Purchaser Indemnitees shall promptly deliver to the
Stockholders' Representative copies of all final
reports, studies, investigations, surveys, test data,
assessments, cost estimates and all other information
and documentation available to it relating to or
supporting such potential or actual Environmental Claim;
(ii) Unless required to do so by applicable Environmental
Law, no Purchaser Indemnitees shall give notice to any
governmental authority of any event or of the existence
of any condition or alleged state of facts that may give
rise to a potential or actual Environmental Claim without
prior written notice to the Stockholders' Representative,
if the Purchaser Indemnitees (or representative or
advisor thereof) shall have any discussion or other
communication with, to, or from any governmental authority
relating to such potential or actual Environmental
Claim, Purchaser Indemnitees shall provide reasonable
prior written notice to the Stockholders' Representative,
and the Stockholders' Representative shall be entitled
to attend all such discussions and communications, with
Purchaser Indemnitees' leading such discussions and
communications.
(iii) Purchaser Indemnitees agree to use their best efforts to
minimize remediation costs with respect to Environmental
Claims, and, in deciding among various alternative
courses of remedial action, due consideration shall be
given to minimization of costs. Deed restrictions or any
limitations on use of any portion of the property shall
not be required to minimize remediation costs, unless
otherwise agreed to by Purchaser Indemnitees.
7.5 Purchaser's Indemnification Covenants. Subject to the limitations set
forth in Section 7.6, Purchaser shall indemnify, save and keep the Stockholders
and Members and their respective heirs, stockholders, partners, members,
directors, officers, employees, successors and assigns ("Stockholder
Indemnitees"), harmless against and from all Damages sustained or incurred by
any Stockholder Indemnitee, as a result of or arising out of or by virtue of:
(A) any inaccuracy in or breach of any representation or warranty
made by Purchaser or Acquisition Sub to the Stockholders or Members
herein, or in any closing document delivered to the Stockholders, Members
or the Stockholders' Representative in connection herewith or therewith;
or
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(B) any breach by Purchaser or Acquisition Sub of, or failure by
Purchaser or Acquisition Sub to comply with, any of the covenants or
obligations under this Agreement be performed by Purchaser or Acquisition
Sub (including obligations under this Article VII).
7.6 Limitation of the Purchaser's Indemnification Obligations. The
Purchaser's obligations pursuant to Section 7.5 are subject to the following
limitations:
(A) The Stockholder Indemnitees shall not be entitled to recover
under Section 7.5 until the aggregate amount which the Stockholder
Indemnitees would recover under Section 7.5, but for this Section 7.6,
exceeds $500,000, and then only for the excess over such amount;
(B) The Stockholder Indemnitees shall not be entitled to recover
under Section 7.5 unless a claim has been asserted by written notice,
specifying the details of the alleged misrepresentation or breach of
warranty or covenant, delivered to the Purchaser on or prior to the first
(1st) year anniversary of the Closing;
(C) The Stockholder Indemnitees shall not be entitled to recover
under Section 7.5:
(i) WITH RESPECT TO CONSEQUENTIAL DAMAGES AND WITH RESPECT
TO PUNITIVE DAMAGES (it being understood that
consequential damages shall not include any multiple of
lost profits reflecting a decrease in the value of the
Business or any decrease in the share price of
Purchaser.);
(ii) With respect to the failure to obtain any consent, or to
satisfy any conditions imposed incident to the giving of
any consent, required in connection with, or as a
consequence of, the transactions contemplated by this
Agreement;
(iii) to the extent the subject matter of the claim is covered
by insurance (including title insurance) held by the
Company, the Stockholders or the Members;
(iv) with respect to any claim or liability to any employee
employed by the Company arising as the result of the
termination of such employee's employment prior to the
Closing Date;
(v) the Stockholder Indemnitees shall not be entitled to
recover, or to seek any remedy under this Agreement to
the extent that the Stockholders or Members shall have
received the benefit of an adjustment to the Consideration
pursuant to the Net Working Capital Adjustment set forth
in Article I with respect to the matter
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for which the Stockholder Indemnitees are seeking
indemnification; and
(vi) with respect to any matter or claim for which the
Stockholders or Members receives indemnification from a
third party.
(D) The amount of any recovery by the Stockholder Indemnitees
pursuant to Section 7.5 shall be net of any foreign, federal, state and/or
local income tax benefits inuring to the Stockholder Indemnitees as a
result of the state of facts which entitled the Stockholder Indemnitees to
recover pursuant to Section 7.5;
(E) In no event shall the aggregate amount of Damages for which the
Purchaser and Acquisition Sub be liable under this Agreement and any other
ancillary documents hereto or thereto exceed $10 million.
7.7 Cooperation. Subject to the provisions of Section 7.8, the
Indemnifying Party shall have the right, at its own expense, to participate in
the defense of any Third Party Claim, and if said right is exercised, the
parties shall cooperate in the investigation and defense of said Third Party
Claim.
7.8 Third Party Claims. Forthwith following the receipt of notice of a
Third Party Claim, the party receiving the notice of the Third Party Claim shall
(i) notify the other party of its existence setting forth with reasonable
specificity the facts and circumstances of which such party has received notice
and (ii) if the party giving such notice is an Indemnified Party, specifying the
basis hereunder upon which the Indemnified Party's claim for indemnification is
asserted. The Indemnified Party may, upon reasonable notice, tender the defense
of a Third Party Claim to the Indemnifying Party. If:
(A) the defense of a Third Party Claim is so tendered and within
thirty (30) days thereafter such tender is accepted in writing subject to
the provisions of this Article VII, including, if applicable, Section 7.4
and Section 7.6, by the Indemnifying Party; or
(B) within thirty (30) days after the date on which written notice
of a Third Party Claim has been given pursuant to this Section 7.8, the
Indemnifying Party shall acknowledge subject to the provisions of this
Article VII, including, if applicable, Section 7.4 and Section 7.6, its
indemnification obligations as provided in this Article VII in writing to
the Indemnified Party;
then, except as hereinafter provided, the Indemnified Party shall not, and the
Indemnifying Party shall, have the right to contest, defend, litigate or settle
such Third Party Claim. The Indemnified Party shall have the right to be
represented by counsel at its own expense in any such contest, defense,
litigation or settlement conducted by the Indemnifying Party provided that the
Indemnified Party shall be entitled to indemnification therefor in accordance
with this Article VII if the Indemnifying Party shall lose its right to contest,
defend, litigate and settle the Third Party Claim as herein provided. The
Indemnifying Party shall lose its right to contest, defend, litigate and settle
the Third Party Claim if it shall fail to diligently contest the Third Party
Claim.
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So long as the Indemnifying Party has not lost its right and/or obligation to
contest, defend, litigate and settle as herein provided, the Indemnifying Party
shall have the exclusive right to contest, defend and litigate the Third Party
Claim and shall have the exclusive right, in its discretion exercised in good
faith, and upon the advice of counsel, to settle any such matter, either before
or after the initiation of litigation, at such time and upon such terms as it
deems fair and reasonable, provided that at least five (5) days prior to any
such settlement, written notice of its intention to settle shall be given to the
Indemnified Party. All expenses (including attorneys' fees) incurred by the
Indemnifying Party in connection with the foregoing shall be paid by the
Indemnifying Party; provided, that if the Indemnifying Party shall be the
Stockholders or Members, all such expenses shall be paid directly from the
Escrow. No failure by an Indemnifying Party to acknowledge in writing its
indemnification obligations under this Article VII shall relieve it of such
obligations to the extent they exist. If an Indemnified Party is entitled to
indemnification against a Third Party Claim, and the Indemnifying Party fails to
accept a tender of, or assume, the defense of a Third Party Claim pursuant to
this Section 7.8, or if, in accordance with the foregoing, the Indemnifying
Party shall lose its right to contest, defend, litigate and settle such a Third
Party Claim, the Indemnified Party shall have the right, without prejudice to
its right of indemnification hereunder, in its discretion exercised in good
faith and upon the advice of counsel, to contest, defend and litigate such Third
Party Claim, and may settle such Third Party Claim, either before or after the
initiation of litigation, at such time and upon such terms as the Indemnified
Party deems fair and reasonable, provided that at least five (5) days prior to
any such settlement, written notice of its intention to settle is given to the
Indemnifying Party.
7.9 Indemnification Exclusive Remedy. From and after the Closing:
(A) indemnification pursuant to the provisions of this Article VII shall
be the exclusive remedy of the parties for any misrepresentation or
breach of any warranty or covenant contained herein or in any
closing or ancillary document executed and delivered pursuant to the
provisions hereof or thereof;
(B) the only legal action which may be asserted by any party with
respect to any matter which is the subject of this Article VII shall
be a contract action to enforce, or to recover damages for the
breach of, this Article VII; and
(C) without limiting the generality of clause (B), no legal action
sounding in tort or strict liability may be maintained by any party.
ARTICLE VIII
Effect of Termination/Proceeding
8.1 General. The parties shall have the rights and remedies with respect
to the termination and/or enforcement of this Agreement which are set forth in
this Article VIII.
8.2 Right to Terminate. Anything to the contrary herein notwithstanding,
this Agreement and the transaction contemplated hereby may be terminated at any
time prior to the Closing by prompt notice given in accordance with Section
10.2:
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(A) by the mutual written consent of Purchaser and the Stockholders'
Representative;
(B) by Purchaser or the Stockholders' Representative if the Closing
shall not have occurred at or before 11:59 p.m. on January 31, 2001 (the
"Optional Termination Date"); provided, however, that the right to
terminate this Agreement pursuant to this Section 8.2(B) shall not be
available to any party whose failure to fulfill any of its obligations
under this Agreement has been the cause of or resulted in the failure of
the Closing to occur on or prior to the aforesaid date;
(C) by Purchaser prior to the Optional Termination Date, if in the
good faith, reasonable opinion of Purchaser's legal counsel the condition
set forth in Section 4.2(C) hereof cannot be satisfied prior to the
Optional Termination Date;
(D) by the Stockholders' Representative prior to the Optional
Termination Date, if in the good faith, reasonable opinion of legal
counsel for the Stockholders and Members, the failure of the condition set
forth in Section 4.1(C) hereof cannot be satisfied prior to the Optional
Termination Date;
(E) by Purchaser in the event of a breach by the Stockholders or
Members of any representation, warranty, covenant or other agreement
contained in this Agreement which (i) would give rise to the failure of a
condition set forth in Sections 4.2(A) or 4.2(B) hereof and (ii) cannot be
or has not been cured within twenty (20) business days after the giving of
written notice thereof to the Stockholders' Representative by Purchaser;
or
(F) by the Stockholders' Representative in the event of a breach by
Purchaser or Acquisition Sub of any representation, warranty, covenant or
other agreement contained in this Agreement which (i) would give rise to
the failure of a condition set forth in Sections 4.1(A) or 4.1(B) hereof
and (ii) cannot be or has not been cured within twenty (20) business days
after the giving of written notice thereof to Purchaser and Acquisition
Sub by the Stockholders' Representative.
8.3 Remedies. Notwithstanding any termination right granted in Section
8.2, in the event of the nonfulfillment of any condition to a party's closing
obligations, in the alternative, such party may elect to do one of the
following:
(A) proceed to close despite the nonfulfillment of any closing
condition, it being understood that consummation of the Closing shall be
deemed a waiver of a breach of any covenant required to be performed prior
to Closing, the lack of performance of which Purchaser or the
Stockholders' Representative, as applicable, has knowledge, and of such
party's rights and remedies with respect thereto;
(B) decline to close, terminate this Agreement as provided in
Section 8.2, and thereafter seek damages to the extent permitted by law;
or
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(C) seek specific performance of the obligations of the other party.
Each party hereby agrees that in the event of any breach by such party of
this Agreement, the remedies available to the other party at law would be
inadequate and that such party's obligations under this Agreement may be
specifically enforced.
ARTICLE IX
Stockholders' Representative
Pursuant to that certain Stockholders and Members Representative Agreement
(the "Stockholders and Members Representative Agreement"), the Stockholders and
Members have appointed ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Stockholders' Representative") to
represent the Stockholders and Members in this transaction. The Stockholders'
Representative has been appointed as attorney-in-fact for the Stockholders and
Members and has the powers described in the Stockholders and Members
Representative Agreement. Purchaser and Acquisition Sub shall be entitled to
rely on written instructions of the Stockholders' Representative and shall be
protected from any liability of any kind for actions taken in reliance upon such
written instructions.
ARTICLE X
Miscellaneous
10.1 Publicity. Except as otherwise required by law or applicable stock
exchange rules, press releases and other publicity concerning this transaction
shall be made only with the prior agreement of the Stockholders' Representative
and Purchaser (and in any event, the Stockholders' Representative and Purchaser
shall use all reasonable efforts to consult and agree with each other with
respect to the content of any such required press release or other publicity).
10.2 Notices. All notices required or permitted to be given hereunder
shall be in writing and may be delivered by hand, by facsimile, by nationally
recognized private courier, or by United States mail. Notices delivered by mail
shall be deemed given three (3) business days after being deposited in the
United States mail, postage prepaid, registered or certified mail, return
receipt requested. Notices delivered by hand, by facsimile, or by nationally
recognized private carrier shall be deemed given on the first business day
following receipt; provided, however, that a notice delivered by facsimile shall
only be effective if such notice is also delivered by hand, or deposited in the
United States mail, postage prepaid, registered or certified mail, on or before
two (2) business days after its delivery by facsimile. All notices shall be
addressed as follows:
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If to the Company (prior to Closing) or the Stockholders'
Representative (which shall constitute notice to all Stockholders
and Members):
Redi-Cut Foods, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice to the Company,
the Stockholders, Members or the Stockholders' Representative) to:
Altheimer & ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser or Acquisition Sub:
Performance Food Group Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice to Purchaser or
Acquisition Sub) to:
Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: F. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 10.2.
10.3 Expenses; Transfer Taxes; Audited Financial Statements. Each party
hereto shall bear all fees and expenses incurred by such party in connection
with, relating to or arising out of the negotiation, preparation, execution,
delivery and performance of this Agreement and the consummation of the
transaction contemplated hereby, including financial advisors', attorneys',
accountants' and other professional fees and expenses. The Stockholders and the
Members shall pay all sales and transfer taxes which may be payable in
connection with the transfer of the
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Shares and Membership Interests pursuant to the Acquisition. The Company shall
prepare financial statements for the nine (9) months ending September 30, 2000,
as soon as reasonably practicable following the end of the period. The financial
statements will be audited by KPMG LLP at the expense of the Purchaser. The
Company will cooperate with KPMG LLP in connection with the preparation of such
audit.
10.4 Entire Agreement. This Agreement and the instruments to be delivered
by the parties pursuant to the provisions hereof constitute the entire agreement
between the parties and shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives, successors and
permitted assigns. Each Exhibit, Schedule and the Disclosure Schedule, shall be
considered incorporated into this Agreement. Any amendments, or alternative or
supplementary provisions, to this Agreement, must be made in writing and duly
executed by an authorized representative or agent of each of the parties hereto.
The inclusion of any item in the Disclosure Schedule is not evidence of the
materiality of such item for the purposes of this Agreement. The parties make no
representations or warranties to each other, except as contained in this
Agreement, and any and all prior representations and warranties made by any
party or its representatives, whether verbally or in writing, are deemed to have
been merged into this Agreement, it being intended that no such prior
representations or warranties shall survive the execution and delivery of this
Agreement.
10.5 Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.
10.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.
10.7 Severability. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
10.8 Applicable Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of Illinois applicable to contracts
made in that State.
10.9 Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, and their successors and permitted
assigns. Nothing in this Agreement, express or implied, shall confer on any
person other than the parties hereto, and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, including third party beneficiary rights.
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10.10 Assignability. This Agreement shall not be assignable by any party
hereto without the prior written consent of the other party.
10.11 Governmental Reporting. Anything to the contrary in this Agreement
notwithstanding, nothing in this Agreement shall be construed to mean that a
party hereto or other person must make or file, or cooperate in the making or
filing of, any return or report to any governmental authority in any manner that
such person or such party reasonably believes or reasonably is advised is not in
accordance with law.
10.12 Waiver of Trial by Jury. Each of the parties hereto waives the right
to a jury trial in connection with any suit, action or proceeding seeking
enforcement of such party's rights under this Agreement or in relation to the
transactions contemplated hereby.
10.13 Consent to Jurisdiction. This Agreement has been executed and
delivered in and shall be deemed to have been made in Chicago, Illinois. The
parties each agree to the exclusive jurisdiction of any state or Federal court
within the City of Chicago, with respect to any claim or cause of action arising
under or relating to this Agreement, and waives personal service of any and all
process upon it, and consents that all services of process be made by registered
mail, directed to it at its address as set forth in Section 10.2, and service so
made shall be deemed to be completed when received. The parties each waive any
objection based on forum non conveniens and waive any objection to venue of any
action instituted hereunder. Nothing in this paragraph shall affect the right of
the parties to serve legal process in any other manner permitted by law.
10.14 No Strict Construction. The parties hereto jointly participated in
the negotiation and drafting of this Agreement. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their collective mutual intent, this Agreement shall be construed as if
drafted jointly by the parties hereto, and no rule of strict construction shall
be applied against any person or entity.
10.15 Interpretation. Whenever the term "include" or "including" is used
in this Agreement, it shall mean "including, without limitation," (whether or
not such language is specifically set forth) and shall not be deemed to limit
the range of possibilities to those items specifically enumerated. The words
"hereof," "herein" and "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular provision. Terms defined in the
singular have a comparable meaning when used in the plural and vice versa.
10.16 Amendments. This Agreement shall not be modified or amended except
pursuant to an instrument in writing executed and delivered on behalf of each of
the parties hereto.
10.17 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
10.18 Trustees. Anything to the contrary herein contained notwithstanding,
this Agreement has been executed by the trustee(s) identified on the signature
pages hereto, not personally, but solely as trustee(s), as aforesaid, in the
exercise of the power and authority
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conferred upon and vested in him (them), as such trustee(s). It is expressly
understood and agreed that all the warranties, indemnitees, representations,
covenants, undertakings and agreements herein made on the part of such
trustee(s), are undertaken by him (them) solely in his (their) capacity as
trustee(s) and not personally. No personal liability or personal responsibility
is assumed by or shall be at any time asserted or enforceable against such
trustee(s) on account of any warranty, indemnity, representation, covenant,
undertaking or agreement of the trustee(s) herein, any such liability being
expressly waived by the Stockholders and Members, and by every person now or
hereafter claiming any right hereunder, and that so far as such trustee(s) and
his (their) successor(s), personally, are concerned, every other person now or
hereafter claiming any right hereunder shall look solely to the trust assets
from time to time held by such trustee(s), for the satisfaction of such
liability.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
PURCHASER:
PERFORMANCE FOOD GROUP COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Its: Vice President of Corporate Operations
and Risk Management
--------------------------------------
ACQUISITION SUB:
K.C. SALAD HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Its: Chairman
---------------------------------------
STOCKHOLDERS:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Irrevocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Co-Trustee
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Irrevocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Co-Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Irrevocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Co-Trustee
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Irrevocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Co-Trustee
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Irrevocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Co-Trustee
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Irrevocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇, Co-Trustee
57
59
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Irrevocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇, Co-Trustee
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Irrevocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇, Co-Trustee
Alexandra ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Irrevocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇, Co-Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Irrevocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇, Co-Trustee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Irrevocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇, Co-Trustee
58
60
MEMBERS OF KC SALAD:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
The ▇▇▇▇▇▇ Family, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Manager
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MEMBERS OF KC REAL ESTATE:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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