EXECUTION DRAFT
ASSET PURCHASE AGREEMENT
BY AND AMONG
PF ACQUISITION II, INC.,
PRO-FAC COOPERATIVE, INC.
AND
AGRIPAC, INC., DEBTOR AND DEBTOR-IN-POSSESSION
DATED FEBRUARY 12, 1999
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made February 12, 1999, by and among PF ACQUISITION
II, INC., a New York corporation ("BUYER"), and a wholly-owned subsidiary of
Pro-Fac Cooperative, Inc., a New York cooperative corporation ("PRO-FAC") and
AGRIPAC, INC., an Oregon cooperative corporation, as debtor and
debtor-in-possession ("SELLER").
Buyer has offered to buy and Seller has offered to sell substantially
all of the assets primarily related to the Frozen Food Business (as hereafter
defined) of Seller.
IT IS THEREFORE AGREED AS FOLLOWS:
ARTICLE 1
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms are defined terms
and shall have the meanings set forth below:
"AFFILIATE" means, with respect to any entity, all directors and
officers (or persons performing similar functions) of such entity, all persons
and entities controlling, controlled by or under common control with such entity
and all directors and officers (or persons performing similar functions) of
Affiliates.
"AGREEMENT" refers to this entire Agreement, including the Disclosure
Memorandum, exhibits, schedules and certificates referred to herein.
"ASSETS" means the Receivables and substantially all of the tangible and
intangible property of every kind and description of the Seller primarily
related to the Frozen Food Business. The Assets include, without limitation, all
of Seller's right, title and interest in and to the following as of Closing:
(a) all Receivables;
(b) Frozen Food Inventory;
(c) Frozen Food Equipment;
(d) Frozen Food Real Property;
(e) rights in, to and under the Frozen Food Leased Property;
(f) the Intellectual Property;
(g) rights in, to and under the Assumed Contracts;
(h) the Permits;
(i) the Intangibles; and
(j) the Business Information and Records.
provided, however, that the definition of Assets shall not include any items
defined as Excluded
EXECUTION DRAFT
Assets.
"ASSUMED CONTRACTS" means only those contracts, leases, licenses and
agreements to which Seller is a party, which are specifically identified on
Exhibit A as being assumed by Buyer, and no others.
"ASSUMED LIABILITIES" means the obligations arising under the Assumed
Contracts subsequent to the Closing Date and no others.
"BANKRUPTCY CODE" means those provisions of the United States Code
currently codified at 11 U.S.C. 'SS' 'SS' 101 et seq. and any successor or
replacement statute or provisions.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
District of Oregon.
"BANKRUPTCY PROCEEDING" means that certain bankruptcy proceeding of
Seller under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court, styled
as In re Agripac, Inc., Debtor, Case No. 699-60001-fra11.
"BUSINESS" means the business of Seller, as currently conducted and
proposed to be conducted, and all activities associated therewith, including
without limitation the Canned Food Business and the Frozen Food Business.
"BUSINESS INFORMATION AND RECORDS" means all records, information, files
and papers of Seller primarily related to the other Assets or the Frozen Food
Business, including, without limitation, lock-box bank accounts relating to the
collection of the Receivables, product designs, blueprints, specifications,
drawings, recorded knowledge, surveys, real property records, engineering
reports, test reports, manuals, material standards, processing standards,
performance standards, catalogues, research data, formulae, inventions,
processes, production methods, quality control information, proprietary
information, know-how, technical data, performance data, plant service
information, trade and business secrets, sales data and other information
relating to the growing, manufacture, processing, freezing, packaging or sale or
service of products of or by Seller primarily related to the Frozen Food
Business, all art work, photographs, slides, color separations, plates and other
back-up material relating to product brochures, literature and similar materials
relating to the products of Seller primarily related to the Frozen Food
Business, and all sales and advertising materials, customer and supplier lists,
including addresses, telephone numbers and principal contacts, records of
products and quantities purchased or supplied by each customer and supplier,
other customer and supplier records and files, sales and purchase
correspondence, sales reports, copies of sales and use tax resale certificates,
personnel records and books of account primarily related to the other Assets or
the Frozen Food Business, but excluding the Corporate Records.
-2-
EXECUTION DRAFT
"BUYER'S LENDERS" means, collectively, CoBank, ACB and St. ▇▇▇▇ Bank for
Cooperatives, FCB.
"CANNED FOOD ASSETS" means all of Seller's right, title and interest
in and to the assets primarily related to the Canned Food Business other than
any Receivables.
"CANNED FOOD BUSINESS" means the canned food business of Seller, as
currently conducted and proposed to be conducted, and all activities associated
therewith.
"CANNED FOOD TRANSITION SERVICES" means those management,
administrative, information, support and other services requested by Seller to
be performed by or otherwise made available through the Buyer for a period
ending on the earlier of (i) six months following the Closing Date, and (ii) any
sale or other transfer of a substantial portion of the Canned Food Assets. Any
out-of-pocket cost to be incurred by the Buyer in providing Canned Food
Transition Services shall be advanced or reimbursed (at Buyer's election) by
Seller.
"CASH COLLATERAL ORDER" means, collectively, the Interim Order Re Cash
Collateral, Adequate Protection, and Debtor in Possession Financing, entered in
the Bankruptcy Proceeding on January 8, 1999; the Order Authorizing Debtor to
Obtain Credit, entered in the Bankruptcy Proceeding on January 19, 1999; and the
Second Order Approving Debtor's Use of Cash Collateral, entered in the
Bankruptcy Proceeding; as each of the same may be amended or replaced after the
date hereof.
"CLOSING" means the consummation of the purchase and sale of the Assets.
"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CORPORATE RECORDS" means all original copies of Seller's corporate
minute books, stock ledgers, corporate accounting journals and corporate books
of account which comprise Seller's permanent accounting or tax records and
similar books and records of a corporate nature.
"CUT-OFF DATE" means March 31, 1998.
"DISCLOSURE MEMORANDUM" means the disclosure memorandum, dated on or
before the Closing Date, delivered by Seller to Buyer.
"EQUIPMENT" means all rights of Seller in any machinery, equipment,
spare parts, vehicles, furniture, dies, molds, patterns and gauges, tools,
supplies and drawings owned, leased, licensed or otherwise possessed by Seller,
including, without limitation, any Frozen Food Equipment, excluding such items
sold, transferred, disposed of or consumed prior to the Closing
-3-
EXECUTION DRAFT
Date in the ordinary course of business or otherwise with the written consent of
Buyer.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" means all cash, cash equivalents, including cash on
hand, in bank accounts and cash in-transit, bank accounts (other than lock-box
bank accounts pertaining to the collection of the Receivables), bank deposits,
notes, securities, refunds relating to any tax obligations of Seller, prepaid
insurance premiums, any contracts, leases, licenses or agreements not included
in the Assumed Contracts, claims or causes of action belonging to Seller's
bankruptcy estate that arise under Chapter 5 of the Bankruptcy Code, computers,
software and information systems, items sold, transferred or disposed of or
consumed in the ordinary course of business prior to Closing, Corporate Records
of Seller, title to the trademark "▇▇▇▇ AND THE BEANSTALK" (provided that Buyer
shall receive a non-exclusive, perpetual, royalty-free, worldwide, irrevocable
license to use the "▇▇▇▇ AND THE BEANSTALK" trademark in connection with the
operation of the Frozen Food Business following the Closing Date), Plant #5,
Seller's interest in Greenfield Partners, Ltd., Limited Partnership and Agripac
Cold Storage Partners Limited Partnership, and all Canned Food Assets.
"EXISTING BANK DEBT" means the pre-petition indebtedness of the Seller
owing to the Seller's Lenders in their capacity as the Seller's pre-petition
lenders.
"FROZEN FOOD BUSINESS" means the frozen food business of Seller, as
currently conducted and proposed to be conducted, and all activities associated
therewith.
"FROZEN FOOD EQUIPMENT" means all rights of Seller in any machinery,
equipment, spare parts, vehicles, furniture, dies, molds, patterns and gauges,
tools, supplies and drawings owned, leased, licensed or otherwise possessed by
Seller and used in the Frozen Food Business and located at the Frozen Food
Leased Property or the Frozen Food Real Property, and any manuals, product
literature, and manufacturer's warranties and representations that relate to the
foregoing.
"FROZEN FOOD EQUIPMENT LEASES" means any and all agreements of the
Seller included in the Assumed Contracts that relate to the possession and use
of any Frozen Food Equipment, including any such agreements styled as leases
(and whether or not such agreements constitute "true" leases, financing leases
under GAAP or disguised financings).
"FROZEN FOOD INVENTORY" means all non-obsolete inventories of Seller
relating to the Frozen Food Business and located at the Frozen Food Leased
Property or the Frozen Food Real Property, including, without limitation, raw
materials, work-in-process, finished goods, and merchandise.
"FROZEN FOOD LEASED PROPERTY" means all leasehold interests of Seller in
real property used by Seller in the Frozen Food Business listed on Exhibit A,
including without limitation the
-4-
EXECUTION DRAFT
Greenfield Lease, together with any prepaid rent, security deposits, options to
renew or purchase, benefits, rights of way and other interests of the Seller
that may be appurtenant to the rights of Seller under such leasehold interests,
together with all buildings, improvements and fixtures existing thereon, as
identified on Exhibit A.
"FROZEN FOOD REAL PROPERTY" means all real property owned by Seller and
listed on Exhibit B, together with all buildings, improvements, and fixtures
existing thereon, as identified on Exhibit B.
"GREENFIELD LEASE" means that certain Facility Lease between Seller, as
Lessee and Greenfield Partners, Ltd., as Lessor, dated 1993 and providing for a
term of ten years commencing no later than July 15, 1993.
"HAZARDOUS MATERIAL" means any hazardous or toxic substance, material or
waste or pollutant, or contaminant, including but not limited to "hazardous
substances" and "hazardous wastes", as those terms are currently defined under
the Federal, State, and Environmental laws, including but not limited to the
Comprehensive Environmental Response Compensation and Liability Act, as amended,
the Resource Conservation and Recovery Act, the Clean Water Act, and/or any
other applicable laws or regulations, petroleum and petroleum by products, or
asbestos containing material that is or becomes regulated by any governmental
authority in any jurisdiction where any Real Property or Leased Property is
located, and lead paint or material containing lead that is or becomes regulated
by any governmental authority in any jurisdiction in which any Real Property or
Leased Property is located.
"HISTORICAL FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 3.5.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INSURANCE VALUE" means a value of a parcel of Real Property as
reasonably established by Buyer for purposes of title insurance.
"INTANGIBLES" means all telephone switches, telephone and facsimile
numbers primarily relating to the Frozen Food Business, all claims of every kind
and description that Seller may have against any person or entity relating to or
affecting any other Assets or the Frozen Food Business, including without
limitation, any claims against the grower/members of the Seller, and the good
will of the Frozen Food Business.
"INTELLECTUAL PROPERTY" means all rights, if any, in all United States
and foreign trademarks (common law and registered) and service marks, trademark
and service ▇▇▇▇ registrations and applications, trade names, copyrights,
copyright registrations, proprietary technology, trade secrets, know-how,
licenses, computer software, inventions, and patents, patent
-5-
EXECUTION DRAFT
applications, utility models, utility model applications and all other patent
rights used in the Frozen Food Business and listed on Exhibit C, including
without limitation the Ore-▇▇▇ Agreement and a license for the "▇▇▇▇ AND THE
BEANSTALK" trademark.
"INVENTORY" means all inventories of Seller, including without
limitation, all Frozen Food Inventory, but excluding such inventories sold,
transferred, disposed of or consumed prior to the Closing Date in the ordinary
course of business or otherwise with the written consent of Buyer.
"LEASED PROPERTY" means all leasehold interests of Seller in real
property used by Seller, including without limitation the Frozen Food Leased
Property, together with any prepaid rent, security deposits, options to renew or
purchase, benefits, rights of way and other interests of the Seller that may be
appurtenant to the rights of Seller under such leasehold interests, together
with all buildings, improvements and fixtures existing thereon.
"NEW BUYER EMPLOYEES" shall have the meaning set forth in Section 5.1.
"ORE-▇▇▇ AGREEMENT" means, collectively, the following agreements
between Seller and Ore-▇▇▇ Foods, Inc.: (i) the Sales Agency Agreement, dated
April 19, 1994, as amended, (ii) the Trademark License Agreement, dated April
19, 1994 (Cob Corn Products), as amended; (iii) the Trademark License Agreement,
dated April 19, 1994 (Stew Vegetable Products), as amended; (iv) Agripac Co-Pack
Agreement, dated March 6, 1992, relating to frozen corn, and (v) Co-Pack
Agreement, dated January 20, 1995, relating to stew vegetables.
"PERMITS" means, to the full extent assignable under applicable law, all
permits, licenses, franchises, approvals and authorizations of any governmental
authority relating to or affecting the ownership or use of any Assets or the
operation of the Frozen Food Business.
"PERMITTED LIENS" means any purchase money liens on any Frozen Food
Equipment arising under Frozen Food Equipment Leases.
"PERMITTED TITLE EXCEPTIONS" means the following:
(a) Non-delinquent liens for taxes or special assessments;
(b) Utility, access and other easements and rights-of-way, restrictions
and exceptions, other than those referred to in (c) below, that counsel
rendering a title opinion, a title insurer, or an independent engineer certifies
will not materially interfere with the present use, occupation or value of the
Real Property or impair the present business operations conducted thereon;
(c) Restrictions, easements and encumbrances, if any, set forth in
Section 3.9 of the Disclosure Memorandum;
-6-
EXECUTION DRAFT
(d) Any building, zoning, or subdivision ordinances applicable to the
premises that permit usage of the premises for the same purpose or purposes as
currently used by Seller; and
(e) the exceptions set forth on Section 3.9 of the Disclosure
Memorandum.
"PLANT #5" means the facility and real property identified as Plant #5
in Section 3.9 of the Disclosure Memorandum, which historically has been used by
the Seller in the Frozen Food Business, but which is an Excluded Asset and is
not being purchased by the Buyer.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.4.
"REAL PROPERTY" means all real property owned by Seller, together with
all buildings, improvements, and fixtures existing thereon, including without
limitation the Frozen Food Real Property.
"RECEIVABLE" means all trade accounts receivable and other receivables
of Seller existing on the Closing Date, other than receivables from any
Affiliate of Seller.
"SALE ORDER" means an order of the Bankruptcy Court satisfying the
requirements of Section 8.3(b), pursuant to Sections 363 and 365 of the
Bankruptcy Code, approving Seller's execution, delivery and performance of this
Agreement, and authorizing the Seller to sell the Assets to Buyer free and clear
of all liens, claims and encumbrances (other than Assumed Liabilities, Permitted
Liens and Permitted Title Exceptions) pursuant to the terms of this Agreement.
"SALE PROCEDURES ORDER" means the Order on Debtor's Amended Motion to
Approve Bid Procedures, entered by the Bankruptcy Court on February 8, 1999,
which establishes the procedures for approving a sale of the Assets by the
Seller.
"SELLER LENDER LIENS" means any liens or security interests held by the
Seller's Lenders as granted pursuant to the Cash Collateral Order.
"SELLER'S LENDERS" means the financial institutions providing
debtor-in-possession financing to the Seller pursuant to the Cash Collateral
Order.
"TRANSITION SERVICES" means those administrative, information, support
and other services requested by Buyer to be performed by or otherwise made
available through the Seller for a period of up to six months following the
Closing Date. Any out-of-pocket cost to be incurred by the Seller in providing
Transition Services shall be advanced or reimbursed (at Seller's election) by
Buyer.
-7-
EXECUTION DRAFT
ARTICLE 2
PURCHASE AND SALE
2.1 CLOSING. The Closing shall take place at the offices of ▇▇▇▇▇▇ Beach
& ▇▇▇▇▇▇, LLP, The Granite Building, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, at 10:00 a.m. (local time) on February 17, 1999 or at such other place,
date or time as the parties may mutually agree ("Closing Date").
2.2 CONVEYANCE. On the Closing Date, Seller shall sell, transfer, convey
and assign to Buyer, and Buyer shall purchase from Seller, all of the Assets,
but not the Excluded Assets. Seller shall transfer to Buyer good and marketable
title to the Assets, free and clear of all liens, claims and encumbrances other
than Assumed Liabilities, Permitted Liens and Permitted Title Exceptions. Buyer
will take possession of and assume control over the Assets on and as of the
Closing Date.
2.3 SURVEY AND TITLE DOCUMENTS. Seller shall provide Buyer with the
following:
2.3.1 At Seller's expense, at least three business days prior to the
Closing Date, an instrument survey of each parcel of Frozen Food Real Property.
Such surveys shall be dated or redated subsequent to this Agreement and be from
surveyors reasonably acceptable to Buyer, shall state that they were prepared
using surveying standards acceptable to Buyer, shall contain legal descriptions
of the property surveyed, and shall locate all improvements and easements
thereon, as well as any easements beneficial to the parcel being surveyed. If
any such survey discloses matters which could reasonably be expected to
materially adversely affect the marketability of the property in question, the
Seller shall obtain title insurance over such matters. Such surveys shall be
certified both to Buyer and to the title insurance company issuing the Title
Policy (defined below).
2.3.2 At Seller's expense, at least three business days prior to the
Closing Date, a commitment (the "Title Commitment(s)") for an owner's policy of
title insurance (the "Title Policy(s)") on each parcel of the Frozen Food Real
Property prepared on the current American Land Title Association standard form
of owner's title insurance to be issued by a national title insurance company
acceptable to Buyer (the "Title Company") in an amount not less than the
Insurance Value of the Frozen Food Real Property.
2.3.3 At Seller's expense, at least three business days prior to the
Closing Date, UCC searches against the Seller in the appropriate offices of each
state and locality in which any Assets are located.
2.4 PURCHASE PRICE. Subject to the provisions of Article 11, the
Purchase Price for the Assets shall equal the sum of (a) eighty-nine percent
(89%) of the actual book value of the Receivables as of the Closing Date, (b)
eighty percent (80%) of the actual book value (adjusted
-8-
EXECUTION DRAFT
to cost in accordance with generally accepted accounting principles) of the
Frozen Food Inventory as of the Closing Date, and (c) eighty percent (80%) of
the aggregate book value of the Frozen Food Equipment (excluding any Frozen Food
Equipment that is the subject of a Frozen Food Equipment Lease), and the Frozen
Food Real Property (excluding the $1,047,000 of capitalized maintenance on the
administrative building identified on Exhibit B) as of the Closing Date. On the
Closing Date, Buyer and Seller shall cooperate in good faith and attempt to
reach definitive agreement on each component of the Purchase Price.
2.5 DISPUTES CONCERNING PURCHASE PRICE. In the event that, despite the
cooperative efforts described in Section 2.4, the Buyer and Seller are unable to
agree on the final Purchase Price, then (a) if the total amount of the Purchase
Price that is disputed by the Buyer and Seller (the "Disputed Amount") is less
than or equal to $5,000,000, the Buyer and Seller shall; and (b) if Disputed
Amount exceeds $5,000,000, the Buyer and Seller may, but only to the extent that
the Buyer and Seller so agree in writing on the Closing Date, resolve such
dispute in accordance with this Section 2.5. Buyer shall transfer 100% of the
Disputed Amount to CoBank, ACB, as escrow agent (the "Escrow Agent") pursuant to
an Escrow Agreement substantially in the form of Exhibit D hereto (the "Escrow
Agreement"). Buyer and Seller shall work in good faith to resolve any such
dispute within ten (10) days following the Closing Date. If, despite such
efforts, a dispute continues to exist, Buyer and Seller shall jointly retain an
independent certified public accounting firm of national reputation reasonably
acceptable to both Buyer and Seller, which shall resolve the dispute within
thirty days of appointment. The determination of the accounting firm shall be
binding on both parties and non-appealable. 100% of the cost of the accounting
firm shall be borne by whichever party receives less than fifty percent 50% of
the Disputed Amount pursuant to the accounting firm's resolution of the dispute.
The parties shall split the cost of the accounting firm if they each receive 50%
of the Disputed Amount.
2.6 PAYMENT OF PURCHASE PRICE. On the Closing Date, Buyer shall deliver
(a) to Seller (but in any event in accordance with the Sale Order) by wire
transfer an amount equal to Three Million Dollars ($3,000,000), (b) to the
Escrow Agent the Disputed Amount pursuant to the terms of the Escrow Agreement,
and (c) to the Seller's Lenders by wire or other transfer acceptable to the
Seller's Lenders, the balance of the Purchase Price. Once any dispute regarding
the Disputed Amount has been resolved, the Escrow Agent shall pay or apply the
Disputed Amount, (y) to the extent it is determined to comprise a portion of the
Purchase Price, in accordance with the Sale Order, and (z) to the extent that it
is determined not to comprise a portion of the Purchase Price, as a repayment
(effective as of the Closing Date and without prepayment penalties, charges or
interest due of any kind) of Buyer's indebtedness to Buyer's Lenders incurred in
connection with the transactions described in this Agreement.
2.7 ALLOCATION OF PURCHASE PRICE. The Purchase Price for the Assets
shall be allocated among the Assets in a manner to be agreed upon at or before
Closing. Buyer and Seller shall adhere to such allocation for the purposes of
all tax returns, whether federal, state or local, of whatever kind filed by or
on behalf of either of them or by or on behalf of their Affiliates including
Internal Revenue Service Form 8594.
-9-
EXECUTION DRAFT
2.8 INSTRUMENTS OF TRANSFER. In connection with the sale and purchase of
the Assets, Seller shall deliver to Buyer on the Closing Date deeds, bills of
sale, motor vehicle title certificates, affidavits satisfying the requirements
of 'SS' 1445(b)(2) of the Code, assignments and consents thereto, and other
instruments of transfer and conveyance satisfactory in form and substance to
counsel to Buyer. Buyer shall pay the cost of recording such instruments of
transfer and conveyance. Seller shall, at any time and from time to time after
the Closing Date, upon the request of Buyer do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, all such
further acts, deeds, assignments, transfers, conveyances and assurances as may
be reasonably required for the better assigning, transferring, granting,
conveying, assuring and confirming to Buyer, or to its successors and assigns,
or for aiding and assisting in collecting and reducing to possession, any or all
of the Assets.
2.9 LIABILITIES ASSUMED. Buyer shall not assume, or become obligated to
pay or perform under, any of the liabilities, obligations or contracts of
Seller, except for the Assumed Liabilities. On the Closing Date, Buyer shall
execute an instrument of assumption with respect to the Assumed Liabilities in
form and substance reasonably satisfactory to counsel to Seller. No Affiliate of
the Buyer shall assume or be liable for any liabilities of the Seller and its
Affiliates of any kind or nature, including without limitation the Assumed
Liabilities. It is a condition to Buyer's obligations hereunder that the Sale
Order expressly confirm the provisions of this Section 2.9.
2.10 EXPENSES. Except as provided in Sections 2.3, 2.5, 2.8, 2.11, 10.3,
and Article 11 hereof, Buyer and Seller shall each pay their own expenses,
(including attorneys' fees and accountants' fees) in connection with the
preparation and negotiation of this Agreement and the consummation of the
transactions contemplated herein.
2.11 CONSENT OF THIRD PARTIES. This Agreement shall not constitute an
agreement to assign any interest in any instrument, contract, lease, Permit or
other agreement or arrangement or any claim, right or benefit arising thereunder
or resulting therefrom, if an assignment or agreement to assign without the
consent of a third party would constitute an enforceable breach or a violation
thereof or affect adversely the rights of Buyer or Seller thereunder. If a
consent of a third party that is required to assign any such interest is not
obtained (or overruled pursuant to a binding and enforceable order of the
Bankruptcy Court) prior to the Closing Date, or if an attempted assignment would
be ineffective or would adversely affect the ability of Seller to convey its
interest to Buyer, Seller will cooperate with Buyer in any lawful and reasonable
arrangement to provide that Buyer shall receive the interest of Seller in the
benefits and assume all of Seller's liabilities and obligations arising after
the Closing Date under any such instrument, contract, lease, Permit or other
agreement or arrangement, including performance by Seller as agent except where
prohibited by law; and any transfer or assignment to Buyer or by Seller of any
interest under any such instrument, contract, lease, Permit or other agreement
or arrangement that requires the consent of a third party shall be made subject
to such consent or approval being obtained (or overruled pursuant to a binding
and enforceable order of the Bankruptcy Court). Notwithstanding the foregoing,
it is anticipated that the terms of the Sale Order will provide an
-10-
EXECUTION DRAFT
effective substitute for any and all consents described in this Section 2.11
with respect to Assumed Contracts. This Section 2.11 shall not constitute a
waiver under Section 8.3. To the extent that any reasonable out-of-pocket costs
are incurred by Buyer to obtain the consent of a third party or as a result of
the failure to obtain the consent of a third party, such cost shall be paid by
Seller.
2.12 PAYMENT OF TAXES. Seller shall make all required reports and pay
directly to each and every taxing authority any and all taxes, fees and
assessments, plus any penalty or interest thereon, that arise as a result of the
sale of the Assets by Seller to Buyer under this Agreement.
2.13 PRORATION OF TAXES, RENTS AND UTILITIES. All ad valorem real
property taxes applicable to the Frozen Food Real Property, all rents payable
with respect to the Assets, and all charges for water, gas, electricity, sewer,
drainage or other utility services relating to the Frozen Food Business will be
prorated as of the Closing Date.
2.14 TERMINATION OF REPRESENTATIONS AND WARRANTIES. Upon consummation of
the transactions described in this Agreement at Closing, all of the
representations and warranties of the Seller contained in this Agreement,
including without limitation those set forth in Article 3, and all of the
representations and warranties of the Buyer and Pro-Fac contained in this
Agreement, including without limitation those set forth in Article 4, shall
terminate and be of no further force or effect. Notwithstanding the foregoing,
any and all covenants of the Buyer and Seller contained in this Agreement shall
survive the Closing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND QUALIFICATION. Seller is a cooperative corporation
duly organized, validly existing and in good standing under the laws of the
State of Oregon. Seller is qualified to do business as a foreign corporation and
in good standing in all of the states and other jurisdictions listed in Section
3.1 of the Disclosure Memorandum, which constitute all states and other
jurisdictions wherein Seller is required by law to qualify as a foreign
corporation. Seller presently is a debtor and debtor-in-possession in the
Bankruptcy Proceeding. Seller has all requisite corporate power to own, operate
and lease its properties and to carry on its business as now conducted.
3.2 AUTHORIZATION. Subject to Bankruptcy Court approval, Seller has all
requisite corporate power to execute, deliver, and perform its obligations under
this Agreement. Subject to Bankruptcy Court approval, the execution, delivery
and performance of this Agreement and the consummation by Seller of all
transactions contemplated by this Agreement, have been duly authorized by all
requisite corporate action of Seller. Subject only to Bankruptcy Court
approval
-11-
EXECUTION DRAFT
and HSR Act approval, this Agreement constitutes a legal, valid and binding
obligation of Seller, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, reorganization, insolvency, or
similar laws affecting creditors' rights generally, and the application of
general principles of equity, regardless of whether such principles are
considered in a proceeding in equity or in law.
3.3 CONFLICTING AGREEMENTS; LIENS. Except as set forth in Section 3.3 of
the Disclosure Memorandum, the execution and delivery of this Agreement by
Seller, and the consummation of the transactions contemplated hereby:
3.3.1 Do not, and at or prior to the Closing Date will not,
conflict with, or result in a breach of, any of the terms, conditions or
provisions of the Articles of Incorporation or Bylaws of Seller.
3.3.2 On the date hereof do not, and as of the Closing Date will
not, conflict with, result in a breach of, give rise to a default under, or give
to others any right of termination, cancellation, modification of terms or
acceleration under any of the terms, conditions or provisions of any Assumed
Contract, or any mortgage, lien, lease, agreement, instrument, order, judgment
or decree by which any of the Assets may be bound, and will not result in a
declaration or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the Assets.
3.4 GOVERNMENT CONSENTS. Section 3.4 of the Disclosure Memorandum lists
all filings with, notices to, consents, authorizations, licenses, permits,
registrations and approvals of, and exemptions and other actions by, any
governmental or public body, commission or authority required in connection with
the execution, delivery or performance of this Agreement by Seller, the absence
of which could reasonably be expected to have a material adverse effect on the
Frozen Food Business or the Assets.
3.5 FINANCIAL INFORMATION. Seller has delivered to Buyer the following
financial statements, including the notes thereto (the "HISTORICAL FINANCIAL
STATEMENTS"): (a) audited balance sheets of Seller as of March 31, 1997, and
related audited statements of earnings and retained earnings and cash flows for
the years then ended; and (b) an unaudited balance sheet of Seller as of the
Cut-off Date, and related unaudited statements of earnings and retained earnings
and cash flows for the fiscal year then ended. The Historical Financial
Statements are complete and correct in all material respects (except that the
Inventory has historically been reported at "net realizable value"), are in
accordance in all material respects with all books, records and accounts of
Seller, have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods indicated (except that
the Inventory has historically been reported at "net realizable value"), and
fairly present in all material respects, the financial condition of Seller as of
the respective dates thereof and the results of its operations for the
respective periods covered thereby. Seller has delivered to Buyer a projected
balance sheet of the Seller as of January 31, 1999 (the "Projections"). The
Projections are complete and correct
-12-
EXECUTION DRAFT
in all material respects, are in accordance in all material respects with all
books, records and accounts of Seller, have been prepared in good faith, and
fairly present in all material respects, the anticipated financial condition of
Seller as of the date thereof and the results of its operations for the period
covered thereby.
3.6 LIABILITIES. As of the date of this Agreement, Seller has no
liabilities of any nature, whether absolute, accrued, contingent or otherwise,
except liabilities disclosed in the Historical Financial Statements, liabilities
incurred by Seller in the ordinary course of business and consistent with past
practices since the Cut-off Date, liabilities disclosed in Section 3.6 of the
Disclosure Memorandum, and liabilities incurred by Seller with the prior written
consent of Buyer.
3.7 INVENTORIES. The Frozen Food Inventory consists of the inventory
reflected on the Historical Financial Statements (but adjusted to the lower of
cost or market consistent with generally accepted accounting principles), less
sales from and additions to inventory in the ordinary course of business.
Inventories of Seller consist of items of a quality and quantity usable or
saleable in the ordinary course of its business, and there are no obsolete
items, items of below standard quality or excess items that have not been
written down to a realizable value or as to which adequate reserves have not
been provided, in each case, in accordance with generally accepted accounting
principles.
3.8 TITLE TO ASSETS. Seller has good and marketable title to all the
Assets, free and clear of all liens, mortgages, pledges, encumbrances,
conditional sale agreements, security interests, restrictions on use or transfer
or other defects in or clouds on title, except as disclosed in Section 3.8 of
the Disclosure Memorandum. As of the Closing Date and subject to the Sale Order,
Seller will have, and will convey to Buyer, good and marketable title to all the
Assets, free and clear of all liens, claims and encumbrances, conditional sale
agreements and security interests of any kind or nature whatsoever excepting
only Assumed Liabilities, Permitted Liens and Permitted Title Exceptions.
3.9 REAL PROPERTY. Section 3.9 of the Disclosure Memorandum contains a
true, correct and complete list of the Real Property and Leased Property.
Section 3.9(a) of the Disclosure Memorandum contains a true, correct and
complete list of the Frozen Food Real Property and Frozen Food Leased Property.
None of the land, buildings or improvements comprising part of the Frozen Food
Real Property or Frozen Food Leased Property is the subject of any complaint
known to Seller, nor is any condemnation proceeding pending or, to the best
knowledge of Seller, threatened against any such property. To Seller's
knowledge, Seller is not in violation of any zoning ordinance, building code,
health regulation, use or occupancy restriction or similar regulation with
respect to the Frozen Food Real Property or the Frozen Food Leased Property.
3.10 CONDITION OF ASSETS. The Frozen Food Equipment and improvements to
the Frozen Food Real Property and Frozen Food Leased Property are in good repair
and operating
-13-
EXECUTION DRAFT
condition (normal wear and tear excepted) and are suitable for the operations
for which they are being used by Seller.
3.11 ABSENCE OF CHANGES. Except as disclosed in Section 3.11 of the
Disclosure Memorandum, since the Cut-off Date there has not been:
3.11.1 Any change in the business, results of operations,
earnings, backlog, prospects, properties, assets, liabilities or condition,
financial or otherwise, of Seller other than changes in the ordinary course of
business, none of which, singly or in the aggregate, has been materially
adverse.
3.11.2 Any damage, destruction or loss (whether or not covered by
insurance) materially affecting Seller or the Assets.
3.11.3 Except in the ordinary course of business for full and
fair value received, any sale, assignment, transfer or other disposition of any
tangible or intangible asset used or useful in the Frozen Food Business.
3.11.4 Any capital expenditure or commitment to make a capital
expenditure relating to the Assets in excess of $25,000.
3.11.5 Any amendment, termination or waiver of any governmental
permit or permission or of any material right relating to the Frozen Food
Business under any contract or agreement.
3.11.6 Any material change in the business or commercial
practices customarily followed by Seller.
3.11.7 Any acquisition by Seller of any business, property or
assets other than in the ordinary course of business consistent with past
practice.
3.11.8 Any change in the accounting practices, procedures or
methods of Seller.
3.12 CONTRACTS AND AGREEMENTS. Section 3.12 of the Disclosure Memorandum
lists every agreement and contract to which Seller is a party that:
3.12.1 Is material to the continued operation of the Frozen Food
Business or any product line.
3.12.2 Involves future payments or receipts of more than $25,000
or performance over a term in excess of six months relating to or affecting the
Frozen Food Business or the Assets.
3.12.3 Relates to the borrowing of money.
-14-
EXECUTION DRAFT
3.12.4 Involves the sale of Frozen Food Business products to the
United States government or any foreign, state or local government or any agency
or instrumentality thereof.
3.12.5 Is with an agent, consultant, engineer, advisor, salesman,
sales representative, distributor, sales agent or dealer relating to or
affecting the Frozen Food Business or the Assets.
3.12.6 Relates to any Intellectual Property.
3.12.7 Is a joint venture agreement.
3.12.8 Is a tolling agreement.
3.12.9 Is with any Affiliate of Seller.
3.12.10 Relates to any sale of fixed assets or sale, assignment,
transfer or other disposition of any contract right, governmental permit or
intangible asset relating to or affecting the Frozen Food Business or the
Assets.
3.12.11 Restricts in any way the right of Seller to compete with
any entity in any business.
3.12.12 Was not made in the ordinary course of business.
True, correct and complete copies of all written contracts referred to therein
and accurate descriptions of the material terms of all oral contracts referred
to therein are included in Section 3.12 of the Disclosure Memorandum or have
been provided to Buyer. All such contracts are valid, enforceable and in full
force and effect as to Seller, assuming the other party thereto is bound which,
to Seller's knowledge, is the case for each such contract. Except as noted in
Section 3.12 of the Disclosure Memorandum, all agreements referred to therein
were made in the ordinary course of business.
3.13 LICENSES, PERMITS. Seller has all Permits as are necessary to
enable Seller to conduct the Frozen Food Business, except where such failure to
have any of the foregoing could reasonably be expected to have a material
adverse effect on the condition or the results of operation of the Frozen Food
Business or on the Assets. All such Permits are listed in Section 3.13 of the
Disclosure Memorandum and are in full force and effect. Except as set forth in
Section 3.13 of the Disclosure Schedule, no violations have occurred within the
past twelve months or are continuing in respect of any such Permit that threaten
to cause the revocation or limitation of such Permit except where such violation
could not reasonably be expected to have a materially adverse effect on the
financial condition or the results of operations of the Frozen Food Business or
on the Assets. No proceeding is pending or, to Seller's knowledge, threatened to
revoke or limit any such Permit.
-15-
EXECUTION DRAFT
3.14 COMPLIANCE WITH LAWS. Seller is not in violation of any law,
regulation, order or other requirement affecting the Frozen Food Business or the
Assets and promulgated by any court or federal, state, municipal or other
governmental body, department, commission, agency or instrumentality, which
violation or the correction thereof could reasonably be expected to have a
material adverse effect on the financial condition or the results of operations
of the Frozen Food Business. Seller has not received any notice of an alleged
violation of any law, regulation, order or other governmental requirement
affecting the Frozen Food Business or the Assets. To Seller's knowledge, there
is no law, regulation, order or requirement outstanding and affecting the Frozen
Food Business or the Assets that requires or will require a change in the manner
of conducting the Frozen Food Business or increased expenditures by or on behalf
of the Frozen Food Business.
3.15 TAXES. There are no unpaid taxes or assessments that are or could
become a lien on any of the Assets. Seller has withheld all federal, state and
local taxes that are required to have been withheld from wages of employees of
Seller and have paid over all such taxes in accordance with applicable statutory
provisions. Seller has paid when due all sales or other excise taxes required to
be paid and timely filed all returns required to be filed with respect thereto.
Such returns are true, correct and complete in all material respects.
3.16 LITIGATION. Except as disclosed in Section 3.16 of the Disclosure
Memorandum, there is no legal action, claim or controversy, or governmental
proceeding or investigation (including those with respect to product liabilities
and warranties, employee matters, customer complaints and environmental
matters), pending or, to the knowledge of Seller, threatened against Seller or
involving any of the Assets that individually involves a demand for greater than
$50,000 (whether or not covered by insurance), that in the aggregate involve
demands for greater than $100,000 (whether or not covered by insurance), that
would adversely affect the Frozen Food Business or the use of the Assets, or
that questions the validity of this Agreement or seeks to prohibit or enjoin or
otherwise challenge the transaction contemplated hereby.
3.17 LEASES. The leases listed and described in Section 3.17 of the
Disclosure Memorandum constitute all leases under which any Leased Property or
any leased personal property used primarily in the Frozen Food Business is used,
occupied or held. True, correct and complete copies of such leases (including
all amendments and modifications thereto) are included in Section 3.17 of the
Disclosure Memorandum or have been delivered to the Buyer. Such leases are
valid, enforceable and in full force and effect and, except as disclosed in
Section 3.17 of the Disclosure Memorandum, would not be modified, subject to
termination or otherwise affected by assignment to Buyer or by consummation of
the transactions contemplated by this Agreement.
3.18 BENEFIT PLANS. Section 3.18 of the Disclosure Memorandum contains a
true, correct and complete list of all of the following to which Seller is a
party or by which Seller is bound:
3.18.1 Contracts with officers and employees.
-16-
EXECUTION DRAFT
3.18.2 Collective bargaining agreements, union contracts, labor
agreements, conciliation agreements or contracts with any labor union or other
representative of employees.
3.18.3 Pension, profit-sharing, bonus, commission, retirement,
stock option, other employee benefit or welfare plans or other similar plans or
arrangements.
3.18.4 Published employment policies.
Seller has furnished to Buyer true and complete copies of the contracts,
plans and policies referred to in Section 3.18 of the Disclosure Memorandum.
3.19 ERISA COMPLIANCE. Except as set forth in Section 3.19 of the
Disclosure Memorandum:
3.19.1 No corporation or other entity is a member with Seller of
a controlled group of corporations as defined in Section 414(b) of the Code, or
is under common control with Seller as defined in Section 414(c) of the Code.
3.19.2 No employee benefit plan maintained by Seller is a
"MULTIEMPLOYER PLAN" as defined in Section 3(37)(A) of ERISA.
3.19.3 (a) Seller has not terminated any plan that is an
"EMPLOYEE PENSION BENEFIT PLAN" as described in Section 3(2) of ERISA, and no
condition presently exists that could result in such termination under Section
4042 of ERISA.
(b) No "REPORTABLE EVENT" (as defined in Section 4043 of
ERISA) has occurred with respect to an employee pension benefit plan maintained
by Seller for which notice to the Pension Benefit Guaranty Corporation is
required pursuant to regulations under Section 4043 of ERISA.
(c) Seller has not engaged in any "PROHIBITED TRANSACTION"
as defined in Section 406 of ERISA (other than a prohibited transaction that is
exempt under Section 407 or 408 of ERISA).
(d) No employee, officer or director of Seller, or any
person for whom Seller is directly or indirectly responsible, whether by way
of indemnity or otherwise, has engaged in a prohibited transaction (other than
a prohibited transaction that is exempt under Section 407 or 408 of ERISA).
(e) Seller has complied in all material respects with the
reporting and disclosure requirements of Part I of ERISA.
(f) There is no accumulated funding deficiency as defined
in Section 412 of the Code with respect to any employee benefit plan maintained
by Seller.
-17-
EXECUTION DRAFT
3.20 EMPLOYEE RELATIONS. Section 3.20 of the Disclosure Memorandum
contains a list of each salaried and hourly employee of the Seller and such
employee's years of service, salary and grade. Seller believes that its
relations with its employees are satisfactory. There have been no labor
controversies and no strikes, lockouts, work stoppages or work slowdowns or
threats thereof with respect to any group of employees during the past three (3)
years. No claim has been asserted or, to the knowledge of Seller, threatened by
an employee on account of any alleged violation by Seller of any law relating to
employment discrimination or employment practices within the last three (3)
years.
3.21 INTELLECTUAL PROPERTY. Except as set forth in Section 3.21 of the
Disclosure Memorandum, Seller owns (or possesses adequate licenses or other
rights to use without payment of royalties) all patents, copyrights, trademarks,
trade names, service marks, processes, designs, computer software, inventions,
trade secrets, know-how, technology and the like necessary to carry on the
Frozen Food Business. Section 3.21 of the Disclosure Memorandum is a list and
brief description (including, if applicable, date of application, filing or
registration and registration or application number) of all of the Intellectual
Property. To Seller's knowledge, Seller has not infringed and is not infringing,
and has not engaged and is not engaging in the unauthorized use or
misappropriation of, any patent, patent application, copyright, trademark,
service ▇▇▇▇, trade name, process, design, computer software, invention, trade
secret, know-how or technology owned by or belonging to any third party. There
are no actual or, to Seller's knowledge, threatened claims against Seller
relating thereto. To the knowledge of Seller, no third party has infringed or in
infringing, or has engaged or is engaging in the unauthorized use or
misappropriation of, any patent, patent application, copyright, trademark,
service ▇▇▇▇, trade name, process, design, computer software, invention, trade
secret, know-how or technology owned by or belonging to Seller.
3.22 NO DEFAULT. Except as set forth in Section 3.22 of the Disclosure
Memorandum, Seller is not in default or breach with respect to any rent or
installment purchase payments affecting the Assets, nor is Seller or, to the
knowledge of Seller, any other party to any Assumed Contract, in material
default or breach under the terms thereof, and no event has occurred that with
the passage of time or the giving of notice or both would constitute such a
material default or breach by Seller or, to the knowledge of Seller, any other
party.
3.23 NO FINDER. Seller has not paid, or become obligated to pay, any fee
or commission to any broker, finder or intermediary for or on account of the
transactions contemplated herein.
3.24 ASSETS OF BUSINESS. Except for the Excluded Assets and as set forth
on Section 3.24 of the Disclosure Memorandum, the Assets constitute all of the
assets that are used in the conduct of the Frozen Food Business as currently
conducted and include all assets required to run the Frozen Food Business as it
has historically been run.
3.25 HAZARDOUS MATERIAL. Except as set forth in Section 3.25 of the
Disclosure Memorandum:
-18-
EXECUTION DRAFT
3.25.1 There is not now, nor has there ever been any disposal,
release, threatened release, treatment, storage and/or arrangement for the
treatment or storage of any Hazardous Material on, from, under, or in proximity
to any Real Property or Leased Property or at any other location that has or may
give rise to liability or claims for liability for remediation or remedial
activities of any kind, personal injury and /or claims for such liability or
property damage liability against the Seller or Buyer or their representatives,
agents or contractors which would reasonably be expected to have a material
adverse effect on the financial condition or results of operations of the Frozen
Food Business or the Assets. Further, neither the condition of the Real Property
or the Leased Property, nor any activities undertaken by Seller or its
employees, agents and representatives previously at or in proximity to the Real
Property or at the Leased Real Property or at any other location will result in
Seller or Buyer being named as a potentially responsible party by any
governmental entity for personal injury or property damage or claims against
Buyer or Seller for the remediation of any property, and any claim by any third
party, no matter how such claims may be denominated, concerning the condition of
the Real Property and Leased Property and any other claims as previously
identified. For purposes of this Section 3.25, the terms disposal, release,
threatened release, treatment, storage, and arrangement for the treatment or
storage shall have the definitions assigned thereto by among others the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, as well as those assigned thereto under the Resource Conservation and
Recovery Act, the Clean Water Act, and any other applicable federal law and or
regulation as well as any applicable state law and or regulation.
3.25.2 None of the Real Property or Leased Property, including
the conditions existing at any such properties, would violate or give rise to
any claims of violation of any laws, regulations, orders, consent decrees, etc.
relating to or concerning industrial hygiene, or the environmental condition on,
under, or in proximity to such properties, including without limitation the
condition of any soils, air, and or ground water at or in proximity to the
previously identified properties which would reasonably be expected to have a
material adverse effect on the financial condition or results of operations of
the Frozen Food Business or the Assets. There are no underground storage tanks
or related piping, conduits, or related structures on or in proximity to the
properties identified above. During the period that Seller has owned or leased
such properties, neither Seller nor any third party has used, generated,
manufactured, stored, and or treated on, under, or proximity to such properties
or transported to or from such properties any Hazardous Material which would
reasonably be expected to have a material adverse effect on the financial
condition or results of operations of the Frozen Food Business or the Assets.
Further, Seller warrants that there are no claims or, to Seller's knowledge,
potential claims against Seller or its agents, employees, or contractors for
treating, storing, or arranging for the treatment or storage, and or
transportation, disposal, or release of Hazardous Material, whether located on
any of the properties previously identified, or at any other location.
3.25.3 During the period of Seller's ownership or lease of the
Real Property or
-19-
EXECUTION DRAFT
Leased Property, there has been no litigation brought or, to Seller's knowledge,
threatened to be brought against Seller, Seller's agents, contractors or
employees nor has there been any settlements concerning in any way relating to
the Seller and or its operations to properties previously referenced, alleging
or claiming the presence, disposal, release, threatened release, treatment, or
arrangement for the treatment and or disposal, of any Hazardous Material on,
from, or under any of the properties previously identified , or at any other
location.
3.26 WARN ACT COMPLIANCE. Seller has complied with, or is exempt from,
all applicable state and federal plant closing laws and regulations, including
but not limited to, the Worker Adjustment and Retraining Notification Act, 29
U.S.C. 'SS' 'SS' 2101 - 09.
3.27 DISCLOSURE. None of the information included in this Agreement
(including the Exhibits hereto) or in the Disclosure Memorandum or any other
written document furnished or to be furnished by Seller pursuant to this
Agreement is false or misleading in any material respect or omits to state a
fact necessary in order to make any of the statements therein not misleading in
any material respect. To Seller's knowledge, there is no fact that has a
material adverse affect or in the future might reasonably be expected to have a
material adverse affect with respect to the Assets or the Frozen Food Business
that has not been disclosed to Buyer in writing or set forth or referred to in
this Agreement (including the Exhibits hereto) or the Disclosure Memorandum.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER AND PRO-FAC
Buyer and Pro-Fac, jointly and severally, represent and warrant to Seller as
follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and has
all requisite corporate power and authority to own, operate and lease its
property and to carry on its businesses as now conducted. Pro-Fac is a
cooperative corporation duly organized, validly existing and in good standing
under the laws of the State of New York, and has all requisite corporate power
and authority to own, operate and lease its property and to carry on its
businesses as now conducted.
4.2 AUTHORIZATION. Each of Buyer and Pro-Fac has all requisite corporate
power to execute, deliver, and perform its obligations under, this Agreement.
The execution, delivery, and performance of this Agreement, and the consummation
by each of Buyer and Pro-Fac of all transactions contemplated by this Agreement,
have been duly authorized by all requisite corporate action of Buyer and
Pro-Fac. This Agreement has been duly executed by each of Buyer and Pro-Fac and,
subject to Bankruptcy Court approval and HSR Act approval, constitutes a legal,
valid and binding obligation of each of Buyer and Pro-Fac, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, or similar
-20-
EXECUTION DRAFT
laws affecting creditors' rights generally, and the application of general
principles of equity, regardless of whether such principles are considered in a
proceeding in equity or in law. The execution and delivery of this Agreement by
each of Buyer and Pro-Fac and the consummation of the transactions contemplated
hereby, (a) do not, and at or prior to the Closing Date will not, conflict with
or result in the breach of, any of the terms, conditions or provisions of the
Certificate of Incorporation or Bylaws of Buyer or Pro-Fac, and (b) on the date
hereof do not, and as of the Closing Date will not, conflict with, result in a
breach of, or give rise to a default under, any of the terms, conditions or
provisions of any mortgage, lien, lease, agreement, instrument, order, judgment
or decree by which Buyer or Pro-Fac or any of their assets may be bound, and
will not result in a declaration or imposition of any lien, charge, or
encumbrance of any nature whatsoever upon any of the assets of Buyer, except for
encumbrances expressly contemplated by this Agreement.
4.3 DISCLOSURE. None of the information included in this Agreement
(including the Exhibits hereto) or in any written document furnished or to be
furnished by Buyer or Pro-Fac pursuant to this Agreement is false or misleading
or omits to state a fact necessary in order to make any of the statements
therein not misleading.
4.4 KNOWLEDGE OF BUYER. Buyer has no knowledge of any information which
makes, or if known to Seller would make, any representation, warranty or
covenant of Seller contained herein untrue. Neither Buyer nor Pro-Fac has
knowledge of any facts or circumstances which would constitute a breach of any
representation, warranty or covenant of Seller contained herein, or which would,
with the passage of time or adequate notice or both, constitute such a breach,
or which would entitle Buyer to make a claim for indemnification under this
Agreement.
4.5 BUYER'S BUSINESS INVESTIGATION. Buyer has conducted such
investigation of the Frozen Food Business and the Assets as it has deemed
necessary in order to make an informed decision concerning the transactions
contemplated hereby. Buyer has reviewed all of the documents, records, reports
and other materials identified in the Disclosure Memorandum, and is familiar
with the content thereof. Buyer acknowledges that it has been given access to
and has visited and examined the Assets and the premises of the Frozen Food
Business and is familiar with the condition thereof. For the purpose of
conducting these investigations, Buyer has employed the services of their own
agents, representatives, experts and consultants. In all matters affecting the
condition of the Assets or the contents of the documents, records, reports or
other materials in connection with the transactions contemplated hereby, Buyer
is relying upon the advice and opinion offered by its own agents,
representatives, experts, consultants, employees and officers. All materials and
information requested by Buyer and Pro-Fac have been provided to Buyer and
Pro-Fac to their satisfaction.
4.6 NO FINDER. Neither Buyer nor Pro-Fac has paid, or become obligated
to pay, any fee or commission to any broker, finder or intermediary for or on
account of the transactions contemplated herein.
-21-
EXECUTION DRAFT
ARTICLE 5
EMPLOYEES AND BENEFITS
5.1 EMPLOYEES. On the Closing Date, Buyer or its designee will offer
employment only to those administrative employees of Seller, and Frozen Food
Business production employees of Seller as Buyer deems reasonably necessary or
appropriate to operate the Frozen Food Business as the same is intended to be
operated by the Buyer. The compensation levels, benefit programs and terms and
conditions of employment offered to such employees shall be determined by market
conditions and the Buyer's business plan for the operation of the Frozen Food
Business. The term for which Buyer will continue to employ such employees will
depend upon their performance, the needs of the business and the results of
operations. Employees of Seller who become employees of Buyer or any Affiliate
of Buyer on the Closing Date are herein sometimes referred to as "NEW BUYER
EMPLOYEES". Buyer shall deliver to Seller a list of all persons that will be
offered to opportunity to become New Buyer Employees at or prior to the Closing
Date.
5.2 PLANS, BENEFITS AND POLICIES. Buyer shall adopt and provide for New
Buyer Employees such pension or retirement plans, insurance plans, vacation and
severance policies and other benefits as are appropriate, in Buyer's sole
judgment, and shall neither adopt nor assume any of the plans, policies or
agreements of Seller. Buyer's severance policies in respect of New Buyer
Employees shall include, at a minimum, those items identified on Exhibit E
hereto. Except to the extent the same are included among the Assumed Liabilities
by reason of the assignment to Buyer of the Assumed Contracts, Buyer will not be
responsible for any of the following benefits: (a) disability benefits, both
long-term and short-term, for disabilities that commenced before the Closing
Date; (b) benefits for covered confinements under medical plans of Seller that
commenced before the Closing Date; (c) health care benefits for services
rendered or materials received before the Closing Date; (d) life insurance and
survivor income benefits for deaths that occur prior to the Closing Date; (e)
worker's compensation benefits for disabilities resulting from an accident while
employed by Seller or a predecessor thereof or exposure to occupational disease
that occurred prior to the Closing Date to the extent such exposure occurred
prior to the Closing Date, and (f) post-retirement life or health insurance
benefits for all New Buyer Employees who would have been eligible under the
plans and policies of Seller to retire before Closing with post-retirement life
or health insurance benefits if they had retired on or before the Closing Date.
The employment by Buyer of any employee of Seller who is on short-term or
long-term disability on the Closing Date shall not begin, unless otherwise
specifically requested by Buyer, until the end of the period of such disability.
5.3 INFORMATION TO NEW BUYER EMPLOYEES. As soon as possible, but not
later than 30 days following the Closing Date, Buyer will deliver to each New
Buyer Employee one or more communications setting forth in detail the New Buyer
Employee's rights, benefits and status under all plans referred to in the first
sentence of Section 5.2.
-22-
EXECUTION DRAFT
5.4 COMMISSIONS AND BONUSES. Buyer shall have no responsibility or
liability for any amounts earned under profit-sharing, commission or bonus
compensation plans and policies of Seller through the Closing Date, including
any such profit-sharing, commissions or bonuses that depend on performance
during a period that would end after the Closing Date.
ARTICLE 6
FURTHER AGREEMENTS OF SELLER
Seller covenants to and agrees with Buyer as follows:
6.1 BUYER'S INVESTIGATIONS. Buyer, at its expense, may make such
evaluations, inspections and investigations with respect to the Frozen Food
Business and the Assets as Buyer may desire provided that such evaluations,
inspections and investigations shall not unreasonably interfere with the
operations of the Frozen Food Business and the Assets are protected from
material loss or damage. Seller shall make available to all authorized
representatives of Buyer, free and full access, during normal business hours and
upon reasonable notice, to the Assets and all records of Seller. Buyer shall
keep all information it obtains as a result of such access confidential and
shall only use the same for the purposes of effectuating the transactions
contemplated by this Agreement (including obtaining the financing necessary to
purchase the Assets and operate the Frozen Food Business). Seller consents to
Buyer's disclosure of confidential information to Buyer's Lenders and any other
existing or prospective lenders of Buyer and its Affiliates.
6.2 OPERATIONS PRIOR TO CLOSING. After the date of this Agreement and
prior to the Closing Date, Seller shall use, maintain and replace the Assets in
compliance with all laws, regulations and ordinances, and in substantially the
same manner in which they have been used, maintained and replaced prior to the
date of this Agreement, and conduct the Frozen Food Business in compliance with
all laws, regulations and ordinances, and substantially as it has been conducted
prior to the date of this Agreement. Seller shall use its commercially
reasonable efforts to preserve existing relations with the employees, suppliers
and customers. Seller shall promptly notify Buyer of any material matter
affecting the Assets or the Frozen Food Business that arises from the date of
this Agreement to the Closing Date.
6.3 ENVIRONMENTAL AUDIT. At least three business days prior to the
Closing Date, Seller shall deliver to Buyer Phase I reports and limited testing
results satisfactory to Buyer and Buyer's Lenders with respect to the Frozen
Food Real Property and the Frozen Food Leased Property. Such reports and testing
results shall state that they may be relied upon by Buyer and the Buyer's
Lenders.
6.4 OBTAINING CONSENTS AND APPROVALS. Seller shall use all commercially
reasonable efforts to obtain all governmental and third party consents and
approvals, including without limitation Bankruptcy Court approval (subject to
the Sale Procedure Order), HSR Act approval,
-23-
EXECUTION DRAFT
and satisfactory assignment of the Ore-▇▇▇ Agreement and the Greenfield Lease,
necessary to complete the transactions contemplated by this Agreement. With
respect to Bankruptcy Court approval, the Seller shall assure that all necessary
and appropriate parties receive proper notice of the sale to be approved by the
Sale Order, including without limitation: (a) all creditors of the Seller
(including persons with claims against the Seller that are disputed by the
Seller), including all unsecured, priority, secured and administrative
creditors; (b) all parties in interest; (c) all equity holders and members of
the Seller; (d) all pension and benefit plan administrators; (e) all holders
of/parties to executory contracts with the Seller; and (f) all appropriate
governmental agencies and taxing authorities.
6.5 SELLER'S RETAINED LIABILITIES. Seller agrees to remain liable for,
pay and discharge, in accordance with its normal practices as such may be from
time to time (but in any event in accordance with the terms of the Sale Order),
all liabilities other than the Assumed Liabilities.
6.6 TRUTH OF REPRESENTATIONS. From the date hereof until the Closing
Date, Seller shall, except as Buyer otherwise consents in writing, use
commercially reasonable efforts to cause all representations and warranties made
by it in this Agreement to be true and correct on and as of the Closing Date.
Seller shall notify Buyer promptly if any such representation or warranty ceases
to be true and correct.
6.7 EFFORTS TO CLOSE. Seller shall use commercially reasonable efforts
to cause the Closing to occur on the Closing Date or as soon thereafter as
practicable.
6.8 ESTOPPEL CERTIFICATES. Seller shall obtain estoppel certificates
from lessors in form reasonably satisfactory to Buyer with respect to the leases
relating to the Leased Property.
6.9 RECEIVABLES. Seller shall pay over to Buyer any amounts received by
Seller after the Closing Date on account of Receivables.
6.10 LICENSE. Seller will grant a perpetual, world-wide, royalty-free
license to Buyer to use the trademark "▇▇▇▇ and the Beanstalk", with respect to
products of the Frozen Food Business pursuant to a License Agreement in
substantially the form attached hereto as Exhibit F.
6.11 FURTHER ASSURANCES. Seller shall cooperate with Buyer, and take
such further action, and execute and deliver such further documents, as may be
reasonably requested by Buyer in order to carry out the terms and purposes of
this Agreement. Without limiting the generality of the foregoing, from and after
the Closing Date, upon the reasonable request of Buyer, Seller shall take such
action and deliver to Buyer such powers of attorney and further instruments of
assignment, conveyance or transfer and other documents of further assurance as
in the opinion of Buyer may be reasonably desirable to assure, complete and
evidence the full and effective transfer, conveyance and assignment of the
Assets and possession thereof to Buyer, its successors and assigns, and the
performance of this Agreement by Seller in all material respects. Seller shall
-24-
EXECUTION DRAFT
also make all commercially reasonable efforts to provide any and all Transition
Services reasonably requested by the Buyer. Buyer shall advance or reimburse
Seller (at Seller's option) for all out-of-pocket costs incurred in connection
with providing such services.
6.12 DELIVERY OF DISCLOSURE STATEMENT. Seller shall deliver a complete
and correct copy of the Disclosure Memorandum to the Buyer prior to the Closing.
6.13 WARN ACT COMPLIANCE. Seller shall comply with the Worker's
Adjustment and Retraining Notification Act of 1988, as amended, and be solely
responsible for furnishing any required notice of any "PLANT CLOSING" or "MASS
LAYOFF", as applicable.
ARTICLE 7
FURTHER AGREEMENTS OF BUYER
Buyer hereby covenants and agrees with Seller as follows:
7.1 EFFORTS TO CLOSE. Buyer shall use all commercially reasonable
efforts to cause the Closing to occur on the Scheduled Closing Date or as soon
thereafter as practicable.
7.2 WARN ACT COMPLIANCE. Notwithstanding Seller's obligations pursuant
to Section 6.12, Buyer shall be responsible for furnishing the required notice
of any "PLANT CLOSING" or "MASS LAYOFF" which Buyer may order to take place
during the first sixty (60) days after the Closing Date.
7.3 CANNED FOOD TRANSITION SERVICES. Buyer shall make all commercially
reasonable efforts to provide any and all Canned Food Transition Services
reasonably requested by the Seller. Seller shall advance or reimburse Buyer (at
Buyer's option) for all out-of-pocket costs incurred in connection with
providing such services. In addition, for so long as Canned Food Transition
Services are being provided by the Buyer, Seller shall advance or reimburse
Buyer (at Buyer's option) for 30% of Buyer's employment costs and expenses
associated with New Buyer Employees who provide services on behalf of the Canned
Food Business. In addition, Buyer agrees to negotiate in good faith the terms on
which it would be willing to provide similar services to any purchaser of the
Canned Food Assets.
-25-
EXECUTION DRAFT
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions provided for
herein are subject (at its option) to the satisfaction, on or prior to the
Closing Date, of each of the following conditions precedent:
8.1 REPRESENTATIONS TRUE. The representations and warranties of Seller
contained in this Agreement shall have been true and complete in all material
respects when made and shall be true and complete in all material respects on
and as of the Closing Date as if made on and as of such date.
8.2 PERFORMANCE BY SELLER. Seller shall have performed and complied with
all agreements, covenants and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
8.3 THIRD PARTY APPROVALS. All licenses, authorizations, consents,
filings, waivers, approvals, including, without limitation, HSR Act approval and
Bankruptcy Court approval, or other action required in connection with the
execution, delivery and performance of this Agreement and the consummation of
transactions contemplated hereby shall have been duly made or obtained. In
particular, (a) the lenders to Agrilink Foods, Inc. shall have consented hereto;
(b) the terms of the Sale Order (i) shall be acceptable to the Buyer in its sole
discretion reasonably exercised, (ii) shall confirm the Buyer's ability and
power to acquire all of the Assets, including without limitation the Ore-▇▇▇
Agreement and the Greenfield Lease; (iii) shall confirm that Buyer's acquisition
of the Assets shall be free and clear of liens, claims and encumbrances of any
kind other than Assumed Liabilities, Permitted Liens and Permitted Title
Exceptions; and (iv) shall confirm that neither the Buyer nor any Affiliate of
Buyer has either assumed or is liable for any liabilities of the Seller of any
kind or nature (excepting only the Buyer's liability for the Assumed
Liabilities); (c) Buyer shall have been assigned the rights under the Ore-▇▇▇
Agreement in a manner acceptable to Buyer; and (d) the assignment of the
Greenfield Lease to Buyer shall be acceptable to the Buyer in its sole
discretion.
8.4 NO DESTRUCTION OF ASSETS. Between the date hereof and the Closing
Date, there shall be no material damage to, or destruction or diminution in
value of, the Frozen Food Business or of the Assets, it being the intent of
Buyer and Seller that Seller bear all risk of loss due to fire or other casualty
up to the Closing Date.
8.5 ADMINISTRATIVE SERVICES AGREEMENT. Buyer shall have entered into an
agreement with its Affiliate, Agrilink Foods, Inc., pursuant to which Agrilink
Foods, Inc., will provide certain administrative services to the Buyer.
8.6 FINANCING. Buyer's Lenders shall provide, on the Closing Date,
financing to
-26-
EXECUTION DRAFT
Buyer in an amount sufficient to finance the Purchase Price and to finance the
ongoing operations of the Buyer following the Closing Date, all on such terms as
may be acceptable to Buyer in its sole discretion. Buyer's Lenders shall have
approved Buyer's contractual relationships with Pro-Fac Cooperative, Inc. and
Agrilink Foods, Inc.
8.7 SUPPORT OF AGRIPAC GROWERS. Former members of Seller (a)
representing at least two-thirds of all of the members of Seller immediately
prior to Closing Date, and (b) which members have enough acreage to satisfy the
Buyer's 1999 packing plan for the Frozen Food Business, shall have entered into
general marketing agreements with the Buyer.
8.8 ENVIRONMENTAL CONDITION. The environmental condition of the Frozen
Food Leased Property and the Frozen Food Real Property shall be acceptable to
the Buyer and Buyer's Lenders in their sole discretion.
8.9 RELEASE OF LIENS. Seller shall have received a complete release of
any and all liens encumbering any of the Assets, including without limitation,
all Seller Lender Liens.
8.10 TITLE INSURANCE. Buyer shall have received at Closing final Title
Policies or marked up Title Commitments deleting all exceptions (including
without limitation the standard exceptions) other than Permitted Title
Exceptions. The Title Policies shall insure that upon consummation of the
purchase and sale herein contemplated, Buyer shall be vested with good, fee
simple, marketable title to the Frozen Food Real Property, subject only to
Permitted Title Exceptions. Seller shall furnish the Title Company with such
affidavits and indemnities as may be required by the Title Company in order to
issue the Title Policy without any exception for unfiled and unrecorded
materialman's and mechanic's liens.
8.11 INSTRUMENTS OF TRANSFER AND OTHER DOCUMENTS. Buyer shall have
received appropriate instruments of transfer with respect to the Assets
satisfactory in form and substance to the Buyer and its counsel. Buyer shall
also have received such certificates, reasonable further assurances and related
documents relating to the transaction as it or its counsel may deem reasonably
necessary or appropriate to consummate the transaction described hereby.
8.12 NO STAY OF SALE ORDER. No order shall have been entered that stays
the effectiveness of the Sale Order.
8.13 APPROVAL OF DISCLOSURE MEMORANDUM. The contents of the Disclosure
Memorandum shall be acceptable to the Buyer in its sole discretion.
8.14 TRANSITION SERVICES. Buyer shall have satisfied itself as to the
availability of adequate Transition Services so as to enable Buyer to operate
the Frozen Food Business in the manner contemplated for its 1999 business plan.
-27-
EXECUTION DRAFT
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions provided for
herein are subject (at its option) to the satisfaction, on or prior to the
Closing Date, of each of the following conditions precedent:
9.1 REPRESENTATIONS TRUE. The representations and warranties of Buyer
contained in this Agreement shall have been true and complete in all material
respects when made and shall be true and complete in all material respects on
and as of the Closing Date as if made on and as of such date.
9.2 PERFORMANCE BY BUYER. Buyer shall have performed and complied with
all agreements, covenants and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
9.3 THIRD PARTY APPROVALS. All licenses, authorizations, consents,
filings, waivers, approvals, including, without limitation, HSR Act approval and
Bankruptcy Court approval, or other action required in connection with the
execution, delivery and performance of this Agreement and the consummation of
transactions contemplated hereby shall have been duly made or obtained.
9.4 OTHER DOCUMENTS. Seller shall have received appropriate
certificates, reasonable further assurances and related documents relating to
the transaction.
ARTICLE 10
TERMINATION; EXPENSES
10.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
10.1.1 By the mutual written consent of Buyer and Seller.
10.1.2 By Seller, if any of the Buyer's representations or
warranties contained in or made pursuant to this Agreement was not true and
complete in all material respects when made or if Buyer fails to perform or
comply in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by Buyer. Notwithstanding the
foregoing, termination of this Agreement pursuant to this Section 10.1.2 shall
not take effect (a) unless Seller notifies Buyer in writing within 24 hours
after Seller's becoming aware of the grounds for such termination and (b) until
and unless Buyer has failed to cure or remove the grounds for such termination
set forth in Seller's notice in accordance with this Section 10.1.2
-28-
EXECUTION DRAFT
on or before the date 5 days after the date of such notice. If Seller gives
notice of termination pursuant to this Section 10.1.2, the Closing Date shall be
delayed, if necessary, to provide Buyer at least 5 days to cure or remove the
grounds for termination of this Agreement set forth in such notice.
10.1.3 By Buyer, if any representations or warranties of Seller
contained in or made pursuant to this Agreement was not true and complete in all
material respects when made or if Seller fails to perform or comply in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by Seller. Notwithstanding the foregoing,
termination of this Agreement pursuant to this Section 10.1.3 shall not take
effect (a) unless Buyer notifies Seller in writing within 24 hours after Buyer's
becoming aware of the grounds for such termination and (b) until and unless
Seller has failed to cure or remove the grounds for such termination set forth
in Buyer's notice in accordance with this Section 10.1.3 on or before the date 5
days after the date of such notice. If Buyer gives notice of termination
pursuant to this Section 10.1.3, the Closing Date shall be delayed, if necessary
to provide Seller at least 5 days to cure or remove the grounds for termination
of this Agreement set forth in such notice.
10.1.4 By Buyer or Seller at any time after February 28, 1999,
provided that the party seeking to terminate this Agreement is not then in
breach of its obligations hereunder.
10.1.5 By Buyer or Seller at any time after February 19, 1999 if
the Bankruptcy Court has not entered a Sale Order by such date.
10.1.6 By Seller if the Bankruptcy Court orders Seller to
terminate this Agreement.
10.1.7 By Buyer or Seller if the consummation of the transactions
contemplated by this Agreement would violate any non-appealable final order,
decree or judgment of any court or governmental body having competent
jurisdiction.
10.2 NOTICE OF TERMINATION. In the event of termination of this
Agreement pursuant to Section 10.1 hereof, notice shall promptly be given by the
terminating party to the other party to this Agreement.
10.3 EXPENSES UPON TERMINATION. If this Agreement is terminated as
provided in Section 10.1, neither Buyer nor Seller nor any Affiliate thereof
shall have any liability to any of the others for costs, expenses (including
without limitation, legal and accounting fees and expenses), loss of anticipated
profits or otherwise; it being understood that in the event of such termination,
each party shall bear its own legal and accounting and other fees, costs, losses
and expenses, provided, however, that in the event (a) (i) this Agreement is
terminated pursuant to Sections 10.1.3, 10.1.5 or 10.1.6, or (ii) Seller enters
into an agreement with another person or entity involving a merger, sale of all
or a significant portion of the Assets or other business combination with
respect to a significant portion of the Assets within six (6) months of the date
-29-
EXECUTION DRAFT
hereof (other than a sale occurring more than one month following the shutdown
of the operation of the Frozen Food Business), then (b) Seller shall pay Buyer
the documented out-of-pocket costs and expenses of Buyer or any Affiliate of
Buyer incurred in connection with their efforts to acquire the Assets, which
expenses shall not exceed $500,000 in the aggregate.
ARTICLE 11
OVERBID PROTECTION
If (i) Seller receives one or more bids from others to purchase all or a
part of the Assets, and (ii) an auction with respect to the Assets is conducted
or ordered by the Bankruptcy Court, then (iii) Buyer shall be entitled to obtain
credit for, and shall be deemed to have increased its offer by, an amount equal
to the documented out-of-pocket costs and expenses of Buyer or any Affiliate of
Buyer incurred in connection with their efforts to acquire the Assets, but not
exceeding $500,000 in the aggregate.
ARTICLE 12
MISCELLANEOUS
12.1 CONFIDENTIALITY. Any information concerning Seller disclosed to
Buyer, its Affiliates or its representatives or concerning Buyer or its
Affiliates disclosed to Seller or its representatives that has not been publicly
disclosed shall be kept strictly confidential by them and shall not be disclosed
or used by the recipients (whether or not Closing occurs) for any purpose other
than consummating the transactions contemplated by this Agreement until publicly
disclosed by Seller and Buyer. In the event that this Agreement is terminated
pursuant to Section 10.1, all documents, if any, of a confidential nature, and
copies thereof delivered by Seller to Buyer or its Affiliates or their
respective representatives or delivered by Buyer to Seller or its
representatives shall be immediately returned. The obligations of the parties
under this Section 12.1 shall survive termination of this Agreement.
Notwithstanding the foregoing, any and all of the obligations of the parties
under this Section are subject to any order of the Bankruptcy Court and the
Sales Procedure Orders.
12.2 PUBLICITY. Subject to any order of the Bankruptcy Court or the Sale
Procedures Order, no press releases shall be issued, nor shall the terms of this
Agreement be disclosed to third parties, other than the representatives of the
parties, without the prior written consent of Seller and Buyer.
12.3 BOOKS AND RECORDS. Seller shall deliver to Buyer promptly after
Closing all correspondence, files, documents and records relating to the Frozen
Food Business. Buyer shall preserve such records for the lesser of: six years
after the Closing Date or such period as Buyer would ordinarily preserve such
records pursuant to its records retention policy then in effect; during such
period Buyer shall make the same available for examination (or for the making of
-30-
EXECUTION DRAFT
▇▇▇▇▇ or extracts), if necessary for a lawful purpose, by Seller or any
purchaser of the Canned Food Business at reasonable times so as not to interfere
with Buyer's business. In the event that prior to the end of six years after the
Closing Date, Buyer decides to destroy any such records pursuant to its records
retention policy then in effect, Buyer shall give Seller and any purchaser of
the Canned Food Business of which it is aware at least sixty days notice of such
decision during which ▇▇▇▇ ▇▇▇▇▇▇ or any purchaser of the Canned Food Business
may request and Buyer shall transfer to Seller and any purchaser of the Canned
Food Business all such records to be destroyed; if no such request is received
by Buyer, Buyer may destroy such records about which notice has been given to
Seller and any purchaser of the Canned Food Business.
12.4 MUTUAL COOPERATION. Buyer and Seller shall use reasonable efforts
to defend litigation assumed or retained, respectively, pursuant to the terms of
this Agreement. Each of Buyer and Seller, without compensation other than
reimbursement for out-of-pocket expenses (excluding expenses for salaries or
time of employees), shall cooperate fully with the other in connection with the
defense of such litigation, including, without limitation, the provision of
access to all of its records and personnel in a manner and to the extent that
such party would make its own records and personnel available internally in
connection with litigation of similar magnitude involving it.
12.5 NOTICES. All notices hereunder shall be in writing and shall be
deemed to have been given if delivered personally or by a recognized commercial
carrier or three days after being sent by certified mail, return receipt
requested, postage prepaid, to the other party to this Agreement at the
following addresses or such other address as any party to this Agreement shall
specify by notice to the others:
If to Buyer: PF Acquisition II, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ Beach & ▇▇▇▇▇▇, LLP
The Granite Building
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to Seller: Agripac, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
-31-
EXECUTION DRAFT
With a copy to: ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
and a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Pacwest Center, Suites 1600-1800
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
12.6 ASSIGNMENT; BINDING EFFECT; BENEFITS. Buyer may assign its rights
under this Agreement to any Affiliate, any successor or purchaser of the Frozen
Food Business, and the financial institution providing financing to Buyer. Such
assignment shall not relieve Buyer of its obligations under this Agreement.
Except for the foregoing, neither this Agreement nor any right, remedy,
obligation or liability arising hereunder shall be assignable by any party to
this Agreement without the prior written consent of the other parties. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the parties to this Agreement and their respective successors and assigns.
Any purported assignment in violation of this Section shall be void and
ineffective.
12.7 WAIVER. No delay or failure of any party to exercise any right,
remedy or power hereunder shall impair the same or be construed as a waiver
thereof. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
12.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Exhibits and
Schedules hereto, and the Disclosure Memorandum embody the entire agreement and
understanding between Buyer and Seller and supersede all prior agreements
relating to the subject matter hereof. This Agreement may be amended, modified
or supplemented only by a written instrument executed by both parties hereto.
12.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
conflict of law principles thereof.
12.10 ARM'S LENGTH AGREEMENT. This Agreement has been negotiated at
arm's length and between persons sophisticated and knowledgeable in the matters
dealt with in this Agreement. In addition, each party has been represented by
experienced and knowledgeable legal counsel. Accordingly, any rule of law or
legal decision that would require interpretation of any ambiguities in this
Agreement against the party that has drafted the Agreement is not applicable and
is waived. This Agreement shall be construed without regard to the identity of
the person who drafted it or the party who caused it to be drafted and shall be
construed as if all parties had
-32-
EXECUTION DRAFT
jointly prepared this Agreement. Each and every provision of this Agreement
shall be construed as though all of the parties participated equally in its
drafting, and any uncertainty or ambiguity shall not be interpreted against any
one party. The provisions of this Agreement shall be interpreted in a reasonable
manner to effect the purpose of the parties and of this Agreement.
[remainder of page intentionally left blank]
-33-
EXECUTION DRAFT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above set forth.
AGRIPAC, INC., PF ACQUISITION II, INC.
Debtor and Debtor-In-Possession
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------- ---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
PRO-FAC COOPERATIVE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
-34-