EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇▇▇ BRANDS INTERNATIONAL, INC.
AND
PERFORMANCE FOOD GROUP COMPANY
FEBRUARY 22, 2005
TABLE OF CONTENTS
Page
----
ARTICLE 1. PURCHASE AND SALE OF SHARES.......................................... 1
1.1 Transfer of Shares........................................ 1
ARTICLE 2. CONSIDERATION........................................................ 1
2.1 Purchase Price............................................ 1
2.2 Other Payments............................................ 1
2.3 EBITDA Adjustment......................................... 4
ARTICLE 3. CLOSING; OBLIGATIONS OF THE PARTIES.................................. 5
3.1 Closing Date.............................................. 5
3.2 Obligations of the Parties at the Closing................. 5
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER............................. 6
4.1 Corporate Status.......................................... 6
4.2 Authority................................................. 7
4.3 No Conflict............................................... 7
4.4 Capitalization............................................ 7
4.5 Financial Statements...................................... 9
4.6 Real Property............................................. 10
4.7 Assets.................................................... 11
4.8 Material Contracts........................................ 11
4.9 Intellectual Property..................................... 13
4.10 Litigation, Claims and Proceedings........................ 14
4.11 Environmental and Safety and Health Matters............... 14
4.12 Compliance with Law....................................... 16
4.13 Employee Matters and Benefit Plans........................ 17
4.14 Taxes..................................................... 18
4.15 Absence of Undisclosed Liabilities........................ 20
4.16 Absence of Certain Changes................................ 20
4.17 Labor Matters............................................. 20
4.18 Customers and Suppliers................................... 21
4.19 Accounts Receivable....................................... 22
4.20 Affiliated Transactions................................... 22
4.21 Insurance................................................. 22
4.22 Payments.................................................. 22
4.23 Finder's Fee.............................................. 23
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................... 23
5.1 Corporate Status.......................................... 23
5.2 Authority................................................. 23
5.3 No Conflict............................................... 23
5.4 Compliance with Law....................................... 24
5.5 Sufficient Funds.......................................... 24
5.6 Finder's Fee.............................................. 24
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5.7 No Reliance............................................... 24
5.8 Investment Intent......................................... 25
ARTICLE 6. COVENANTS............................................................ 25
6.1 Interim Operations of the Companies....................... 25
6.2 Consents.................................................. 26
6.3 Publicity................................................. 27
6.4 Access to Records and Properties.......................... 28
6.5 Further Action............................................ 30
6.6 Expenses.................................................. 31
6.7 Notification of Certain Matters........................... 31
6.8 Employee Benefit Plans.................................... 31
6.9 Non-Competition, Non-Solicitation and Non-Disclosure...... 34
6.10 Intercompany Indebtedness................................. 35
6.11 Debt and Guarantees....................................... 36
6.12 Supplements to Disclosure Schedule........................ 36
6.13 Non-Solicitation.......................................... 36
6.14 Obligations with Respect to Certain Insurance Claims...... 37
6.15 Obligation with Respect to Fresh Advantage................ 38
ARTICLE 7. CLOSING CONDITIONS................................................... 38
7.1 Conditions to Obligations of Seller and Purchaser to
Consummate the Transaction................................ 38
7.2 Additional Conditions to Obligations of Purchaser......... 38
7.3 Additional Conditions to Obligations of Seller............ 40
ARTICLE 8. CERTAIN TAX MATTERS.................................................. 41
8.1 Responsibility for Filing Tax Returns..................... 41
8.2 Cooperation on Tax Matters................................ 41
8.3 Tax Sharing Agreements.................................... 42
8.4 Tax Indemnifications...................................... 42
8.5 Certain Non-income Taxes.................................. 43
8.6 Section 338(h)(10) Election............................... 44
ARTICLE 9. ADDITIONAL INDEMNIFICATION........................................... 44
9.1 Survival.................................................. 44
9.2 Additional Indemnification................................ 44
9.3 Indemnification Procedures................................ 46
9.4 Indemnification Limitations............................... 47
ARTICLE 10. TERMINATION......................................................... 48
10.1 Termination............................................... 48
10.2 Effect of Termination and Abandonment..................... 49
ARTICLE 11. MISCELLANEOUS....................................................... 49
11.1 Intentionally Deleted..................................... 49
11.2 Notices................................................... 49
11.3 Certain Definitions; Interpretation....................... 50
11.4 Severability.............................................. 55
11.5 Entire Agreement; No Third-Party Beneficiaries............ 55
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11.6 Amendment; Waiver......................................... 55
11.7 Binding Effect; Assignment................................ 55
11.8 Disclosure Schedule....................................... 55
11.9 Governing Law; Jurisdiction............................... 56
11.10 Enforcement............................................... 56
11.11 Construction.............................................. 56
11.12 Counterparts.............................................. 56
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INDEX OF DEFINED TERMS
Term Section
---------------------------------------------------- -----------
338(h)(10) Entity................................... 8.6
Accountants......................................... 2.2(d)(iii)
Accounts Receivable................................. 4.19
Acquisition Proposal................................ 6.13
Action.............................................. 11.3(a)(i)
Actual Payment Amount............................... 2.2(a)
Adjustment Amount................................... 2.2(c)
affiliate........................................... 11.3(a)(ii)
Affiliated Group.................................... 11.3(a)(iii)
Agreement........................................... Recitals
Assets.............................................. 4.7
Audited Statements.................................. 6.4(b)
Average Working Capital............................. 2.2(b)
Business............................................ 4.4(d)
Cause............................................... 6.8(d)
CBAs................................................ 4.17(a)
▇▇▇▇▇▇▇ County Arrangements......................... 11.3(a)(v)
Cleanup............................................. 11.3(a)(v)
Closing............................................. 3.1
Closing Date........................................ 3.1
Closing Date Financial Statements................... 2.2(d)(i)
Closing Date Working Capital........................ 2.2(d)(i)
Code................................................ 11.3(a)(vi)
Commitment Letter................................... 5.5
Companies........................................... Recitals
Companies Covered Employees......................... 6.8(b)
Companies Owned Intellectual Property............... 4.9(b)
Companies Used Intellectual Property................ 4.9(b)
Company Plans....................................... 4.13(a)
Company Release..................................... 11.3(a)(vii)
Confidential Material............................... 6.9(c)
Confidentiality Agreement........................... 6.4(a)
Contract............................................ 4.8(a)(i)
control............................................. 11.3(a)(viii)
DOJ................................................. 6.2(a)
EBITDA.............................................. 11.3(a)(ix)
Effective Time...................................... 3.1
Encumbrances........................................ 4.3
Environmental Claim................................. 11.3(a)(x)
Environmental Law................................... 4.11(a)
ERISA............................................... 11.3(a)(xi)
ERISA Affiliate..................................... 4.13(f)
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Estimated Payment................................... 2.2(a)
Estimated Payment Adjustment Amount................. 2.2(a)
Financial Statements................................ 4.5(a)
FTC................................................. 6.2(a)
GAAP................................................ 4.5(b)
▇▇▇▇▇▇▇ Fee......................................... 4.23
Governmental Authority.............................. 11.3(a)(xii)
Governmental Order.................................. 11.3(a)(xiii)
Guarantees.......................................... 6.11
Hazardous Substance................................. 4.11(a)
HSR Act............................................. 4.3
Indemnified Party................................... 9.3(a)
Indemnifying Party.................................. 9.3(a)
Intercompany Notes.................................. 11.3(a)(xiv)
Key Customers and Suppliers......................... 4.18
Key Employees....................................... 4.13(h)
knowledge........................................... 11.3(a)(xv)
Law................................................. 11.3(a)(xvi)
Leased Real Property................................ 4.6(c)
Losses.............................................. 9.2(a)
Material Contracts.................................. 4.8(a)
▇▇▇▇▇▇▇ ▇▇▇▇▇ Fee................................... 4.23
Monthly Statements.................................. 2.2(d)(i)
Owned Real Property................................. 4.6(b)
Permit.............................................. 11.3(a)(xvii)
Permitted Encumbrances.............................. 4.6(b)
Person.............................................. 11.3(a)(xviii)
PICL................................................ 6.14
Pre-Closing Claims.................................. 6.14
Preliminary EBITDA Statement........................ 2.3(a)
Purchase Price...................................... 2.1
Purchaser........................................... Recitals
Purchaser Indemnified Parties....................... 9.2(a)
Purchaser Material Adverse Effect................... 11.3(a)(xix)
Purchaser's 401(k) Plan............................. 6.8(e)
Real Property....................................... 4.6(c)
Real Property Leases................................ 4.6(a)(ii)
Reference Balance Sheet............................. 4.5(a)
Related Parties..................................... 4.20
Representatives..................................... 6.9(c)
Seller.............................................. Recitals
Seller Indemnified Parties.......................... 9.2(b)
Seller Material Adverse Effect...................... 11.3(a)(xxi)
Seller Plans........................................ 4.13(a)
Seller Release...................................... 11.3(a)(xx)
Shares.............................................. 1.1
ii
Straddle Period..................................... 8.4(a)(iii)
Subsidiary.......................................... 11.3(a)(xxii)
Survival Period..................................... 9.1
Tax Return.......................................... 11.3(a)(xxv)
Taxes............................................... 11.3(a)(xxiii)
Taxing Authority.................................... 11.3(a)(xxiv)
Termination Date.................................... 10.1(b)
Third-Party Claim................................... 9.3(a)
Threshold Amount.................................... 9.4
WC Adjustment Amount................................ 2.2(b)
Working Capital..................................... 2.2(b)
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made this 22nd day of
February, 2005, by and between ▇▇▇▇▇▇▇▇ Brands International, Inc., a New Jersey
corporation ("Purchaser"), and Performance Food Group Company, a Tennessee
corporation ("Seller").
WHEREAS, Seller owns all of the issued and outstanding shares of the
capital stock of Fresh International Corp., a Delaware corporation, Fresh
Advantage, Inc., a Virginia corporation, Redi-Cut Foods, Inc., an Illinois
corporation, and K.C. Salad Holdings, Inc., a Missouri corporation
(collectively, the "Companies"); and
WHEREAS, Purchaser desires to acquire from Seller, and Seller desires to
sell to Purchaser, all of the issued and outstanding shares of the capital stock
of the Companies upon and subject to the terms and conditions contained in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the parties agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF SHARES
1.1 TRANSFER OF SHARES. Subject to all of the terms and conditions of this
Agreement, at the Closing, Seller hereby agrees to sell, transfer and convey to
Purchaser, and Purchaser agrees to purchase and acquire from Seller, free and
clear of all Encumbrances (as defined in Section 4.3), 100 shares of common
stock, no par value, of Fresh International Corp., 1,000 shares of common stock,
par value $0.01 per share, of Fresh Advantage, Inc., 1,000 shares of Class A
common stock, no par value, of Redi-Cut Foods, Inc., and 1,000 shares of common
stock, par value $0.01 per share, of K.C. Salad Holdings, Inc., which constitute
all of the issued and outstanding shares of capital stock of the Companies
(collectively, the "Shares").
ARTICLE 2.
CONSIDERATION
2.1 PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Shares shall be $855,000,000, subject to adjustment pursuant to Section 2.3, if
applicable. At the Closing (as defined below), Purchaser shall deliver the
Purchase Price to Seller by wire transfer of immediately available funds
pursuant to the wire transfer instructions provided by Seller.
2.2 OTHER PAYMENTS.
(a) Payment of Cash and Outstanding Checks in Excess of Deposits.
Purchaser agrees that it will pay to Seller at Closing an amount equal to
the estimated amount of the following balance sheet line items (i) cash;
and (ii) "outstanding checks (issued by Seller in payment of obligations
of the Companies
and Subsidiaries) in excess of deposits" as of the most recently completed
four or five-week fiscal period prior to the Closing Date for which
financial statements of the Companies and their Subsidiaries prepared in
accordance with GAAP consistently applied with the Financial Statements
are available (the "Estimated Payment"). The "Estimated Payment Adjustment
Amount" (which may be a positive or negative number) will be equal to the
amount determined by subtracting the actual amount of (i) cash; and (ii)
"outstanding checks (issued by Seller in payment of obligations of the
Companies and Subsidiaries) in excess of deposits" as of the Closing Date
as set forth in the applicable line items in the Closing Date Financial
Statements (the "Actual Payment Amount") from the Estimated Payment.
(b) Working Capital Adjustment Amount. "Working Capital" as of a
given date shall mean the amount calculated by subtracting the current
liabilities of the Companies and their Subsidiaries (including
"outstanding checks (issued by Seller in payment of obligations of the
Companies and Subsidiaries) in excess of deposits," but excluding (i)
liabilities for income taxes, (ii) capital lease obligations, (iii)
interest payable, (iv) the current portion of long-term debt, (v)
intercompany payables owing to Seller or its Subsidiaries and (vi) any
Seller insurance allocation accrual), as of that date from the current
assets of the Companies and their Subsidiaries (other than (i) cash, (ii)
current deferred income tax assets, (iii) any other income Tax assets and
(iv) intercompany receivables owed by Seller or its Subsidiaries) as of
that date; provided, that, for the avoidance of doubt, calculations of
inventory and accounts receivable shall be net of the applicable reserve.
The "Average Working Capital" of the Companies and their Subsidiaries
shall be equal to the average of the Working Capital as of the last day of
each of the 12 most recently completed four or five-week fiscal periods
prior to the Closing Date for which internally prepared financial
statements of the Companies and their Subsidiaries prepared in accordance
with GAAP consistently applied with the Financial Statements are
available. The "WC Adjustment Amount" (which may be a positive or negative
number) will be equal to the amount determined by subtracting the Closing
Date Working Capital (as defined below) from the Average Working Capital.
For the avoidance of doubt, Seller shall be fully responsible for the
payment of, and shall make payment when due on, any "outstanding checks in
excess of deposits" as of the Closing Date to the extent such amount has
been included in the Estimated Payment and the Actual Payment Amount. An
example of the internally prepared financial statements and calculation of
Working Capital as of January 1, 2005 is attached as Section 2.2(b) of the
Disclosure Schedule.
(c) Post-Closing Payment. The Estimated Payment Adjustment Amount
and the WC Adjustment Amount when added together (which may be a positive
or negative number) shall collectively be referred to as the "Adjustment
Amount." If the Adjustment Amount is positive, the Adjustment Amount shall
be paid by wire transfer by Seller to an account specified by Purchaser.
If the Adjustment Amount is negative, the Adjustment Amount (treated as if
it were a positive number) shall be paid by wire transfer by Purchaser to
an account
2
specified by Seller. All payments shall be made together with interest at
a rate of 3% per annum, which interest shall begin accruing on the Closing
Date and end on the date that the payment is made. Within three business
days after the calculation of the Actual Payment Amount and Closing Date
Working Capital becomes binding and conclusive on the parties pursuant to
Section 2.2(d), Seller or Purchaser, as the case may be, shall make the
wire transfer payment provided for in this Section 2.2(c).
(d) Adjustment Procedure.
(i) Seller shall prepare financial statements (including a
combined balance sheet as of the Closing Date and a combined
statement of operations from January 2, 2005 through the Closing
Date) (the "Closing Date Financial Statements") of the Companies and
their Subsidiaries as of the Closing Date in accordance with GAAP
consistently applied with the Financial Statements. Seller shall
then determine (A) the Actual Payment Amount and the Working Capital
as of the Closing Date (the "Closing Date Working Capital") based
upon the Closing Date Financial Statements and (B) the Average
Working Capital based on the financial statements of the Companies
and their Subsidiaries prepared in accordance with GAAP consistently
applied with the Financial Statements for each of the 12 most
recently completed four or five-week fiscal periods prior to the
Closing Date for which internally prepared financial statements of
the Companies and their Subsidiaries prepared in accordance with
GAAP consistently applied with the Financial Statements are
available (the "Monthly Statements"). Seller shall deliver the
Closing Date Financial Statements, the Monthly Statements and its
determination of the Actual Payment Amount, the Average Working
Capital and the Closing Date Working Capital (which shall include a
description in reasonable detail of the components and amounts
thereof) to Purchaser within thirty (30) days following the Closing
Date.
(ii) If within thirty (30) days following delivery of the
Closing Date Financial Statements, the Monthly Statements and the
calculation of the Actual Payment Amount, the Average Working
Capital and the Closing Date Working Capital, Purchaser has not
given Seller written notice of its objection as to the Actual
Payment Amount, the Average Working Capital and/or the Closing Date
Working Capital calculation (which notice shall state in reasonable
detail the basis of Purchaser's objection), then the Actual Payment
Amount, the Average Working Capital and Closing Date Working Capital
calculated by Seller shall be binding and conclusive on the parties
and be used in computing the Estimated Payment Adjustment Amount and
the WC Adjustment Amount, respectively.
(iii) If Purchaser duly gives Seller such notice of objection,
and if Seller and Purchaser fail to resolve the issues outstanding
with respect to
3
the Closing Date Financial Statements and the calculation of the
Actual Payment Amount, the Average Working Capital and/or the
Closing Date Working Capital within thirty (30) days of Seller's
receipt of Purchaser's objection notice, Seller and Purchaser shall
submit the issues remaining in dispute to Deloitte & Touche LLP,
independent public accountants (the "Accountants"), for resolution
in accordance with the terms of the Agreement and in compliance with
GAAP consistently applied with the Financial Statements. If issues
are submitted to the Accountants for resolution, (i) Seller and
Purchaser shall furnish or cause to be furnished to the Accountants
such work papers and other documents and information relating to the
disputed issues as the Accountants may request and are available to
that party or its agents and shall be afforded the opportunity to
present to the Accountants any material relating to the disputed
issues and to discuss the issues with the Accountants; (ii) the
determination by the Accountants, as set forth in a notice to be
delivered to both Seller and Purchaser within sixty (60) days of the
submission to the Accountants of the issues remaining in dispute,
shall be final, binding and conclusive on the parties and shall be
used in the calculation of the Actual Payment Amount, the Average
Working Capital and/or the Closing Date Working Capital, as
applicable; and (iii) Seller and Purchaser will each bear fifty
percent (50%) of the fees and costs of the Accountants for such
determination.
2.3 EBITDA ADJUSTMENT.
(a) Concurrently with the delivery to Purchaser of the Audited
Statements, Seller shall deliver to Purchaser a preliminary statement
("Preliminary EBITDA Statement") of the EBITDA based on the Audited
Statements (which shall include a description in reasonable detail of the
components and amounts thereof).
(b) If within ten (10) days following delivery of the Preliminary
EBITDA Statement, Purchaser has not given Seller written notice of its
objection as to the calculation of EBITDA (which notice shall state in
reasonable detail the basis of Purchaser's objection), then the EBITDA
calculated by Seller shall be binding and conclusive on the parties and be
used in computing any adjustment of the Purchase Price pursuant to this
Section 2.3.
(c) If Purchaser duly gives Seller such notice of objection, and if
Seller and Purchaser fail to resolve the issues outstanding with respect
to the Preliminary EBITDA Statement and the calculation of the EBITDA
within ten (10) days of Seller's receipt of Purchaser's objection notice,
Seller and Purchaser shall submit the issues remaining in dispute to the
Accountants for resolution in accordance with the terms of the Agreement
and consistent with the definition of EBITDA set forth herein. If issues
are submitted to the Accountants for resolution: (i) Seller and Purchaser
shall furnish or cause to be furnished to the Accountants such work papers
and other documents and information relating to
4
the disputed issues as the Accountants may request and are available to
that party or its agents and shall be afforded the opportunity to present
to the Accountants any material relating to the disputed issues and to
discuss the issues with the Accountants; (ii) the determination by the
Accountants, as set forth in a notice to be delivered to both Seller and
Purchaser within ten (10) days of the submission to the Accountants of the
issues remaining in dispute, shall be final, binding and conclusive on the
parties and shall be used in the calculation of any adjustment of the
Purchase Price pursuant to this Section 2.3; and (iii) Seller and
Purchaser will each bear fifty percent (50%) of the fees and costs of the
Accountants for such determination.
(d) In the event the amount of EBITDA set forth in Section 2.3(d) of
the Disclosure Schedule (which shall include a description in reasonable
detail of the components and amounts thereof, including the amount of any
corporate allocation charge and any insurance allocation charge) exceeds
by more than $4,000,000 the amount of EBITDA based on the Audited
Statements as finally determined pursuant to this Section 2.3, the
Purchase Price shall be reduced by an amount equal to the product of (i)
the difference between the amount of EBITDA set forth in Section 2.3(d) of
the Disclosure Schedule and the amount of EBITDA based on the Audited
Statements as finally determined pursuant to this Section 2.3 and (ii)
8.65. For the avoidance of doubt, an example of the calculation of EBITDA
for the year ended January 1, 2005 is set forth in Section 2.3(d) of the
Disclosure Schedule.
ARTICLE 3.
CLOSING; OBLIGATIONS OF THE PARTIES
3.1 CLOSING DATE. The closing (the "Closing") shall take place at 10:00
a.m., local time, at the offices of Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC, Nashville,
Tennessee, on the later of (i) five (5) business days following satisfaction or
waiver of all conditions to Closing set forth in Article 7 hereof (other than
those conditions that by their nature have to be satisfied at Closing (but
subject to the satisfaction or waiver of those conditions)) or (ii) 45 days
after the date of Purchaser's receipt of the Audited Statements (as defined in
Section 6.4(b)) (the "Closing Date"). The transfer shall be deemed to have
become effective at 12:01 a.m., California time on the Closing Date (the
"Effective Time").
3.2 OBLIGATIONS OF THE PARTIES AT THE CLOSING.
(a) At the Closing, Purchaser shall deliver to Seller:
(i) the Purchase Price as specified in Section 2.1, plus the
Estimated Payment;
(ii) a copy of resolutions of the Board of Directors of
Purchaser, certified by Purchaser's Secretary, authorizing the
execution, delivery and performance of this Agreement and the other
documents
5
referred to herein to be executed by Purchaser, and the consummation
of the transactions contemplated hereby; and
(iii) a duly executed copy of the Company Release.
(b) At the Closing, Seller will deliver to Purchaser:
(i) stock certificates for the Shares, which certificates
shall be duly endorsed to Purchaser or accompanied by duly executed
stock powers;
(ii) a copy of resolutions of the Board of Directors of
Seller, certified by Seller's Secretary, authorizing the execution,
delivery and performance of this Agreement and the other documents
referred to herein to be executed by Seller, and the consummation of
the transactions contemplated hereby;
(iii) a duly executed copy of the Seller Release;
(iv) written resignations, effective as of the Closing Date,
from any directors, officers or managing members of the Companies
and the Subsidiaries requested by Purchaser to resign as of the
Closing;
(v) an opinion of Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC in form and substance
reasonably satisfactory to Purchaser, or, with respect to certain
matters, opinions of local counsel reasonably satisfactory to
Purchaser or of the general counsel of the Seller or the Companies;
and
(vi) such other certificates, documents and instruments as
Purchaser may reasonably request in connection with the consummation
of the transactions contemplated hereby.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
4.1 CORPORATE STATUS. Each of the Companies and each Subsidiary of the
Companies is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and each (a) has
all requisite corporate or limited liability company power and authority to own,
operate or lease its properties and assets and to carry on its business as it is
now being conducted, and (b) is duly qualified to do business and is in good
standing in each of the jurisdictions listed on Section 4.1 of the Disclosure
Schedule, which includes each jurisdiction in which the ownership, operation or
leasing of its properties and assets and the conduct of its business requires it
to be so qualified, licensed or authorized, except where the failures to have
such power and authority or to be so qualified, licensed or authorized would not
have a Seller Material Adverse Effect. Seller has made available to Purchaser a
copy of the certificate
6
of incorporation and bylaws (or similar organization documents), as amended, of
the Companies and each of their Subsidiaries, each as in effect on the date
hereof.
4.2 AUTHORITY. Seller has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Seller and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Seller and no other corporate
proceedings are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Seller, and (assuming due authorization and delivery by Purchaser)
this Agreement constitutes a legal, valid and binding obligation of Seller
enforceable against it in accordance with its terms, subject to general
principles of equity and except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws of
general application relating to creditors' rights.
4.3 NO CONFLICT. Except as set forth in Section 4.3 of the Disclosure
Schedule and except for the notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), the execution, delivery and performance
of this Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby will not (a) violate, conflict with or result in the breach
of any term or provision of the charter or bylaws (or similar organizational
documents) of Seller, any of the Companies or any of the Subsidiaries, (b)
conflict with or violate any Law applicable to Seller, the Companies or any
Subsidiary or any of their respective assets, properties or businesses, (c)
result in the creation of any Encumbrance (as defined below) on the Shares, (d)
require any action, consent, approval or authorization by, or any other order
of, filing with or notification to, any Governmental Authority or (e) conflict
with or violate, result in the breach of any term or provision of, or constitute
a default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any mortgage, pledge, hypothecation, claim, security interest,
encumbrance, interest, option, lien or other restriction (collectively,
"Encumbrances") on any of the assets or properties of Seller, the Companies or
any Subsidiary pursuant to, in the case of clause (e), any material agreement or
arrangement to which Seller is a party or by which it is bound or any Material
Contract, except for immaterial violations, conflicts, breaches or defaults or
violations, conflicts, breaches or defaults which would occur as a result of the
business or activities in which Purchaser is or proposes to be engaged or as a
result of any acts or omissions by, or the status of any facts pertaining to,
Purchaser.
4.4 CAPITALIZATION.
(a) The authorized and outstanding capital stock of the Companies is
set forth in Section 4.4(a) of the Disclosure Schedule. All of the
Companies' issued and outstanding stock is duly authorized, validly
issued, fully paid, nonassessable, free of any preemptive rights, have
been issued in compliance with
7
applicable Law and is held of record and beneficially by Seller, free and
clear of any Encumbrance. The Shares constitute all of the issued and
outstanding capital stock of the Companies.
(b) Except as set forth in Section 4.4(b) of the Disclosure
Schedule, there are (i) no outstanding obligations, options, warrants,
convertible securities or other rights, agreements, arrangements or
commitments of any kind relating to the capital stock of the Companies or
obligating the Companies to issue or sell or otherwise transfer any shares
of capital stock of, or any other interest in, the Companies, (ii) no
outstanding obligations of the Companies to repurchase, redeem or
otherwise acquire any shares of their respective capital stock or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person or (iii) no voting trusts,
stockholder agreements, proxies or other agreements or understandings in
effect with respect to the voting or transfer of any of their respective
capital stock.
(c) Section 4.4(c) of the Disclosure Schedule sets forth a true and
complete list of all Subsidiaries of the Companies, listing for each
Subsidiary its name, its jurisdiction of organization, the percentage of
stock or other equity interest of each subsidiary owned by the Companies
or a Subsidiary and the authorized and outstanding capital stock of each
such Subsidiary. Other than the Subsidiaries or as otherwise set forth in
Section 4.4(c) of the Disclosure Schedule, there are no other
corporations, partnerships, joint ventures, associations or other similar
entities in which the Companies own, of record or beneficially, any direct
or indirect equity or other similar interest or any right (contingent or
otherwise) to acquire the same. All of the issued and outstanding shares
(or voting securities) of each of the Subsidiaries are validly issued,
fully paid, nonassessable, and free of any preemptive rights. Except as
set forth in Section 4.4(c) of the Disclosure Schedule, (i) the Companies
own beneficially and of record all of the outstanding shares of capital
stock (or voting securities) of each Subsidiary free and clear of any
Encumbrances, (ii) there are no outstanding obligations, options,
warrants, convertible securities or other rights, agreements or
commitments of any kind relating to the capital stock of any Subsidiary or
obligating the Companies or any Subsidiary to issue or sell or otherwise
transfer any shares of capital stock of, or any other interest in, any
Subsidiary, (iii) there are no outstanding obligations of the Subsidiaries
to repurchase, redeem or otherwise acquire any shares of their respective
capital stock or to provide funds to, or make any investment (in the form
of a loan, capital contribution or otherwise) in, any other Person, and
(iv) there are no voting trusts, stockholder agreements, proxies or other
agreements or understandings in effect with respect to the voting or
transfer of any of their respective capital stock.
(d) Except as set forth on Section 4.4(d) of the Disclosure
Schedule, the "Fresh Cut" business of Seller as such business is described
in Seller's public filings with the United States Securities and Exchange
Commission (the "Business") is conducted exclusively by the Companies and
the Subsidiaries. At Closing, the assets and properties of the Companies
and the Subsidiaries will
8
constitute substantially all of the tangible and intangible property
historically used by them.
4.5 FINANCIAL STATEMENTS.
(a) Seller has made available to Purchaser true and complete copies
of (i) the audited combined balance sheets as of January 3, 2004 and
December 28, 2002 and related audited combined statements of earnings,
cash flows and Seller's net investment for the Companies and their
Subsidiaries for the fiscal years then ended, and (ii) the unaudited
combined balance sheet as of January 1, 2005 and related unaudited
combined statements of earnings and statement of cash flows for the
Companies and their Subsidiaries for the year ended January 1, 2005
(collectively, the "Financial Statements"). The January 1, 2005 balance
sheet is referred to herein as the "Reference Balance Sheet."
(b) The Financial Statements (i) have been prepared based on the
books and records of the Companies and their Subsidiaries in accordance
with United States generally accepted accounting principles ("GAAP") and
the Companies' normal accounting practices, consistent with past practice
(except as may be indicated therein or in the notes or schedules thereto),
(ii) except with respect to the unaudited Financial Statements described
under Section 4.5(a)(ii), are in accordance with Regulation S-X of the
Securities Exchange Act of 1934, as amended, and (iii) present fairly, in
all material respects, the combined financial condition, combined results
of operations and combined statements of cash flow of the Companies and
their Subsidiaries as of the dates indicated or for the periods indicated.
(c) Seller's internal control over financial reporting is sufficient
in all material respects to provide reasonable assurance (i) that
transactions of the Companies and the Subsidiaries are recorded as
necessary to permit preparation of financial statements in conformity with
GAAP, (ii) that receipts and expenditures of the Companies and the
Subsidiaries are being made only in accordance with the authorization of
management, and (iii) regarding prevention or timely detection of the
unauthorized acquisition, use or disposition of the Assets that could
materially affect the combined financial statements of the Companies and
the Subsidiaries. Based on information available and Seller's internal
control review conducted through the date hereof, Seller has no knowledge
of any significant deficiencies or material weaknesses in the design or
operation of Seller's internal control over financial reporting with
respect to the Companies, the Subsidiaries or the Business. The books and
records of the Companies and the Subsidiaries, all of which have been made
available to Purchaser, are complete and accurate in all material respects
and at the Closing will be in their possession.
(d) The matters relating to Seller and certain of its Subsidiaries
subject to an informal inquiry by the Securities and Exchange Commission
and under investigation by Seller's Audit Committee do not involve or
affect the financial
9
reporting, financial statements or internal controls relating to the
Business or any of the Companies or Subsidiaries.
(e) Section 4.5(e) of the Disclosure Schedule sets forth Seller's
good faith calculation of excess raw product costs, fruit start-up costs,
excess insurance allocation costs, executive severance costs and bonus
costs, in each case, of the Companies and the Subsidiaries for the fiscal
year ended January 1, 2005.
4.6 REAL PROPERTY.
(a) Section 4.6(a) of the Disclosure Schedule sets forth a true and
complete list of all of the real property owned or leased by the Companies
or any Subsidiary, including any on which one of the Companies' or their
Subsidiaries' operating facilities is located, as delineated therein,
including:
(i) with respect to the owned real property, (a) if available,
the street address of each parcel of owned real property, and (b)
the current owner of each such parcel of owned real property, and
(ii) with respect to the leased real property, (a) if
available, the street address of each parcel of leased real
property, (b) the identity of the lessor and lessee of each such
parcel of leased real property, (c) the term of the lease pertaining
to each such parcel of leased real property and (d) a list of all
leases, as amended (the "Real Property Leases").
(b) Except as otherwise set forth in Section 4.6(b) of the
Disclosure Schedule, (i) the Companies or one of their Subsidiaries have
good and marketable fee simple title to all of the real property owned by
them (the "Owned Real Property"), free and clear of all Encumbrances,
except (x) to the extent of liens reserved against in the Financial
Statements for the applicable property, (y) liens for taxes not yet due
and payable or which are being contested in good faith, or (z) liens that
individually or in the aggregate would not have a Seller Material Adverse
Effect (collectively, "Permitted Encumbrances"), (ii) there are no leases,
subleases, licenses, concessions or other agreements granting to any
Person the right to use or occupy the Owned Real Property, and (iii) there
are no outstanding options, rights of first offer or rights of first
refusal to purchase the Owned Real Property or any portion thereof or
interest therein.
(c) The Companies and/or the Subsidiaries have a valid and
subsisting leasehold estate in and the right to quiet enjoyment of the
material real properties leased by it as lessee (the "Leased Real
Property" and, together with the Owned Real Property, the "Real Property")
under the Real Property Leases related to such Leased Real Property. The
improvements on the Real Property listed in Section 4.6(c) of the
Disclosure Schedule are in all material respects in good operating
condition and in a state of good maintenance and repair, ordinary wear and
tear excepted, are adequate and suitable for the purposes for which they
are presently being used and there are no condemnation or appropriation
proceedings
10
pending or threatened against any of such real property or the
improvements thereon.
4.7 ASSETS. Except as disclosed in Section 4.7 of the Disclosure Schedule,
either one of the Companies or a Subsidiary, as the case may be, owns or leases
all the properties and assets, including, without limitation, the Companies
Intellectual Property (defined in Section 4.9) and the assets reflected in the
Reference Balance Sheet (except for inventory or other assets disposed of in the
ordinary course of business consistent with past practice), but excluding the
Real Property, used or held for use by the Companies or a Subsidiary in the
conduct of the Business (all such properties and assets being the "Assets"),
except where the failures to own or lease such Assets would not have a Seller
Material Adverse Effect. Either one of the Companies or a Subsidiary, as the
case may be, has good and valid title to, or in the case of leased or subleased
Assets, valid and subsisting leasehold interests in, all the Assets, free and
clear of all Encumbrances, except (a) as disclosed in Section 4.7 of the
Disclosure Schedule, (b) for Permitted Encumbrances and (c) where the failure to
have good and valid title to or valid or subsisting leasehold interests in the
Assets would not have a Seller Material Adverse Effect. Except as set forth in
Section 4.7 of the Disclosure Schedule, the Assets, together with the Real
Property, are sufficient for the conduct of the Business as currently conducted
by the Companies and Subsidiaries. The equipment used or held for use by the
Companies and Subsidiaries is in all material respects in good operating
condition and in all material respects in a state of good maintenance and
repair, ordinary wear and tear excepted.
4.8 MATERIAL CONTRACTS.
(a) Section 4.8(a) of the Disclosure Schedule sets forth a true and
complete list of all the Material Contracts to which any of the Companies
or their Subsidiaries is a party or by which it is expressly bound. As
used herein, "Material Contracts" means all of the following:
(i) each agreement or arrangement to which any of the
Companies or any Subsidiary is party or by which it is bound (a
"Contract") that was not entered into in the ordinary course of
business consistent with past practice;
(ii) each agreement with any Key Customer or Key Supplier;
(iii) each agreement, indenture or other instrument relating
to the borrowing of money, or guaranteeing, or providing security
for, indebtedness, in an amount in excess of One Million Dollars
($1,000,000) or otherwise restricting, in any material respect, the
ability of the Companies or Subsidiaries to incur indebtedness or
provide security for indebtedness;
11
(iv) each partnership, material joint venture or material
other similar agreement to which any of the Companies or any
Subsidiary is a party or by which any of them is otherwise expressly
bound;
(v) each agreement, arrangement, contract or commitment
restricting or otherwise affecting the ability of the Companies or
Subsidiaries to engage in any business or compete in any
jurisdiction or otherwise solicit customers;
(vi) each material Real Property Lease, each agreement
covering Companies Used Intellectual Property and each lease of
material equipment or other material Assets;
(vii) each agreement, arrangement, contract or commitment with
a third party for the benefit of any of the Companies or
Subsidiaries or the Business restricting or otherwise affecting the
ability of the third party to engage in the Business or compete or
solicit customers of the Business in any jurisdiction;
(viii) each Contract with exclusive supply or requirements
obligations;
(ix) each employment agreement of any of the Companies or any
of their Subsidiaries pursuant to which any employee is entitled to
receive base salary in excess of $100,000 in any one year and each
material consulting Contract;
(x) each agreement for the sale or other transfer of a
material Asset or Owned Real Property that has not yet been
consummated and was not entered into in the ordinary course of
business consistent with past practice;
(xi) each Contract with Seller or any other affiliate of
Seller;
(xii) each Contract providing for any "earn out" type
arrangements to any Person;
(xiii) each other existing agreement, not otherwise covered by
clauses (i) through (xii), that requires payments by or to any of
the Companies or any Subsidiary in excess of One Million Dollars
($1,000,000) during any one year and has not been entered into in
the ordinary course of business consistent with past practice;
(b) Except as disclosed in Section 4.8(b) of the Disclosure
Schedule:
(i) neither any of the Companies nor any Subsidiary party to
any Material Contract, nor, to the knowledge of Seller, any other
party thereto, is in breach thereof or default thereunder except
where such
12
breach or default would not have a Seller Material Adverse Effect,
or has given notice of breach or default to any other party
thereunder; and
(ii) each Material Contract is valid and binding on each of
the relevant Companies and their relevant Subsidiaries and, to the
knowledge of Seller, each respective counterparty thereto, and each
Material Contract is in full force and effect and is enforceable in
accordance with its terms, subject to general principles of equity
and except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar
laws of general application relating to creditors' rights. No third
party to any Material Contract has notified Seller or any of the
Companies or Subsidiaries that it intends to terminate or otherwise
alter any Material Contract.
(c) Except as required by Law or as set forth on Section 4.8(c) of
the Disclosure Schedule, there are no outstanding material warranties,
other than those made in the ordinary course of business consistent with
past practices, made by the Companies or Subsidiaries and there have been
no material warranty claims within the past two (2) years and there are no
material unresolved claims thereunder.
(d) Seller has made available to Purchaser each Material Contract,
other than as indicated on Section 4.8(a) of the Disclosure Schedule.
4.9 INTELLECTUAL PROPERTY.
(a) Section 4.9 of the Disclosure Schedule sets forth a true and
complete list of all (i) intellectual property registrations and
applications, Internet domain names and material unregistered intellectual
property owned by the Companies or any Subsidiary and (ii) material
intellectual property licensed by the Companies or any Subsidiary (whether
as licensee or licensor) (excluding "clickwrap" or "shrinkwrap"
agreements, agreements contained in or pertaining to "off-the-shelf"
software, and the terms of use or service for any website, to the extent
each is commercially available to consumers on nondiscriminatory pricing
terms). There are no pending actions against any of the Companies or any
Subsidiary of which the Companies or any Subsidiary have been given
written notice that assert that the Companies or any Subsidiary violate or
infringe or unlawfully use the intellectual property rights of others or
challenging the Companies' or any Subsidiary's ownership or use of, or
the validity, enforceability or registrability of any intellectual
property. To the knowledge of Seller, neither any of the Companies nor any
Subsidiary violates, infringes upon or unlawfully uses any intellectual
property owned by another Person. Neither any of the Companies nor any
Subsidiary has received any written notice alleging any violation,
infringement upon or unlawful use of any intellectual property rights of
others or challenging the Companies' or any Subsidiary's ownership or use
of, or
13
the validity, enforceability or registrability of any intellectual
property that remains unresolved on the date hereof. Except as set forth
in Section 4.9(a) of the Disclosure Schedule, neither the Companies nor
any Subsidiary has brought or threatened any Action against another Person
involving intellectual property, and to the knowledge of Seller, there is
no basis for any Action regarding the foregoing.
(b) Except as set forth in Section 4.9(b) of the Disclosure
Schedule, the Companies or a Subsidiary solely and exclusively owns all
intellectual property owned by the Companies or a Subsidiary ("Companies
Owned Intellectual Property") and has the valid and enforceable right to
use all other material intellectual property used or held for use by the
Companies or any Subsidiary ("Companies Used Intellectual Property"), free
and clear of all material Encumbrances.
(c) The Companies Owned Intellectual Property and, to the knowledge
of Seller, any Companies Used Intellectual Property, (i) has been duly
maintained, (ii) is subsisting, in full force and effect and (iii) has not
been cancelled, expired or abandoned.
4.10 LITIGATION, CLAIMS AND PROCEEDINGS. Except as set forth in Section
4.10 of the Disclosure Schedule, there are no Actions that have been brought by
or against any Governmental Authority or any other Person pending or, to the
knowledge of Seller, threatened against or by the Companies, any Subsidiary of
the Companies, the Business, any Assets, or any of their Owned Real Property or
Leased Real Property, which, if adversely determined, would result in
liabilities in excess of Three Million Dollars ($3,000,000) or material
injunctive or equitable relief, or would have a Seller Material Adverse Effect.
There are no existing Governmental Orders naming the Companies or any Subsidiary
as an affected party. Seller makes no representation in this Section 4.10 as to
any matter the subject matter of which is specifically covered by Sections 4.9,
4.11, 4.13 or 4.14 of this Agreement.
4.11 ENVIRONMENTAL AND SAFETY AND HEALTH MATTERS. Except as disclosed in
Section 4.11 of the Disclosure Schedule:
(a) The Companies and their Subsidiaries have obtained all material
Permits that are required under any Environmental Law for the operation of
their businesses as currently being conducted. To Seller's knowledge, all
such Permits are valid and in full force and effect, and will survive the
Closing without material modification. "Environmental Law" means any
applicable Law relating to (i) the protection, investigation or
restoration of the environment or natural resources, (ii) the protection
of human health and safety as it pertains to exposure to Hazardous
Substances, or (iii) the handling, use, presence, disposal, treatment,
storage, release or threatened release of any Hazardous Substance, and
includes, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, the Federal Water Pollution Control Act,
the Clean Air Act, the Resource Conservation and Recovery Act, the
Occupational Safety and Health
14
Act, the Hazardous Materials Transportation Act, the Safe Drinking Water
Act, the Federal Insecticide, Fungicide & Rodenticide Act, the National
Environmental Policy Act, the Emergency Planning & Community Right-to Know
Act, and any similar or analogous state statutes. "Hazardous Substance"
means any substance that is (i) listed, classified or regulated pursuant
to any Environmental Law, (ii) any petroleum product or by-product, (iii)
any asbestos-containing material and (iv) any other substance which is the
subject of regulatory action by any Governmental Authority pursuant to any
Environmental Law or which may result in liability pursuant to any
Environmental Law.
(b) The Companies and their Subsidiaries are in material compliance
with all material Permits required under all Environmental Laws that are
used in the operation of their businesses as currently being conducted.
The Companies and their Subsidiaries have historically been in compliance
with all Permits required under all Environmental Laws, except where the
failures to comply would not have a Seller Material Adverse Effect. To the
knowledge of Seller, no circumstances exist which could cause any material
Permit to be revoked, modified or rendered non-renewable upon payment of
the permit fee.
(c) The Companies, their Subsidiaries and their Real Property are in
material compliance with all Environmental Laws. The Companies, their
Subsidiaries and the Real Property have historically been in material
compliance with all Environmental Laws, except where the failure to comply
would not, individually or in the aggregate, have a Seller Material
Adverse Effect. To Seller's knowledge, no Hazardous Substance is located
on any of the Real Property, except in material compliance with all
Environmental Laws. To Seller's knowledge, no facts or circumstances exist
which would reasonably be expected to involve any of the Companies or any
Subsidiary in any environmental litigation, or impose upon the Purchaser
or the Companies or their Subsidiaries any environmental liability which
would have a Seller Material Adverse Effect.
(d) To Seller's knowledge, neither any of the Companies nor any
Subsidiary, nor, any other Person, has had a material disposal or release
of any Hazardous Substances on, under, in, from, adjacent to or about the
Real Property.
(e) None of the Companies nor any Subsidiary has disposed or
arranged for the disposal of Hazardous Substances on any third party
property that has subjected or, to the knowledge of Seller, may subject
the Companies or their Subsidiaries to material liability under any
Environmental Law.
(f) To Seller's knowledge, there has been no discharge or release at
any property formerly owned, used, leased or occupied by the Companies or
any Subsidiary which has subjected or is expected to subject the Companies
or their Subsidiaries to material liability under any Environmental Law.
(g) None of the Companies nor their Subsidiaries have received any
written notice, demand, letter, claim or request for information alleging
violation
15
of or liability under any Environmental Law and neither the Companies nor
their Subsidiaries are party to any written proceedings, actions, orders,
decrees or injunctions alleging material liability under any Environmental
Law.
(h) None of the Companies or their Subsidiaries have entered into
any agreement that may require them to pay to, reimburse, guarantee,
pledge, defend, indemnify or hold harmless any person from or against any
liabilities or costs arising in connection with or relating to
Environmental Laws.
(i) Seller has delivered or made available to Purchaser copies of
all environmental assessments, audits, studies and other environmental
reports in its possession relating to the Companies, their Subsidiaries
and the Real Property.
(j) Except for such expenditures that have been included in the
projected budgets for the Companies or its Subsidiaries, which have been
provided to Purchaser, to Seller's knowledge, none of the Companies nor
their Subsidiaries is required to make any capital or other expenditures
to comply with applicable Environmental Law exceeding $500,000.
4.12 COMPLIANCE WITH LAW. Except as disclosed in Section 4.12 of the
Disclosure Schedule, to the knowledge of Seller, the Companies and the
Subsidiaries have conducted and are currently conducting their business in
accordance with all Laws and Governmental Orders applicable to the Companies or
any Subsidiary or any of the Assets, the Real Property or their business, except
where the violation of such Laws or Governmental Orders would not have a Seller
Material Adverse Effect. Neither the Companies nor any Subsidiary has received
any outstanding or uncured written notice alleging any default or violation of
any Law or Governmental Order nor to Seller's knowledge is there any reasonable
basis for any such allegation, which, if true, would have a Seller Material
Adverse Effect. The Companies and the Subsidiaries have each Permit required by
Law for the operation of the Business, except where the failure to have any such
Permit would not have a Seller Material Adverse Effect. Each Permit is valid,
binding and in full force and effect and none of the Companies or Subsidiaries
is in default thereunder (or would be with the giving of notice or lapse of time
or both) except for such defaults as would not have a Seller Material Adverse
Effect. Seller makes no representation in this Section 4.12 as to any matter the
subject matter of which is specifically covered by Section 4.9, 4.11, 4.13 or
4.14 of this Agreement.
16
4.13 EMPLOYEE MATTERS AND BENEFIT PLANS.
(a) Section 4.13(a)(i) of the Disclosure Schedule identifies each
employment, bonus, deferred compensation, pension, stock option, stock
appreciation right, profit-sharing or retirement plan, arrangement or
practice, each medical, vacation, retiree medical, severance pay plan, and
each other agreement or fringe benefit plan, arrangement or practice, of
the Seller which affects or covers any current employee of the Companies
or a Subsidiary, including all "employee benefit plans" as defined by
Section 3(3) of ERISA (collectively, the "Seller Plans"). Purchaser will
have no liabilities or obligations under any Seller Plan, except as
specifically provided in this Agreement. Section 4.13(a)(ii) of the
Disclosure Schedule identifies each employment, bonus, deferred
compensation, pension, stock option, stock appreciation right,
profit-sharing or retirement plan, arrangement or practice, each medical,
vacation, retiree medical, severance pay plan, and each other agreement or
fringe benefit plan, arrangement or practice, of the Seller, the Companies
or any Subsidiary which affects or covers any current employee of the
Companies or a Subsidiary, including all "employee benefit plans" as
defined by Section 3(3) of ERISA (collectively, the "Company Plans").
(b) Except as set forth on Section 4.13(b) of the Disclosure
Schedule, for each Company Plan, correct and complete copies of the plan
documents and summary plan descriptions, the most recent Form 5500 annual
report, the most recent favorable determination letter (if applicable),
and all related trust agreements, insurance contracts and funding
agreements which implement each such Company Plan, have been made
available to Purchaser.
(c) Neither the Companies nor any Subsidiary has any commitment,
whether formal or informal, (i) to create any additional such Company
Plan; (ii) to modify or change any such Company Plan; or (iii) to maintain
for any period of time any such Company Plan, except as described in
Section 4.13 of the Disclosure Schedule.
(d) Except as disclosed in Section 4.13 of the Disclosure Schedule,
(i) neither the Companies, any Subsidiary, nor, to the knowledge of
Seller, any Company Plan or any trustee, administrator, fiduciary or
sponsor of any Company Plan has engaged in any prohibited transactions as
defined in Section 406 of ERISA or Section 4975 of the Code for which
there is no statutory exemption under Section 408 of ERISA or Section 4975
of the Code; (ii) all material filings, reports and descriptions as to all
Company Plans (including Form 5500 annual reports, summary plan
descriptions, and summary annual reports) required to have been made or
distributed to participants, the Internal Revenue Service, the United
States Department of Labor and other governmental agencies have been made
in a timely manner or will be made in a timely manner on or prior to the
Closing Date; (iii) there is no material litigation, disputed claim,
governmental proceeding or investigation pending or, to the knowledge of
Seller, threatened with respect to any Company Plan, the related trusts,
or any fiduciary, trustee, administrator or sponsor of any Company Plan;
and (iv) all Company Plans have been established,
17
maintained and administered in all material respects in accordance with
their governing documents and applicable provisions of ERISA and the Code.
(e) Except as disclosed in Section 4.13 of the Disclosure Schedule,
none of the Company Plans provide for continuing benefits or coverage
after termination or retirement from employment, except for COBRA rights
under a "group health plan" as defined in Section 4980B(g) of the Code and
Section 607 of ERISA.
(f) Except for the Midwest Pension Plan (contributed to pursuant to
the collective bargaining agreement between Redi-Cut Foods, Inc. and
Manufacturing, Production and Service Workers Union, Local 24), neither
the Companies, any Subsidiary, nor any entity required to be aggregated
with the Companies or any Subsidiary under Section 414(b), (c), (m) or (o)
of the Code ("ERISA Affiliate") has ever sponsored, participated in, or
contributed to (or been required to contribute to) either a plan subject
to Title IV of ERISA, or a multiemployer plan as defined in Section
4001(a)(3) of ERISA. Neither the Companies, any Subsidiary nor any ERISA
Affiliate has ever withdrawn from such a multiemployer plan nor incurred
any liability as a result of any partial or complete withdrawal by any
employer from a multiemployer plan as described under Sections 4201, 4203,
or 4205 of ERISA. No event has occurred that presents a material risk of a
partial withdrawal from the Midwest Pension Plan. The aggregate withdrawal
liability of the Companies, Subsidiaries and ERISA Affiliates, computed as
if a complete withdrawal by the Companies, Subsidiaries and ERISA
Affiliates had occurred under the Midwest Pension Plan on the date hereof,
would not exceed $50,000.
(g) Each Company Plan that is intended to be qualified within the
meaning of Section 401(a) of the Code has received a determination letter
from the Internal Revenue Service that it is so qualified, and no fact or
event has occurred since the date of such determination letter that could
adversely affect the qualified status of any such Company Plan.
(h) As of the date hereof, Seller has not received any notification
or other direct indication from any employee listed in Section 4.8(h) of
the Disclosure Schedule (collectively, "Key Employees") that such employee
intends to terminate his or employment with any of the Companies.
4.14 TAXES. Except as set forth in Section 4.14 of the Disclosure
Schedule:
(a) Each of the Companies and the Subsidiaries has filed, or Seller
has filed on behalf of each of them, all Tax Returns required to be filed
on or before the date of this Agreement, except where the failure to file
such Tax Returns or to pay such Taxes shown thereon as owing would not
have a Seller Material Adverse Effect, all such Tax Returns are true,
correct and complete in all material respects and all Taxes shown due with
respect to the periods covered by such Tax Returns have been paid. True
and correct copies of all federal, state and local
18
income Tax Returns filed by or on behalf of each of the Companies and the
Subsidiaries for all periods since December 31, 2001, have been heretofore
made available to Purchaser except for such returns where Seller files a
consolidated return that includes any Company or any Subsidiary. Except as
set forth in Section 4.14 of the Disclosure Schedule, all Taxes not yet
due and payable by the Companies and the Subsidiaries have been properly
accrued on the books of account of the Companies in accordance with GAAP.
(b) There are no (i) examinations, audits, actions, proceedings,
investigations or disputes pending of which Seller or any of the Companies
or their Subsidiaries have been notified in writing, (ii) claims asserted
in writing for Taxes, (iii) waivers or extensions of statutes of
limitation with respect to Taxes currently in effect, or (iv) closing
agreements, or similar agreements entered into or issued by any Taxing
Authority, in each case with respect to any Company or Subsidiary, that
may, in each case, increase any Taxes of such Company or Subsidiary by a
material amount.
(c) No Taxing Authority has asserted that any of the Companies or
any Subsidiary is subject to Tax or obligated to file a Tax Return in a
jurisdiction in which such Company or Subsidiary does not pay Tax or file
a Tax Return.
(d) None of the Companies nor any Subsidiary is a party to any Tax
allocation or sharing agreement.
(e) There are no liens for Taxes upon the Assets or properties of
the Companies or any Subsidiary (whether real, personal or mixed, tangible
or intangible) except for statutory liens for Taxes not yet due or
payable.
(f) None of the Seller, any of the Companies nor any of their
Subsidiaries is a "foreign person" within the meaning of Section 1445 of
the Code.
(g) None of the Companies nor any Subsidiary has 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).
(h) Except with respect to any Affiliated Group of which the Seller,
the Companies or a Subsidiary is the common parent, none of the Companies
nor any Subsidiary (i) has been a member of an Affiliated Group or (ii)
has any liability to pay, reimburse, indemnify, or otherwise bear the
Taxes of any Person under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor,
by contract or otherwise.
(i) Each Affiliated Group has filed all Tax Returns that it was
required to file for each taxable period during which any of the Companies
or any Subsidiary was a member of that Affiliated Group, and has paid all
Taxes shown thereon as owing, except where the failure to file such Tax
Returns or pay such Taxes would not have a Seller Material Adverse Effect.
19
(j) Each of the Companies and their Subsidiaries has withheld and/or
paid all Taxes required to have been withheld and/or paid in connection
with amounts paid or owed to any employee, independent contractor,
creditor, stockholder, member or other third party.
(k) No Company or Subsidiary has reported, and Seller has not
reported with respect to any Company or Subsidiary, any "reportable
transaction" as defined in Treasury Regulation Section 1.6011-4 or any
transaction that is required to be reported to any Taxing Authority
pursuant to any corresponding or similar provision of state, local or
foreign Law.
4.15 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities or
obligations which are accrued or reserved against in the Reference Balance Sheet
(or reflected in the notes thereto) or in connection with the transactions
contemplated by this Agreement, the Companies and their Subsidiaries do not have
any liabilities or obligations (contingent or absolute) which would constitute a
Seller Material Adverse Effect. Seller makes no representation in this Section
4.15 as to any matter the subject matter of which is specifically covered by
Sections 4.9, 4.11, 4.13 or 4.14 of this Agreement.
4.16 ABSENCE OF CERTAIN CHANGES. Except as (a) disclosed on the Reference
Balance Sheet; (b) disclosed in Section 4.16 of the Disclosure Schedule; or (c)
expressly contemplated by this Agreement, since the date of the Reference
Balance Sheet, neither the Companies nor their Subsidiaries have: (i) suffered
any change constituting a Seller Material Adverse Effect; (ii) split, combined
or reclassified their capital stock; (iii) materially changed their accounting
principles, practices or methods, except as required by GAAP or applicable Law;
(iv) declared or paid any dividend or other distribution of cash or other assets
or made any payments to Seller or its affiliates (in each case, on a net basis),
or released any claims against Seller or its affiliates, except for (A)
participation in Seller's cash management program pursuant to which cash
collected by the Companies and their Subsidiaries is swept by Seller to reduce
amounts outstanding under the Intercompany Notes and expenditures made by the
Companies and the Subsidiaries are paid with funds provided by Seller increasing
the balances of the Intercompany Notes, consistent with past practice, and (B)
the payment of any accounts payable to Seller or its affiliates arising from the
sale in the ordinary course of business of food or other products or services to
the Companies and the Subsidiaries by Seller or such affiliates consistent with
past practice; (v) materially increased any compensation or expanded any
perquisites of employees; (vi) paid any liabilities or collected any receivables
other than in the ordinary course of business based on the normal terms thereof
and consistent with past practice; (vii) sold or otherwise transferred any
material asset of the Companies or the Subsidiaries; or (viii) otherwise
operated the business other than in the ordinary course consistent with past
practices.
4.17 LABOR MATTERS.
(a) Section 4.17(a) of the Disclosure Schedule lists each collective
bargaining agreement, work rule or practice, or other labor-related
Contract (collectively, "CBAs") to which any of the Companies or one of
their Subsidiaries
20
is a party or by which it is bound, or which pertain to any of the
employees of the Companies or the Subsidiaries. There is no material
arbitration, material grievance, labor dispute, strike, slowdown or
stoppage in progress or pending or, to the knowledge of Seller,
threatened, against or involving the Companies or any Subsidiary. Since
December 28, 2002, neither the Companies nor any Subsidiary has
experienced any material arbitration, material grievance, labor dispute,
strike, lockout, slowdown or stoppage. Seller has no knowledge of any
labor union organizing activities or proceedings with respect to any
employees of the Companies or their Subsidiaries. Since December 28, 2002,
there has been no request for collective bargaining or for a
representation election from, or any demand for recognition or
certification by, any employee, union, labor organization, works council
or the National Labor Relations Board or any other labor relations
tribunal or authority, and there are no representation or certification
proceedings or petitions seeking a representation proceeding presently
pending or threatened in writing to be brought or filed with the National
Labor Relations Board or any other labor relations tribunal or authority.
(b) Since December 28, 2002 and except as set forth in Section
4.17(b) of the Disclosure Schedule, the Companies and the Subsidiaries
have not received notice of (i) any unfair labor practice charge or
complaint pending or threatened before the National Labor Relations Board
or any other Governmental Authority, (ii) any complaints, grievances or
arbitrations arising out of any CBAs or otherwise, (iii) any charge or
complaint with respect to or relating to them pending before the Equal
Employment Opportunity Commission or any other Governmental Authority
responsible for the prevention of unlawful employment practices, (iv) the
intent of any Governmental Authority responsible for the enforcement of
labor, employment, child labor, immigration, or occupational safety and
health Laws to conduct an investigation with respect to or relating to
them or notice that such investigation is in progress, or (v) any
complaint, lawsuit or other proceeding pending or threatened in any forum
by or on behalf of any present or former employee of such entities, any
applicant for employment or classes of the foregoing alleging breach of
any express or implied contract of employment, any applicable Law
governing employment or the termination thereof or other discriminatory,
wrongful or tortuous conduct in connection with the employment
relationship, except, in each case under clauses (i) through (v) above,
for such charges, complaints, investigations, complaints, lawsuits or
other proceedings (as the case may be) that would not have a Seller
Material Adverse Effect.
(c) No private agreement restricts the Companies or the Subsidiaries
from relocating, closing or terminating any of its operations or
facilities.
4.18 CUSTOMERS AND SUPPLIERS. Section 4.18 of the Disclosure Schedule
contains a complete and accurate list of (i) the top ten (10) retail and the top
five (5) foodservice customers of the Business based on 2004 fiscal year sales
and (ii) the top ten (10) suppliers of the Business based on amounts paid by the
Companies or their Subsidiaries for raw product purchased by the Companies or
the Subsidiaries during 2004
21
(collectively, "Key Customers and Suppliers"). As of the date hereof, no listed
customer or supplier has notified Seller that it intends to terminate or
otherwise materially alter its business relationship with the Companies or
Subsidiaries.
4.19 ACCOUNTS RECEIVABLE. All accounts receivable of the Companies and
Subsidiaries that are reflected on the Reference Balance Sheet or that will be
reflected on the Closing Date Financial Statements (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business
consistent with past practice. To Seller's knowledge, there is no contest, claim
or right of set-off, other than returns in the ordinary course of business
consistent with past practice, of any obligor of an Accounts Receivable relating
to the amount or validity of such Accounts Receivable.
4.20 AFFILIATED TRANSACTIONS. Except as set forth in Section 4.20 of the
Disclosure Schedule, (a) there is no indebtedness between Seller or any
affiliate (excluding the Companies and Subsidiaries) (collectively "Related
Parties") and any of the Companies or Subsidiaries, (b) no Related Party has, or
since December 28, 2002 has had, any interest in any asset or property (whether
real, personal, tangible or intangible) used in the operation of the Business,
(c) no Related Party is, or since December 28, 2002 has owned an equity interest
or any other financial or profit interest in, a Person that has (i) had business
dealings or a material financial interest in any transaction with any of the
Companies or Subsidiaries or (ii) engaged in competition with any of the
Companies or Subsidiaries. Except as set forth in Section 4.20 of the Disclosure
Schedule, no Related Party is a party to any contract with, or otherwise
provides services to, or has any claim or right against, any of the Companies or
Subsidiaries.
4.21 INSURANCE. Seller has provided to Purchaser a complete and accurate
list of all policies of insurance to which any of the Companies or Subsidiaries
is a party or under which any of such companies or any employee, officer or
director thereof is or has been covered at any time within the year preceding
the date of this Agreement. Section 4.21 of the Disclosure Schedule also
describes (a) any self-insurance arrangement by or affecting any of the
Companies or Subsidiaries, including any reserves established thereunder, and
(b) any contract or arrangement, other than a policy of insurance, for the
transfer or sharing of any risk by any of the Companies or Subsidiaries. Seller
maintains self-insurance programs pursuant to which Seller or PICL (as defined
in Section 6.14) provides general and vehicle liability, workers' compensation
and group medical insurance for claims that do not on an individual basis exceed
$500,000, and individual Pre-Closing Claims (as defined in Section 6.14) in
excess of such amount are fully insured by independent third party insurers,
subject to applicable limitations and exclusions.
4.22 PAYMENTS. None of the Companies or Subsidiaries nor, to Seller's
knowledge, any director, officer or employee thereof or any other individual
acting for or on behalf of any of the Companies or Subsidiaries, has made any
illegal contribution, gift, rebate, payoff, influence payment, kickback or other
payment to any Person, regardless of form, whether in money, property or
services (a) to obtain favorable treatment in securing business for the
Companies or any of the Subsidiaries, (b) to pay for
22
favorable treatment for business secured by the Companies or any of the
Subsidiaries, or (c) to obtain special concessions or for special concessions
already obtained for the benefit of the Companies or any of the Subsidiaries.
4.23 FINDER'S FEE. Except for fees and expenses payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Co. (the "Goldman Fee"), and the fee payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. in
connection with its rendering of a fairness opinion with respect to the
transaction contemplated by this Agreement (the "▇▇▇▇▇▇▇ ▇▇▇▇▇ Fee") neither
Seller, the Companies nor any Subsidiary has incurred any liability to any party
for any brokerage or finder's fee or agent's commission, or the like, in
connection with the transaction contemplated by this Agreement based upon
arrangements made by or on behalf of Seller, the Companies or any Subsidiary.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
5.1 CORPORATE STATUS. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and (a) has all requisite corporate power and authority to own,
operate or lease all of its properties and assets and to carry on its business
as it is now being conducted, and (b) is duly qualified to do business and is in
good standing in each of the jurisdictions in which the ownership, operation or
leasing of its properties and assets and the conduct of its business requires it
to be so qualified, licensed or authorized, except where the failure to have
such power and authority or to be so qualified, licensed or authorized would not
have a Purchaser Material Adverse Effect.
5.2 AUTHORITY. Purchaser has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the board of directors of Purchaser and no other corporate
proceedings are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Purchaser, and (assuming due authorization and delivery by Seller)
this Agreement constitutes a legal, valid and binding obligation of Purchaser,
enforceable against it in accordance with its terms, subject to general
principles of equity and except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws of
general application relating to creditors' rights.
5.3 NO CONFLICT. Except for the notification requirements of the HSR Act,
the execution, delivery and performance of this Agreement by Purchaser and the
consummation by Purchaser of the transactions contemplated hereby will not (a)
violate, conflict with or result in the breach of any term or provision of the
certificate of incorporation or bylaws of Purchaser, (b) conflict with or
violate, in any material respect, any Law applicable to Purchaser or any of its
assets, properties or business, (c) require
23
any action, consent, approval or authorization by, or any other order of, filing
with or notification to, any Governmental Authority or (d) conflict with or
violate, result in the breach of any term or provision of, or constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrances on any of the assets or properties of Purchaser
pursuant to, any material note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Purchaser is a
party or by which its properties or assets may be bound, except, in each case
for such conflicts, violations, breaches, defaults, rights of termination,
amendment, acceleration, suspension, revocation or cancellation or creation of
any Encumbrance which would not have a Purchaser Material Adverse Effect.
5.4 COMPLIANCE WITH LAW. Purchaser is not in material violation of
applicable Laws or Governmental Orders which would affect its ability to perform
its obligations hereunder. There is no Action pending, or to the knowledge of
Purchaser, threatened against Purchaser, affecting its ability to perform its
obligations hereunder.
5.5 SUFFICIENT FUNDS. As of the date hereof, Purchaser has received a
commitment letter (and has delivered a copy thereof to Seller) with respect to
financing the Purchase Price (the "Commitment Letter"), and, as of the Closing
and, subject to the terms of the Commitment Letter, Purchaser will have
sufficient funds available (pursuant to the debt financing or otherwise) to pay
the Purchase Price.
5.6 FINDER'S FEE. Purchaser has not done anything to cause Seller, the
Companies, their Subsidiaries or any of their respective stockholders, option
holders, directors, officers or other Affiliates to incur any liability to any
party for any brokerage or finder's fee or agent's commission, or the like, in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Purchaser.
5.7 NO RELIANCE. Purchaser acknowledges that neither Seller, the
Companies, the Subsidiaries of the Companies nor any other Person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding the Companies, their Subsidiaries, the
Assets, the Real Property or their business or other matters that is not
included in this Agreement or the Disclosure Schedule hereto. Without limiting
the generality of the foregoing, neither Seller, the Companies, their
Subsidiaries nor any other Person has made a representation or warranty to
Purchaser with respect to (i) any projections, estimates or budgets for the
Companies' or their Subsidiaries' business, (ii) any material, documents or
information relating to the Companies and their Subsidiaries made available to
Purchaser or its counsel, accountants or advisors in Seller's data room or
otherwise, except as expressly covered by a representation or warranty set forth
in Article 4, or (iii) the information contained in Seller's Confidential
Memorandum dated November 2004, in each case, other than to the extent expressly
included herein.
24
5.8 INVESTMENT INTENT. Purchaser has such knowledge and experience in
financial and business matters that it is capable of evaluating the risks and
merits associated with the acquisition of the Shares and is acquiring the Shares
for its own account for investment, with no present intention of making a public
distribution thereof. Purchaser will not sell or otherwise dispose of the Shares
in violation of the Securities Act of 1933, as amended, or any state securities
laws.
ARTICLE 6.
COVENANTS
6.1 INTERIM OPERATIONS OF THE COMPANIES. Seller covenants and agrees that,
after the date hereof and prior to the Effective Time or earlier termination of
this Agreement pursuant to its terms (unless Purchaser shall otherwise approve
in writing, which approval shall not be unreasonably withheld, conditioned or
delayed, or unless as otherwise expressly contemplated by this Agreement or
explicitly disclosed in the Disclosure Schedule):
(a) the business of the Companies and their Subsidiaries shall be
conducted in all material respects in the ordinary and usual course
consistent with past practice;
(b) the Companies and their Subsidiaries shall not (A) amend their
Articles of Incorporation or bylaws (or similar organization documents) or
any Material Contract, (B) split, combine, subdivide or reclassify their
outstanding shares of capital stock; (C) repurchase, redeem or otherwise
acquire any shares of their capital stock or any securities convertible
into their capital stock; (D) release any claims against Seller or its
affiliates; or (E) engage in any transaction outside the ordinary course
of business other than on an arm's-length basis, with Seller, or any
affiliate, officer, director or employee of Seller;
(c) except as required by applicable Law, the Companies shall not,
and shall not permit their Subsidiaries to, (A) enter into, adopt or amend
any agreement or arrangement relating to severance, (B) except as set
forth on Section 6.1(c) of the Disclosure Schedule, enter into, adopt or
amend any employee benefit plan or employment, CBA or consulting
agreement, (C) grant any stock options or other equity related awards, or
(D) increase any compensation except in the ordinary course of business
consistent with past practice or expand any perquisites of its employees;
(d) neither the Companies nor any of their Subsidiaries shall (i)
incur or assume any long-term or short-term debt or issue any debt
securities except for borrowings under existing lines of credit or from
Seller in the ordinary course of business consistent with past practice
(including participation in Seller's cash management program); (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the material obligations
of any other person except in the ordinary and usual course of business
consistent with past practice in an amount not material to the Companies
25
and their Subsidiaries taken as a whole; (iii) make any material loans,
advances or capital contributions to, or investments in, any other person;
(iv) pledge or otherwise encumber the Shares; or (v) mortgage or pledge
any of its material Assets or create any material Encumbrance of any kind
with respect to any such material Asset;
(e) neither the Companies nor any of their Subsidiaries shall issue,
deliver, sell or encumber shares of any class of their capital stock or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares;
(f) neither the Companies nor any of their Subsidiaries shall
acquire any business, including any plants or other facilities, whether by
merger, consolidation, purchase of property or assets or otherwise, or
sell or otherwise transfer any material asset of the Companies or the
Subsidiaries;
(g) the Companies shall not materially change their accounting
policies, practices or methods except as required by GAAP or by the rules
and regulations of the United States Securities and Exchange Commission;
(h) neither the Companies nor the Subsidiaries shall pay liabilities
or collect receivables other than in the ordinary course of business based
on the normal terms thereof and consistent with past practice;
(i) neither the Companies nor the Subsidiaries shall fail to
maintain their books and records in their usual manner consistent with
prior practice;
(j) neither the Companies nor the Subsidiaries shall fail to
maintain and manage inventories consistent in all material respects with
past practice or fail to use reasonable efforts to maintain the Real
Property or tangible personal property used or held for use in the
Business in good repair and condition, subject to reasonable wear and
tear;
(k) neither the Companies nor the Subsidiaries shall fail to use
reasonable efforts to retain key employees and consultants and to preserve
the goodwill of customers, suppliers and other business relations; and
(l) the Companies shall not enter into, or permit any of their
Subsidiaries to enter into, any commitments or agreements to do any of the
foregoing.
6.2 CONSENTS.
(a) Each of Seller and Purchaser shall, in no event later than seven
(7) business days following the date hereof, file with the United States
Federal Trade Commission (the "FTC") and the United States Department of
Justice (the "DOJ") the notification and report form pursuant to the HSR
Act, required for the transactions contemplated hereby. Each of Seller and
Purchaser shall, as promptly as practicable, comply with any request for
additional information and
26
documents pursuant to the HSR Act. Each of Seller and Purchaser shall
inform the other promptly of any communication made by or on behalf of
such party to (including permitting the other party to review such
communication in advance), or received from, the FTC or the DOJ and shall
furnish to the other such information and assistance as the other may
reasonably request in connection with its preparation of any filing,
submission or other act that is necessary or advisable under the HSR Act.
Seller and Purchaser shall keep each other timely apprised of the status
of any communications with, and any inquiries or requests for additional
information from, the FTC or the DOJ, and shall comply promptly with any
such inquiry or request. Neither party shall agree to participate in any
meeting with any Governmental Authority in respect of any filings,
investigation or other inquiry unless it consults with the other party in
advance, and to the extent permitted by such Governmental Authority, gives
the other party the opportunity to attend and participate thereat.
Purchaser agrees to take as promptly as reasonably practicable any and all
steps necessary to avoid or eliminate each and every impediment under any
antitrust or competition law that may be asserted by any U.S. federal,
state or local antitrust or competition authority so as to enable the
parties to expeditiously close the transactions contemplated by this
Agreement, including committing to or effecting, by consent decree, hold
separate orders, or otherwise, the sale, divestiture or disposition of
such of its assets or businesses, or of the business to be acquired by it
pursuant to this Agreement, as is required to be divested in order to
avoid the entry of, or to effect the dissolution of, any decree, order,
judgment, injunction, temporary restraining order or other order in any
suit or proceeding, that would otherwise have the effect of delaying or
preventing the consummation of the transactions contemplated by this
Agreement. In addition, without limiting the generality of the foregoing
regarding Governmental Authorities, Purchaser agrees to take promptly any
and all steps necessary to attempt to vacate or lift any order or other
restraint relating to antitrust matters that would have the effect of
making the transaction contemplated by this Agreement illegal or otherwise
prohibiting its consummation.
(b) The parties hereto shall cooperate with one another in
determining whether any action by or in respect of, or filing with, any
Governmental Authority (excluding the actions and filings described in
clause (a) above) is required or reasonably appropriate, or any action,
consent, approval or waiver from any party to any Material Contract is
required or reasonably appropriate, in connection with the consummation of
the transactions contemplated by this Agreement. Subject to the terms and
conditions of this Agreement and the Confidentiality Agreement (as defined
in Section 6.4), in taking such actions or making any such filings, the
parties hereto shall furnish information required in connection therewith
and timely seek to obtain any such actions, consents, approvals or
waivers.
6.3 PUBLICITY. Subject to their respective legal obligations (including
requirements of stock exchanges, national stock markets and other similar
regulatory bodies), Seller and Purchaser shall consult with each other, and use
reasonable best efforts to agree upon the text of any press release, before
issuing any such press release or
27
otherwise making public statements with respect to the transactions contemplated
hereby and in making any filings with any federal or state governmental or
regulatory agency or with any national securities exchange or national stock
market with respect thereto. Seller and Purchaser shall mutually agree on the
timing and content of providing notification of the transactions contemplated
hereby to customers and key suppliers.
6.4 ACCESS TO RECORDS AND PROPERTIES.
(a) From the date hereof until the Closing Date or earlier
termination of this Agreement, Seller will, and will cause the Companies
and their Subsidiaries to:
(i) provide Purchaser and its officers, counsel and other
representatives with reasonable access during normal business hours
to the facilities of the Companies and Subsidiaries, their principal
personnel and representatives, and such books and records pertaining
to the Companies and Subsidiaries as Purchaser may reasonably
request, including access to all auditor work papers and opinions
with respect to the Financial Statements and access to conduct
non-intrusive Phase I environmental investigations of the Real
Property, provided that (i) Purchaser agrees that such access will
give due regard to minimizing interference with the operations,
activities and employees of the Companies and their Subsidiaries,
(ii) such access and disclosure would not violate the terms of any
agreement to which the Companies or any Subsidiary is bound
(provided that, promptly following the date hereof, Seller shall
disclose the existence of any such agreement and the nature and
scope of the applicable restrictions thereunder to Purchaser and
provided further that Seller shall use its commercially reasonable
efforts to obtain any consents necessary to provide such access or
disclosure under such agreements) or any applicable Law, and (iii)
all arrangements for access shall be made solely through Seller; and
(ii) furnish to Purchaser or its representatives (A) within 20
days of the close of each fiscal month, monthly combined financial
statements (including a combined balance sheet and a combined
statement of operations) of the Companies and the Subsidiaries,
prepared in accordance with GAAP consistently applied with the
Financial Statements and in accordance with past practice, (B)
within 40 days of the close of each fiscal quarter, quarterly
combined financial statements (including a combined balance sheet
and a combined statement of operations) of the Companies and the
Subsidiaries, prepared in accordance with GAAP consistently applied
with the Financial Statements and in accordance with Regulation S-X
under the Securities Exchange Act of 1934, as amended, and (C) such
additional financial and operating data and other information
relating to the Companies and each of their Subsidiaries as may be
reasonably requested, to the extent access to and disclosure of such
additional financial and operating data would not violate the terms
of any
28
agreement to which the Companies or any Subsidiary is bound
(provided that, promptly following the date hereof, Seller shall
disclose the existence of any such agreement and the nature and
scope of the applicable restrictions thereunder (to the extent
permissible under such agreement) to Purchaser and provided further
that Seller shall use its commercially reasonable efforts to obtain
any consents necessary to provide such access or disclosure under
such agreements) or any applicable Law.
Without limiting the foregoing, as promptly as practicable following
the date hereof, Seller shall furnish to Purchaser copies of any
Material Contracts not previously made available to Purchaser;
provided that, in the case of Material Contracts that by their terms
do not permit Seller to provide copies to Purchaser, Seller shall
disclose the existence of any such agreement and the nature and
scope of the applicable restrictions thereunder (to the extent
permissible under such agreement) to Purchaser and shall use its
commercially reasonable efforts to obtain any consents necessary to
provide Purchaser with a copy of such Material Contract.
Each of Seller and Purchaser agrees that all information so received
from the other party hereto shall be deemed received pursuant to the
Confidentiality Agreement dated October 5, 2004 between the parties
(the "Confidentiality Agreement") and that each shall, and shall
cause its affiliates and each of its and their representatives to,
comply with the provisions of the Confidentiality Agreement with
respect to such information, and the provisions of the
Confidentiality Agreement are hereby incorporated herein by
reference with the same effect as if fully set forth in this
Agreement; provided, however, that Purchaser may disclose
confidential information relating to the Company, the Subsidiaries
or the Business in connection with Purchaser's communications with
investors and analysts with the prior consent of Seller (which
consent shall not be unreasonably withheld or delayed).
(b) Seller shall prepare, and deliver to Purchaser as promptly as
practicable, the audited combined balance sheet as of January 1, 2005 and
related combined statements of earnings, cash flows and Seller's net
investment for the Companies and their Subsidiaries for the year ended
January 1, 2005, together with footnotes and a report thereon of KPMG LLP,
or any other independent certified public accountants of recognized
national standing (the "Audited Statements"). The Audited Financial
Statements shall be prepared in accordance with GAAP consistently applied
with the Financial Statements and in accordance with Regulation S-X of the
Securities Exchange Act of 1934, as amended. Seller shall make available
to Purchaser the work papers of Seller's accountants relating to the
Audited Statements.
(c) The Companies and their Subsidiaries currently maintain their
backup data center at Seller's facility in Richmond, Virginia, and the
Seller currently maintains its backup data center with respect to the
balance of its
29
business at the Companies' facility in Grand Prairie, Texas. Seller
shall provide Purchaser with access to its Richmond, Virginia
facility and equipment, and Purchaser shall provide Seller with
access to its Grand Prairie, Texas facility and equipment, for a
period of one (1) year following the Closing solely to permit the
other party to maintain the backup data and move the backup data of
such party to its own facility and equipment.
6.5 FURTHER ACTION. Each of Seller and Purchaser shall, subject to
the fulfillment at or before the Effective Time of each of the conditions
of performance set forth herein or the waiver thereof, use its reasonable
best efforts to perform such further acts and execute such documents as
may be reasonably required to effect the transactions contemplated hereby.
Each of Seller and Purchaser will comply in all material respects with all
applicable laws and with all applicable rules and regulations of any
Governmental Authority in connection with its execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
Each of Seller and Purchaser agrees to use its reasonable best efforts to
obtain in a timely manner all necessary waivers, consents, approvals and
opinions and to effect all necessary registrations and filings, and to use
its reasonable best efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper
or advisable to consummate and make effective as promptly as practicable
the transactions contemplated hereby. This Section 6.5 shall in no way
limit Purchaser's obligations set forth in the last two sentences of
Section 6.2(a). In the event that any or all of the borrowings or amounts
provided pursuant to the Commitment Letter are unavailable for any reason
in the amount specified therein, Purchaser shall use its reasonable
efforts to obtain replacement financing from alternative sources,
provided, however, that if Purchaser is unable to obtain financing from
alternative sources within a reasonable period of time after Purchaser is
notified that the financing under the Commitment Letter is not available,
then financing may be arranged by Seller or Seller's advisor with third
party institutions (including Seller's advisors). Notwithstanding the
foregoing, Purchaser shall be under no obligation to enter into any
replacement financing if the terms and conditions of such replacement
financing are materially less favorable to Purchaser than the terms and
conditions of the Commitment Letter. Without limiting the foregoing, in
connection with Purchaser's efforts to obtain high-yield bond financing
and any other financings undertaken by Purchaser or its affiliates in
connection with the transactions contemplated hereby, Seller shall cause
members of management of the Seller, the Companies or the Subsidiaries,
and shall request their respective accountants and other experts, in each
case to the extent practicable, to (a) aid in the preparation of written
offering materials used to complete such financings, to the extent
information contained therein relates to the Business, the Companies or
the Subsidiaries, (b) provide Purchaser and its representatives with
financial information and data (including projections) and other
information and data reasonably requested in connection with due diligence
relating to such financings and, in the case of its accountants, assist in
the preparation of auditors reports, comfort letters and other
documentation prepared in connection therewith and (c) participate in
presentations, road shows, due diligence sessions, drafting sessions and
other meetings customarily involved in financing efforts; provided, that
the foregoing activities would not unreasonably interfere with the
performance of such Person's duties in connection with the Business; and
provided that the foregoing shall be at the sole cost
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and expense of the Purchaser. Seller shall, and shall cause each of the
applicable Companies and Subsidiaries to, use its reasonable commercial efforts
to obtain, at Purchaser's expense, opinions of its local counsel (which may be
in-house counsel) addressing the matters reasonably requested by, and addressed
to, Purchaser's lenders and placement agents and, in an offering under Rule 144A
under the Securities Act of 1933, as amended, the initial purchasers. Purchaser
shall promptly upon request reimburse Seller for any costs or expenses incurred
by Seller which are to be borne by Purchaser pursuant to this Section 6.5.
6.6 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party hereto
incurring such expenses except as expressly provided herein; provided that any
such fees and expenses of the Company or the Subsidiaries shall be borne by
Seller. Without limiting the foregoing, Seller shall not pay or cause to be paid
any such costs and expenses, including the Goldman Fee, the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Fee
and legal fees and expenses, from funds of any Company or Subsidiary. Purchaser
and Seller shall each pay 50% of any fees required to be paid under the HSR Act.
6.7 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt notice
to the other of the following:
(a) the occurrence or nonoccurrence of any event whose occurrence or
nonoccurrence is reasonably expected to cause any of the conditions
precedent to the other party's obligations set forth in Article 7 not to
be satisfied; and
(b) the status of matters relating to completion of the transactions
contemplated hereby, including promptly furnishing the other with copies
of notices or other communications received by any party or any of its
respective Subsidiaries from any Governmental Authority or other third
party with respect to this Agreement or the transactions contemplated
hereby.
Subject to Section 6.12 hereof, any such notification shall not be given
effect for purposes of the representations, warranties and covenants contained
herein.
6.8 EMPLOYEE BENEFIT PLANS.
(a) From and after the Effective Time, Purchaser will cause the
Companies and their Subsidiaries to continue and perform, in accordance
with their terms, all employment agreements listed in Items 1-6 of Section
4.13 of the Disclosure Schedule between the Companies and their
Subsidiaries and any officer, director or employee of the Companies or any
of their Subsidiaries and all obligations of the Companies under the
Plans. Nothing in this Section 6.8 shall be interpreted to prohibit
Purchaser, the Companies or any of their Subsidiaries, from and after the
Effective Time, from establishing new plans or amending or terminating any
Plan sponsored by any of the Companies or a Subsidiary in accordance with
the terms thereof.
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(b) Purchaser shall cause the Companies and their Subsidiaries to
continue to employ, immediately following the Effective Time, each
individual employed by any of the Companies or any Subsidiary on the
Closing Date (other than any person who is subject to a collective
bargaining agreement or employment agreement), including employees absent
from work due to short-term or long-term disability, sick leave, military
leave or other employer-approved absences of short duration ("Companies
Covered Employees"); provided, however, that nothing in this Agreement is
intended to limit Purchaser's right to terminate, or cause to be
terminated, or otherwise deal with, any Companies Covered Employee after
the Effective Time. Purchaser shall, for a period of one year after the
Effective Time, cause to be provided to each Companies Covered Employee
who continues to be employed during that time a base salary not less than
his or her base salary in effect immediately prior to the date hereof and
an annual cash bonus opportunity substantially comparable to that provided
to him or her immediately prior to the date hereof, and cause to be
provided to Companies Covered Employees employee benefits, including, but
not limited to, welfare, retirement and savings benefits substantially
comparable, in the aggregate, to those provided to Companies Covered
Employees immediately prior to the Effective Time (excluding for these
purposes any equity-based plan or arrangement). For purposes of
determining eligibility and vesting (but not for benefits accrual) under
any Purchaser benefit plan in which a Companies Covered Employee
participates after the Effective Time, such employee shall be credited
with his or her years of service with the Companies or their Subsidiaries,
to the extent such credit was given under any corresponding Plan (as
defined in Section 4.13(a)). To the extent that any Purchaser benefit plan
in which a Companies Covered Employee participates after the Effective
Time provides medical, dental or vision benefits, Purchaser shall cause
all pre-existing condition exclusions and actively at work requirements of
such plan to be waived for such employee and his or her covered dependents
except to the extent such employee and his or her covered dependents were
subject to such exclusions and requirements under the corresponding Plan,
and Purchaser shall cause any eligible expenses incurred by such employee
on or before the Effective Time to be taken into account under such
Purchaser benefit plan for purposes of satisfying all deductible,
coinsurance and maximum out-of-pocket requirements applicable to such
employee and his or her covered dependents for the applicable plan year.
Purchaser shall not provide any specific incentive or inducement to any
Companies Covered Employees to choose to be covered under the health care
continuation provisions of the Plans, including, without limitation, the
payment of all or a portion of a Companies Covered Employee's COBRA
premium.
(c) The parties hereto agree that the consummation of the
transaction contemplated in this Agreement (i) shall constitute a
"corporate sale" within the meaning of Article VI of Seller's Senior
Management Severance Plan and (ii) shall not constitute a "Change in
Control" within the meaning of any "Agreement for Key Executive" entered
into by Seller.
32
(d) Purchaser covenants that it will, or will cause the Companies
and their Subsidiaries to, employ those managers set forth on Section
6.8(c) of the Disclosure Schedule for a period of no less than nine months
from the Closing Date; provided, however, Purchaser shall be entitled to
terminate such managers for Cause during such period; provided, further,
however, that Purchaser may also terminate such managers at any time
without Cause, provided that Purchaser shall make a severance payment no
less than the amount of salary to which such manager is otherwise entitled
to receive for the period beginning on the date of termination and ending
on the first anniversary of the Closing. If the employment of any of these
managers is terminated for any reason other than with Cause following the
nine-month period and prior to the first anniversary of the Closing Date,
Purchaser agrees to provide such terminated employee at least 90 days'
prior notice of such termination. "Cause" shall mean (1) any act of
employee which is demonstrably injurious to his or her employer that
constitutes dishonesty, willful misconduct, gross insubordination, breach
of fiduciary duty, or breach of the duty of loyalty; (2) gross negligence
in the performance of the employee's duties that continues for 10 days
following written notice thereof from the employer, (3) willful violation
of any law, governmental rule or regulation (other than traffic violations
or similar minor offenses), or court order that is demonstrably injurious
to the employer; (4) the death of employee; (5) employee's inability to
perform the essential functions of his or her job due to physical or
mental disability causing employee to be absent from his or her duties on
a full-time basis for ninety consecutive days, the determination of such
mental or physical disability to be made by a licensed physician
satisfactory to employee and employer; or (6) material breach by employee
of the written policies of the Companies and the Subsidiaries determined
on a reasonable basis.
(e) As of the Closing Date, Purchaser shall cause to be maintained
for the benefit of Companies Covered Employees (and to the extent required
by, and in accordance with, any applicable collective bargaining
agreement, other employees of the Companies and their Subsidiaries) a
defined contribution plan intended to be qualified under Section 401(a) of
the Code ("Purchaser's 401(k) Plan"). Upon the Closing, or as soon as
practicable thereafter, Seller shall direct the trustee of Seller's
tax-qualified 401(k) plan to transfer to the trustee of Purchaser's 401(k)
Plan the aggregate individual account balances of the above-described
employees (whether or not vested) who are then employed by Purchaser, the
Companies or the Subsidiaries, or any of their affiliates.
(f) Seller will, and will cause the Companies and their Subsidiaries
to, (i) provide Purchaser and its officers, counsel and other
representatives with reasonable access to the Key Employees for the
purposes of negotiating employment arrangements with such employees and
(ii) reasonably cooperate with Purchaser to facilitate and assist with
such negotiations. Seller shall not take any action or fail to take any
action, directly or indirectly, which would enable any of the Key
Employees to terminate their employment for "Good Reason" (as defined in
the Employment Agreements set forth in Section 4.8(a)(x) of the Disclosure
Schedule). Seller shall promptly advise Purchaser of any written
33
notification from any Key Employee of his or her resignation from the
Companies or the Subsidiaries.
6.9 NON-COMPETITION, NON-SOLICITATION AND NON-DISCLOSURE.
(a) For a period of five (5) years from the Closing Date, except as
permitted in this Section 6.9, neither Seller nor any of its affiliates
shall directly or indirectly (i) process, produce or manufacture (in each
case, whether directly or indirectly or through co-packers and whether
independently or with co-packers) value-added produce items, including
packaged salads, salad kits, specialty salads, fresh-cut vegetables and
fresh-cut fruit for sale through any outlets, including grocery stores,
supercenters or other outlets in the retail distribution channel and
quick-service restaurant and other food service outlets, (ii) sell or
provide equipment, processes or material for freshness extending
atmosphere systems or (iii) own any interest in any business or Person
engaged in any of the foregoing activities under clauses (i) or (ii)
above. The restrictions set forth in this Section 6.9 shall not be
construed to prohibit or restrict: (A) any minority equity investment by
Seller or any of its affiliates in any person or entity in which Seller or
its affiliates do not have the right to designate a controlling number of
members of the board of directors (or similar governing body) of such
entity, or in which Seller or its affiliates collectively hold not more
than 10% of the outstanding voting securities; (B) the sale of produce
items purchased by Seller from third parties on an arm's-length basis
(including produce which has been processed) exclusively for resale (and
not subject to further processing) to its foodservice customers; (C) any
business activity that would otherwise violate this Section 6.9 that is
carried on by an entity or business that is acquired by Seller or
otherwise becomes an affiliate thereof, but only if, at the time of such
acquisition, the revenues derived from such business by such entity or
business constitute less than 10% of the gross revenues of such person or
business; or (D) Seller's engaging in its foodservice distribution
business as currently conducted. For a period of three (3) years from the
Closing Date, neither Seller nor any of its affiliates will, without the
prior written consent of Purchaser, solicit any Person listed in Section
6.9(a) of the Disclosure Schedule to terminate such Person's customer
relationship with the Companies or the Subsidiaries or enter into a
relationship or arrangement with a different company or business engaged
in the produce processing business with respect to any value-added produce
item currently supplied, or contemplated to be supplied (as set forth in
Section 6.9(a) of the Disclosure Schedule), by the Companies or the
Subsidiaries.
(b) Except as set forth in Section 6.9(b) of the Disclosure
Schedule, for a period of two (2) years from the Closing Date, neither
Seller nor any of its affiliates will, without the prior written consent
of Purchaser, employ any officer or managerial employee of the Companies
or their Subsidiaries, unless such person has ceased to be an officer or
managerial employee for at least six (6) months; provided, however, that
the foregoing shall not prohibit any general solicitations of employment
not directed to employees of the Companies or their Subsidiaries
(including the placing of an advertisement or solicitation through an
34
employment agency or executive search firm (provided that such employment
agency or executive search firm is not directed, encouraged or advised by
Seller or its affiliates to approach such officer or managerial employee)
or prevent Seller or its affiliates from hiring any such person or any
person who contacts Seller on his or her own initiative.
(c) Seller agrees to treat any information in its possession
concerning the Companies and their Subsidiaries (whether prepared by the
Seller, its advisors or otherwise) based on, containing or otherwise
reflecting such information, including any notes, memoranda, analyses,
compilations, studies or other documents (herein collectively referred to
as the "Confidential Material") in accordance with the provisions of this
clause (c) and to take or abstain from taking certain other actions herein
set forth. The term "Confidential Material" does not include information
which (i) is or becomes generally available to the public other than as a
result of a disclosure by Seller or its directors, officers, employees,
agents, advisors, affiliates or representatives (including, without
limitation, accountants, investment bankers and attorneys (such persons
being collectively called "Representatives") in violation of this
Agreement or (ii) becomes available to Seller on a non-confidential basis
from a source other than Purchaser or its advisors, provided that such
source is not, to Seller's knowledge after reasonable inquiry, bound by a
confidentiality agreement with or other obligation of secrecy to Purchaser
or another party. Seller hereby agrees that, except for such disclosures
thereof as may be required by Law, the Confidential Material will be kept
confidential by Seller and its Representatives and not disclosed to any
other person and that it will not use any Confidential Material to benefit
or further its own business activities; provided, however, that any
disclosure of such information may be made to which Purchaser consents, in
advance, in writing. Seller shall, as and when requested by Purchaser and
at Purchaser's expense, use commercially reasonable efforts to enforce any
confidentiality or non-disclosure agreement entered into with bidders and
their representatives in connection with the auction process with respect
to the Shares, including enforcing Purchaser's demands for the return or
destruction of any material covered by such agreements in accordance with
the terms thereof.
6.10 INTERCOMPANY INDEBTEDNESS. Immediately prior to the Closing, Seller
shall contribute to the Companies as a capital contribution in respect of the
Shares, all indebtedness and other payables owed by the Companies or their
Subsidiaries to Seller that has not been repaid by the Companies or their
Subsidiaries prior to the Closing, if any (the amount of which totaled
$368,164,000 as of the date of the Reference Balance Sheet) and shall cause the
Companies to cancel, distribute or forgive all receivables owed by the Seller or
its affiliates to the Company or the Subsidiaries (the amount of which totaled
$618,000 as of the date of the Reference Balance Sheet). In addition,
immediately prior to the Closing, K.C. Salad Holdings, Inc. and its Subsidiaries
shall, at the election of Seller, either cancel that certain Revolving Credit
Note dated October 15, 2004 by and between K.C. Salad Holdings, Inc. and its
Subsidiaries and the Seller and forgive any amounts owed by Seller thereunder as
of the Closing, or distribute that note to Seller. Immediately prior to the
Closing, Seller shall cause the termination or
35
cancellation of any intercompany agreements or arrangements between Seller or
any affiliate thereof, on the one hand, and the Companies or any of the
Subsidiaries, on the other hand.
6.11 DEBT AND GUARANTEES. At the Closing, except for trade payables,
Seller shall, solely out of Seller's funds, pay, or irrevocably deposit for the
purpose of defeasing or paying, all outstanding indebtedness of the Companies
and the Subsidiaries (excluding, for the avoidance of doubt, the ▇▇▇▇▇▇▇ County
Arrangements), including the indebtedness listed on Section 6.11 of the
Disclosure Schedule, together with any associated interest, prepayment amounts
or other penalties, provided that Seller shall not be required to give notice of
repayment until Closing, and Seller shall concurrently obtain full and
unconditional releases of any Encumbrances associated therewith. At the election
of Purchaser not less than five (5) business days prior to the Closing, Seller
shall use its reasonable efforts to cause any and all of the ▇▇▇▇▇▇▇ County
Arrangements to be terminated and of no further force and effect as of the
Closing. Section 6.11 of the Disclosure Schedule also sets forth all guarantees,
financial accommodations and security arrangements by Seller in favor of the
Companies and Subsidiaries with respect to obligations of the Companies or
Subsidiaries, excluding the foregoing indebtedness to be satisfied by Seller
(collectively, "Guarantees"). Purchaser and Seller shall reasonably cooperate,
to cause Purchaser or one of its affiliates to be substituted for Seller and all
of its affiliates other than the Companies and the Subsidiaries as of the
Closing, without recourse to Seller or any such affiliates, with respect to all
such Guarantees. In the event that Purchaser and Seller are unable to obtain the
release of any Guarantee, Purchaser shall indemnify and hold harmless Seller
from any and all obligations or liabilities incurred by Seller with respect to
such Guarantee.
6.12 SUPPLEMENTS TO DISCLOSURE SCHEDULE. If Seller becomes aware of, or
there occurs after the date of this Agreement, any fact or condition that
constitutes a breach of any representation or warranty made by Seller in Article
4 above that is qualified by materiality or a material breach of any
representation or warranty made by Seller in Article 4 above that is not so
qualified, or if any fact or condition, either currently existing or hereafter
occurring, requires any change in the Disclosure Schedule delivered to Purchaser
at the time of execution of this Agreement, Seller will deliver to Purchaser at
or before the Closing a supplement to the Disclosure Schedule specifying any
needed change. Any such supplement to the Disclosure Schedule shall not be given
effect for purposes of the representations and warranties contained herein;
provided, however, that if the disclosures made in such supplement would give
rise to the Purchaser's right not to close under Section 7.2(a) hereof (as so
notified by Seller) and Purchaser nonetheless proceeds with the Closing, such
supplement to the Disclosure Schedule shall be given effect for purposes of
determining whether there has been a breach of a representation and warranty for
purposes of the indemnification provisions under Section 9.2 hereof.
6.13 NON-SOLICITATION. Prior to the Closing Date, Seller agrees (i) that
it shall not, and shall direct its directors, officers, employees, advisors,
accountants and attorneys not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer with respect to a merger, acquisition,
36
consolidation or similar transaction involving any of the Companies, the
Subsidiaries, the Business or any significant portion of the assets or any
equity securities of any of the Companies or the Subsidiaries (any such proposal
or offer being 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,
(ii) that it 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 (iii) that it 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.
6.14 OBLIGATIONS WITH RESPECT TO CERTAIN INSURANCE CLAIMS. Except as
expressly set forth in this Section 6.14 or elsewhere in this Agreement
(including the indemnity provisions of Section 9.2), from and after the Closing,
Purchaser shall assume and pay when due all liabilities, including any claims
handling expense, arising out of, or related to, events, acts or occurrences
prior to the Closing which give rise to a claim against the Companies or the
Subsidiaries or otherwise relating to the Business ("Pre-Closing Claims"),
regardless of when the claim is brought, but only to the extent such claims
would be required to be paid by Seller, including any Pre-Closing Claims funded
by Performance Insurance Company Ltd. ("PICL"), or PICL under any workers
compensation, general liability, automobile liability or health insurance policy
issued in favor of the Companies or the Subsidiaries, notwithstanding anything
to the contrary in any policies issued by PICL to the Companies or the
Subsidiaries. All insurance policies issued by PICL in favor of the Companies or
the Subsidiaries shall be terminated as of Closing and neither Seller nor PICL
shall have any obligation to pay any claims which would otherwise be payable
thereunder; provided, that Seller shall reasonably cooperate with Purchaser and
keep Purchaser reasonably informed of all material events with respect to
Pre-Closing Claims thereunder and not settle or compromise any such Pre-Closing
Claims without the prior written consent of Purchaser. The accrued liabilities
of the Companies and the Subsidiaries with respect thereto was $12,800,000 as of
the Reference Balance Sheet. Notwithstanding the foregoing, Purchaser shall have
no liability for any Pre-Closing Claim to the extent that coverage is provided
under an insurance policy written by a third party not affiliated with Seller
which covers Pre-Closing Claims. Prior to the Closing and, at the request of
Purchaser, following the Closing, Seller shall cause any Pre-Closing Claims to
be made on behalf of the Companies or the Subsidiaries that are covered within
the terms and conditions of any such policies, whether or not collectable and
whether or not subject to deductibles, co-insurance or retrospectively-rated
premium adjustments, and Purchaser and Seller shall reasonably cooperate and
keep the other party reasonably informed of all material events with respect to
such Pre-Closing Claims. Seller shall not cancel, release or otherwise terminate
any of Seller's policies with third-party insurance carriers with respect to
Pre-Closing Claims without the prior written consent of Purchaser; provided that
Seller shall not be required to make any additional payments after the Closing
in order to keep such policies in place; provided, further, that Seller shall
provide Purchaser with notice of any notice that Seller receives that any such
additional payments may be required. Seller shall promptly pay to
37
Purchaser any insurance proceeds received by Seller or its affiliates under
policies with third-party insurance carriers in respect of such Pre-Closing
Claims. From and after the Closing, Seller shall cause each of the Companies and
the Subsidiaries to be a named insured, and have all the rights of a named
insured, under Seller's policies with third-party insurance carriers with
respect to Pre-Closing Claims.
6.15 OBLIGATION WITH RESPECT TO FRESH ADVANTAGE. Prior to the Closing,
Seller shall take all action necessary or reasonably requested by Purchaser, at
Seller's expense, to cause all of its and its affiliates' right, title and
interest in and to the Fresh Advantage trademark and name (and all goodwill
associated therewith) to be assigned to the Companies, free and clear of any
Encumbrances, and shall make all necessary filings in connection therewith. At
Closing, the Companies shall grant Seller and its affiliates the right to use
the Fresh Advantage ▇▇▇▇ for a period of two (2) years following the Closing at
no cost to Seller or its affiliates on terms reasonably satisfactory to Seller
and Purchaser. During such two-year period, neither Purchaser nor Seller shall
license or sublicense such ▇▇▇▇ to any third party. This trademark license shall
be on an "as is" basis, without representations or warranties, or recourse by
Seller of any kind against Purchaser.
ARTICLE 7.
CLOSING CONDITIONS
7.1 CONDITIONS TO OBLIGATIONS OF SELLER AND PURCHASER TO CONSUMMATE THE
TRANSACTION. The respective obligation of each of Seller and Purchaser to
consummate the transactions contemplated hereby shall be subject to the
satisfaction of each of the following conditions:
(a) Legality. No order, decree or injunction shall have been entered
or issued by any Governmental Authority which is in effect and has the
effect of making the transactions contemplated hereby illegal or otherwise
prohibiting consummation of the transactions contemplated hereby. Each of
Seller and Purchaser agrees that, in the event that any such order, decree
or injunction shall be entered or issued, it shall use its reasonable best
efforts to cause any such order, decree or injunction to be lifted or
vacated. The immediately preceding sentence shall in no way limit or
expand Purchaser's obligations under Section 6.2(a).
(b) HSR Act. The waiting period (or extension thereof) under the HSR
Act applicable to the transactions contemplated hereby shall have expired
or been terminated.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate the transactions contemplated hereby shall also be
subject to the satisfaction or waiver of each of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Seller contained in this Agreement that are qualified by
materiality
38
or Seller Material Adverse Effect and the representations and warranties
of Seller contained in Sections 4.4(a) and (b) hereof shall be true and
correct on and as of the Closing Date (except to the extent such
representations and warranties shall have been expressly made as of an
earlier date, in which case such representations and warranties shall have
been true and correct as of such earlier date) with the same force and
effect as if made on and as of the Closing Date and (ii) the
representations and warranties of Seller contained in this Agreement that
are not qualified as to materiality or Seller Material Adverse Effect or
contained in Sections 4.4(a) and (b) hereof shall be true and correct on
and as of the Closing Date (except to the extent such representations and
warranties shall have been expressly made as of an earlier date, in which
case such representations and warranties shall have been true and correct
as of such earlier date) with the same force and effect as if made on and
as of the Closing Date, except to the extent that any failures of such
representations and warranties in this clause (ii) to be so true and
correct, individually or in the aggregate, would not reasonably be
expected to have resulted in a Seller Material Adverse Effect.
(b) Agreements and Covenants. Seller shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
before the Effective Time.
(c) Certificate. Purchaser shall have received a certificate of an
executive officer of Seller that the conditions set forth in this Section
7.2 have been satisfied.
(d) Documents. Purchaser shall have received the documents and
instruments set forth in Section 3.2(b).
(e) Audited Financial Statements. Purchaser shall have received the
Audited Statements (together with an unqualified auditor's opinion), and
the Audited Statements (including the notes thereto) shall not reflect or
disclose any information that is adverse, in any material respect, to the
Business, the Companies or their Subsidiaries, taken as a whole, that was
not reflected or disclosed in the Financial Statements (including the
notes thereto) previously provided to Purchaser.
(f) Financing. The financing institutions party to the Commitment
Letter (or any agreements relating to alternative sources of financing
that may be entered into by Purchaser under Section 6.5) shall have funded
the portion of the Purchase Price in the amount specified in the
Commitment Letter; provided that the foregoing shall not be a condition
under this Agreement in the event that (i) a breach by Purchaser of its
obligations under the Commitment Letter (or any agreements relating to
alternative sources of financing that may be entered into by Purchaser
under Section 6.5) has caused the funding thereunder not to occur, or (ii)
all conditions precedent to the closing and extension of credit of the
amount specified in the Commitment Letter have been satisfied other than
the conditions
39
contained in clause (vi) and clause (viii) (other than, in the case of
clause (viii), a default, or failure of the representations and warranties
to be true, under any of the loan documentation for the Senior Credit
Facilities (as defined in the Commitment Letter) which relates to the
Companies or the Subsidiaries) of Annex II of the Commitment Letter.
(g) Material Adverse Change. There shall have been no Seller
Material Adverse Effect after the date hereof that has not been cured by
the Closing Date.
7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the transactions contemplated hereby shall also be subject
to the satisfaction or waiver of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement that are qualified by
materiality or Purchaser Material Adverse Effect shall be true and correct
on and as of the Closing Date (except to the extent such representations
and warranties shall have been expressly made as of an earlier date, in
which case such representations and warranties shall have been true and
correct as of such earlier date) with the same force and effect as if made
on and as of the Closing Date, and (ii) the representations and warranties
of Purchaser contained in this Agreement that are not qualified as to
materiality or Purchaser Material Adverse Effect shall be true and correct
on and as of the Closing Date (except to the extent such representations
and warranties shall have been expressly made as of an earlier date, in
which case such representations and warranties shall have been true and
correct as of such earlier date) with the same force and effect as if made
on and as of the Closing Date, except to the extent that any failures of
such representations and warranties in this clause (ii) to be so true and
correct, individually or in the aggregate, would not reasonably be
expected to have resulted in a Purchaser Material Adverse Effect.
(b) Agreements and Covenants. Purchaser shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
before the Effective Time.
(c) Certificate. Seller shall have received a certificate of an
executive officer of Purchaser that the conditions set forth in paragraphs
(a) and (b) above have been satisfied.
(d) Resolutions. Seller shall have received the resolutions set
forth in Section 3.2(a).
(e) Solvency Opinion. The Seller shall have received a solvency
opinion, addressed to the Board of Directors of the Seller, rendered by an
independent valuation firm, at Seller's expense, setting forth their
conclusion that,
40
after giving effect to the transactions contemplated by this Agreement and
the incurrence of any financings in connection therewith, the Purchaser,
Companies and Subsidiaries taken as a whole, are not insolvent and will
not be rendered insolvent by the indebtedness incurred in connection
therewith, and will not be left with unreasonably small capital with which
to engage in their business and will not have incurred debts beyond their
ability to pay such debts as they mature.
ARTICLE 8.
CERTAIN TAX MATTERS
8.1 RESPONSIBILITY FOR FILING TAX RETURNS.
(a) Seller shall include the income of the Companies and the
Subsidiaries on Seller's consolidated federal income Tax Returns (and any
state consolidated, unitary or combined Tax Returns) for all periods
through the end of the Closing Date and pay any income Taxes attributable
to such income. The Companies and the Subsidiaries shall furnish Tax
information to Seller for inclusion in Seller's federal consolidated
income Tax Return (or such state Tax Return described in the preceding
sentence) for the period that includes the Closing Date in accordance with
the Companies' and the Subsidiaries past custom and practice. The income
of the Companies and the Subsidiaries shall be apportioned to the period
up to the Closing Date and the period after the Closing Date by closing
the books of the Companies and the Subsidiaries as of the Closing Date.
Seller shall prepare or cause to be prepared and file or cause to be filed
all other Tax Returns for the Companies and their Subsidiaries for all
periods ending on or prior to the Closing Date that are due after the
Closing Date.
(b) Purchaser shall prepare or cause to be prepared and file or
cause to be filed all other Tax Returns for the Companies and the
Subsidiaries that are due after the Closing Date (other than Tax Returns
with respect to periods for which a consolidated, unitary or combined Tax
Return of Seller will include the operations of the Companies). Purchaser
shall permit Seller to review and comment on each such Tax Return
described in the preceding sentence prior to filing and shall make such
revisions to such Tax Returns as are reasonably requested by Seller but
only to the extent that such Tax Returns relate to Taxes for which Seller
has an obligation to indemnify or has indemnified Purchaser pursuant to
Section 8.4.
8.2 COOPERATION ON TAX MATTERS.
(a) Purchaser and Seller shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of
Tax Returns pursuant to this Article 8 and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records
and information which are reasonably relevant to any such Tax Return
preparation, audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information
and explanation of any material provided
41
hereunder. Seller agrees (A) to retain all books and records with respect
to Tax matters pertinent to the Companies and their Subsidiaries relating
to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Purchaser, any extensions thereof) of the respective taxable periods, and
to abide by all record retention agreements entered into with any Taxing
Authority, and (B) to give Purchaser reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if
Purchaser so requests, Seller shall allow Purchaser to take possession of
such books and records.
(b) Purchaser and Seller further agree, upon request, to use
commercially reasonable efforts to obtain any certificate or other
document from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions
contemplated hereby).
8.3 TAX SHARING AGREEMENTS. All Tax sharing agreements or similar
agreements with respect to or involving the Companies and their Subsidiaries
shall be terminated as of the Closing Date and, after the Closing Date, the
Companies and their Subsidiaries shall not be bound thereby or have any
liability thereunder.
8.4 TAX INDEMNIFICATIONS.
(a) Seller shall be liable for, and shall indemnify and hold
Purchaser harmless against:
(i) all Taxes of the Companies and the Subsidiaries payable
for any taxable year or taxable period ending on or before the
Closing Date, including, but not limited to, any Taxes with respect
to the deemed sale of assets resulting from the Section 338(h)(10)
elections pursuant to Section 8.6 of this Agreement; provided,
however, that no indemnity shall be provided under this Agreement
for Taxes resulting from any transaction undertaken by the
Purchaser, any Company or Subsidiary on the Closing Date, but after
the Closing, occurring outside of the ordinary course of business;
(ii) all Taxes imposed on any member of any Affiliated Group
with which any Company or Subsidiary files or filed a Tax Return on
a consolidated, combined or unitary basis for a taxable year (of a
Company or any Subsidiary) beginning before the Closing Date and for
which any Company or Subsidiary is liable as a result of filing or
being included in such a Tax Return on a consolidated, combined or
unitary basis; and
(iii) with respect to any taxable year or taxable period
beginning before the Closing Date and ending after the Closing Date
(a "Straddle Period"), the portion of the Taxes of the Companies and
the Subsidiaries attributable to the portion of such taxable year or
taxable period ending on
42
the Closing Date; provided, however, that no indemnity shall be
provided under this Agreement for any Taxes resulting from any
transaction undertaken by the Purchaser, any Company or Subsidiary
on the Closing Date, but after the Closing, occurring outside of the
ordinary course of business.
(b) Purchaser shall be liable for, and shall indemnify and hold
Seller harmless against, (i) any and all Taxes imposed on any Company or
Subsidiary for any taxable year or portion thereof beginning on or after
the Closing Date, including the portion commencing on the Closing Date of
any Straddle Period, and (ii) any additional Tax owed by Seller (including
Tax owed by Seller due to this indemnification payment) resulting from any
transaction engaged in by any Company or any Subsidiary not in the
ordinary course of business occurring on the Closing Date after
Purchaser's purchase of the Companies' stock.
(c) Whenever any Taxing Authority asserts a claim, makes an
assessment, or otherwise disputes the amount of Taxes for which Seller is
liable under this Agreement, Purchaser shall upon receipt of such
assertion, promptly inform Seller in writing and Seller shall have the
sole right to control any resulting proceedings and to determine whether
and when to settle any such claim, assessment or dispute to the extent
such proceedings or determinations affect the amount of Taxes for which
Seller may be liable under this Agreement. Whenever any Taxing Authority
asserts a claim, makes an assessment or otherwise disputes the amount of
Taxes for which Purchaser is liable under this Agreement, Purchaser shall
have the right to control any resulting proceedings and to determine
whether and when to settle any such claim, assessment or dispute, except
to the extent such proceedings affect the amount of Taxes for which Seller
is liable under this Agreement. Whenever any Taxing Authority asserts a
claim, makes an assessment or otherwise disputes the amount of Taxes for
which both Seller and Purchaser may be liable, (i) each party may
participate in any resulting proceedings, and (ii) that portion of the
proceedings shall be controlled by that party which would bear the burden
of the greater portion of the sum of the adjustment and any corresponding
adjustments that may reasonably be anticipated for other taxable periods.
The party not controlling such proceedings may, with the written consent
of the other party and at its sole expense, assume control of such
proceeding.
(d) The obligations of the parties set forth in this Section 8.4
shall be unconditional and absolute. Except as expressly provided in
Article 9, the rights and obligations of the parties with respect to
indemnification for any and all matters relating to Taxes shall be
governed by this Section 8.4.
8.5 CERTAIN NON-INCOME TAXES. All transfer, documentary, sales, use,
stamp, registration and other similar Taxes and fees (including any penalties
and interest), but not including income taxes incurred in connection with this
Agreement (including any such Tax imposed indirectly as a result of the sale of
the Shares), shall be borne by Purchaser. Purchaser will, at its own expense,
file all necessary Tax Returns and other
43
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees.
8.6 SECTION 338(h)(10) ELECTION. Purchaser and Seller agree to join in
making elections under section 338(h)(10) of the Code (and any corresponding or
similar provision of state and local Law) with respect to Redi-Cut Foods, Inc.,
an Illinois corporation, and K.C. Salad Holdings, Inc., a Missouri corporation,
and, if Seller so timely requests, with respect to Fresh Advantage, Inc., a
Virginia corporation (any of such companies with respect to which an election is
to be made, a "338(h)(10) Entity"), and shall cooperate in the preparation and
filing of IRS Form 8023 and any other Tax forms or filings necessary to effect
such elections. Prior to Closing, Seller and Purchaser shall agree upon an
allocation of a portion of the Purchase Price to each of the 338(h)(10)
Entities, and if Seller and Purchaser are unable to agree on such allocation
they shall submit the matter to the Accountants for a determination, which shall
be final and binding on both Seller and Purchaser.
ARTICLE 9.
ADDITIONAL INDEMNIFICATION
9.1 SURVIVAL. The representations and warranties of the parties contained
in Articles 4 and 5 hereof shall survive the Closing; provided, that, subject to
the last sentence of this Section 9.1, such representations and warranties shall
terminate on the date that is one (1) year after the Closing Date, except that
(i) the representations and warranties contained in Sections 4.2 (Authority) and
4.4(a), (b) and (c) (Capitalization) shall survive indefinitely following the
Closing, (ii) the representations and warranties contained in Section 4.11
(Environmental and Safety and Health Matters) shall survive for five (5) years
following the Closing and (iii) the representations and warranties contained in
Section 4.14 (Taxes) shall survive the Closing until the statute of limitations
for the applicable representation and warranty ends. All covenants and
agreements contained herein which by their terms contemplate actions or impose
obligations following the Closing shall survive the Closing and remain in full
force and effect in accordance with their terms. All covenants and agreements
contained herein which by their terms contemplate full performance at or prior
to Closing shall terminate upon Closing, except that claims for indemnification
in respect of any breach thereof shall survive until the first anniversary of
the Closing. The period of time a representation or warranty or covenant or
agreement survives the Closing pursuant to this Section 9.1 shall be the
"Survival Period" with respect to such representation or warranty or covenant or
agreement. In the event notice of any claim for indemnification under this
Article 9 shall have been given within the applicable Survival Period and such
claim has not been finally resolved by the expiration of such Survival Period,
the representations or warranties or covenants or agreements that are the
subject of such claim shall survive, but only to the extent of and in the amount
of the claim as made prior to the expiration of the Survival Period, until such
claim is finally resolved.
9.2 ADDITIONAL INDEMNIFICATION. Subject to the terms, conditions and
limitations set forth in this Article 9, from and after the Closing Date:
44
(a) Seller shall defend, indemnify and hold harmless Purchaser and
its Affiliates and each of their respective officers, directors, members,
partners, managers and employees (collectively, the "Purchaser Indemnified
Parties") from and against any costs or expenses (including reasonable
attorneys' fees and expenses), judgments, fines, claims, damages
(including consequential damages in the form of lost profits) and
assessments (collectively, "Losses") that are imposed on or incurred by
Purchaser Indemnified Parties which result from (i) any breach of any
representation or warranty made by Seller in Section 4.1, 4.3, 4.4(d) or
(e), 4.5. 4.6, 4.7, 4.8 through 4.10 and 4.12 through 4.23 (disregarding
for purposes of measuring damages under this Section 9.2(a) any
qualification by materiality or Seller Material Adverse Effect) on the
Closing Date (except to the extent such representations and warranties
shall have been expressly made as of an earlier date, in which case as of
such earlier date), (ii) any breach of any representation or warranty made
by Seller in Section 4.2 or 4.4(a), (b) or (c) hereof (disregarding for
purposes of measuring damages under this Section 9.2(a) any qualification
by materiality or Seller Material Adverse Effect) on the Closing Date
(except to the extent such representations and warranties shall have been
expressly made as of an earlier date, in which case as of such earlier
date), (iii) the failure of Seller to perform any covenant or agreement of
Seller set forth in this Agreement, and (iv) (A) any Environmental Claim
arising out of or relating to actions, conditions, occurrences, incidents,
events or omissions involving the Companies, the Subsidiaries or the Real
Property on or prior to the Closing Date, (B) any violation of or
noncompliance with applicable Environmental Law by the Companies or any of
their Subsidiaries prior to the Closing Date, including the continuation
of such violation or noncompliance within three (3) months after the
Closing Date, whether or not a third party claim has arisen in connection
with such violation or noncompliance, (C) any Cleanup required by
Environmental Law at the Real Property, as a result of a release or
discharge of Hazardous Substances at such Real Property prior to the
Closing Date, and (D) any breach of any representation or warranty made by
Seller in Section 4.11 on the Closing Date (except to the extent such
representations and warranties shall have been expressly made as of an
earlier date, in which case as of such earlier date). Notwithstanding the
foregoing, Seller shall not indemnify the Purchaser Indemnified Parties
under this Section 9.2(a) with respect to matters relating to Taxes to the
extent indemnification is available with respect to such matters under
Section 8.4(a).
(b) Purchaser shall defend, indemnify and hold harmless Seller and
its Affiliates and each of their respective directors, officers,
equityholders, partners and employees (collectively, the "Seller
Indemnified Parties") from and against any Losses that are imposed on or
incurred by Seller Indemnified Parties which result from (i) any breach of
any representation or warranty made by Purchaser in Article 5 hereof
(disregarding for purposes of this Section 9.2(b) any qualification by
materiality or Purchaser Material Adverse Effect) on the date hereof or on
and as of the Closing Date with the same force and effect as if made on
and as of the Closing Date, (ii) the failure to perform any covenant or
agreement of Purchaser set forth in this Agreement and (iii) any
Environmental Claim relating to the
45
Company or its Subsidiaries other than those matters that are subject to
the indemnification provided by Seller pursuant to Section 9.2(a)(iv).
Notwithstanding the foregoing, Purchaser shall not indemnify the Seller
Indemnified Parties under this Section 9.2(b) with respect to matters
relating to Taxes to the extent indemnification is available with respect
to such matters under Section 8.4(b).
9.3 INDEMNIFICATION PROCEDURES. The following procedures shall govern
claims for indemnification under this Article 9:
(a) In order for a party (the "Indemnified Party") to be entitled to
any indemnification provided for under this Article 9 in respect of a
claim made against the Indemnified Party by any Person who is not a party
to this Agreement (a "Third-Party Claim"), such Indemnified Party must
notify the indemnifying party hereunder (the "Indemnifying Party") in
writing of the Third-Party Claim promptly following receipt by such
Indemnified Party of notice of the Third-Party Claim; provided, however,
that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the Indemnifying
Party shall have been actually prejudiced as a result of such failure.
Thereafter, the Indemnified Party shall deliver to the Indemnifying Party,
promptly following the Indemnified Party's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified
Party relating to the Third-Party Claim, other than those notices and
documents separately addressed to the Indemnifying Party.
(b) If a Third-Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense thereof
and if it so chooses, to assume the defense thereof with counsel selected
by the Indemnifying Party; provided, however, that if the defendants in
any such Third-Party Claim include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party shall have reasonably
concluded that there exists any actual conflict of interest between the
Indemnifying Party and the Indemnified Party, the Indemnifying Party shall
not have the right to direct the defense of such action on behalf of such
Indemnified Party and such Indemnified Party shall have the right to
retain, at the Indemnifying Party's expense, one separate counsel
reasonably satisfactory to the Indemnifying Party to defend such action on
behalf of such Indemnified Party. Subject to the immediately preceding
proviso, should the Indemnifying Party so elect to assume the defense of a
Third-Party Claim, (i) the Indemnifying Party shall not be liable to the
Indemnified Party for any legal expenses incurred by the Indemnified Party
in connection with the defense thereof and (ii) the Indemnified Party
shall have the right to participate in the defense thereof and to employ
counsel, in each case at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the
Indemnifying Party shall control such defense. The Indemnifying Party
shall be liable for the reasonable fees and expenses of counsel employed
by the Indemnified Party for any period during which the Indemnifying
Party has not assumed such defense.
46
(c) If the Indemnifying Party chooses to defend or prosecute a
Third-Party Claim, the Indemnified Parties shall cooperate in the defense
or prosecution thereof. If the Indemnifying Party assumes the defense of a
Third-Party Claim, the Indemnified Party shall not admit any liability
with respect to, or settle, compromise or discharge, such Third-Party
Claim without the Indemnifying Party's prior written consent. If the
Indemnifying Party assumes the defense of a Third-Party Claim, the
Indemnified Party shall agree to any settlement, compromise or discharge
of a Third-Party Claim that the Indemnifying Party may recommend and that
(i) by its terms obligates the Indemnifying Party to pay the full amount
of the liability in connection with such Third-Party Claim, (ii) does not
require any payment or other action by, or limitation on, the Indemnified
Party which is materially adverse to the continuing business interests of
the Indemnified Party and (iii) releases the Indemnified Party in
connection with such Third-Party Claim.
(d) In the event any Indemnified Party should have a claim against
any Indemnifying Party under this Article 9 that does not involve a
Third-Party Claim, the Indemnified Party shall deliver notice of such
claim to the Indemnifying Party promptly following the Indemnified Party
becoming aware of the same. The failure by any Indemnified Party so to
notify the Indemnifying Party shall not relieve the Indemnifying Party
from any liability that it may have to such Indemnified Party under this
Article 9, except to the extent that the Indemnifying Party has been
actually prejudiced by such failure.
(e) With respect to any indemnified matter subject to Section
9.2(a)(iv) that relates to a Cleanup of Hazardous Substances discharged at
any Real Property, Purchaser and its affiliates agree that, to the extent
allowed by applicable Environmental Law and the relevant Governmental
Authority (if a Governmental Authority is involved in the matter),
Purchaser or said affiliate shall agree to accept a deed restriction that
would: (i) allow it to continue to use the Real Property for the same
purposes as such property is being used as of the date of this Agreement;
(ii) not impose limitations on the use of the Real Property related to its
productive capacity or output; (iii) not cause more than de minimis
interference with Purchaser's or its affiliates' operation of the Real
Property; and (iv) not impose any operations and maintenance costs on the
Purchaser (other than costs that would be less than $2,000) per year). If
with respect to a particular matter, Purchaser or its affiliate does not
agree to such a restriction, Seller will only be responsible (except as
limited by other terms in this Agreement) for the Losses that would have
been incurred had Purchaser or its affiliates accepted such restriction.
9.4 INDEMNIFICATION LIMITATIONS. In no event shall Seller be liable for
indemnification pursuant to Section 9.2(a)(i) and 9.2(a)(ii), unless and until
the aggregate of all Losses with respect to Section 9.2(a)(i) and 9.2(a)(ii)
that are imposed on or incurred by the Purchaser Indemnified Parties thereunder
exceeds $5,000,000 (the "Threshold Amount"), in which case the Purchaser
Indemnified Parties shall be entitled to indemnification for all Losses in
excess of the Threshold Amount. Notwithstanding
47
the foregoing, the Seller shall not be required to make payments for
indemnification pursuant to Section 9.2(a)(i) and 9.2(a)(iv) in an aggregate
amount in excess of $85,000,000. In no event shall Seller be liable for
indemnification pursuant to Section 9.2(a)(iv) unless and until the aggregate of
all Losses with respect thereto that are imposed on or incurred by the Purchaser
Indemnified Parties thereunder exceeds $2,000,000, in which case the Purchaser
Indemnified Parties shall be entitled to indemnification for all such Losses
that are in excess of $2,000,000. Purchaser shall not be required to make
payments for indemnification pursuant to Section 9.2(b)(i) in an aggregate
amount in excess of $85,000,000. In calculating amounts payable to an
Indemnified Party, the amount of the indemnified Losses shall not be duplicative
of any other Loss for which an indemnification claim has been made, and shall be
computed net of (i) payments recovered by the Indemnified Party under any
insurance policy with respect to such Losses, (ii) any prior or subsequent
recovery by the Indemnified Party from any Person (other than an Indemnifying
Party) with respect to such Losses and (iii) any Tax benefit that may be
available to the Indemnified Party arising from the incurrence or payment of any
such Loss. In the event the Closing occurs, the indemnification provisions of
Section 8.4 and this Article 9 shall be the sole and exclusive remedy of Seller
(and the other Seller Indemnified Parties) and Purchaser (and the other
Purchaser Indemnified Parties) and each other party to this Agreement for any
breach of any representation, warranty, covenant or agreement made in this
Agreement (other than for specific performance or injunctive relief) and each
party to this Agreement hereby waives all statutory, common Law and other claims
with respect to this Agreement, other than claims for indemnification with
respect to this Agreement pursuant to (and in accordance with the terms of)
Section 8.4 and this Article 9 and other than claims for specific performance or
injunctive relief; provided, however, that nothing contained in this Agreement
shall limit any party's remedies for fraud or intentional misrepresentation.
Notwithstanding anything herein to the contrary, in no event shall Seller or
Purchaser be liable for any special or punitive damages, consequential damages
(other than lost profits) or damages measured on the basis of a multiple of
earnings or similar financial measure, and Purchaser shall not be entitled to
recover or seek any remedy under this Agreement (i) with respect to any claim or
liability to any employee employed by any of the Companies or any of their
Subsidiaries arising as a result of the termination of such employee's
employment after the Closing Date (except to the extent arising out of a breach
of any representation or warranty of Seller hereunder relating to severance or
other payments or obligations in connection with such termination) or (ii) to
the extent that such amount is included in the Working Capital Adjustment
Amount.
ARTICLE 10.
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time before the
Effective Time as follows;
(a) by mutual written consent of each of Seller and Purchaser;
(b) by either Seller or Purchaser, if the Effective Time shall not
have occurred on or before June 30, 2005 (the "Termination Date");
provided,
48
however, that in the event the FTC or DOJ issues a "second request" in
connection with any review of the transactions contemplated by this
Agreement under the HSR Act, such date shall be extended to September 30,
2005; provided further, however, that the right to terminate this
Agreement under this Section 10.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before the Termination Date;
(c) by either Seller or Purchaser, if a Governmental Authority shall
have issued an order, decree or injunction having the effect of making the
transactions contemplated hereby illegal or permanently prohibiting the
consummation of the transactions contemplated hereby, and such order,
decree or injunction shall have become final and nonappealable (but only
if such party shall have used its best efforts to cause such order, decree
or injunction to be lifted or vacated and shall have otherwise complied
with its obligations under this Agreement, including Purchaser's
obligations under Section 6.2(a));
(d) by either Seller or Purchaser, if (x) there shall have been a
material breach by the other of any of its representations, warranties,
covenants or agreements contained in this Agreement, which breach would
result in the failure to satisfy one or more of the conditions set forth
in Section 7.2 (in the case of a breach by Seller) or Section 7.3 (in the
case of a breach by Purchaser), and such breach shall be incapable of
being cured or, if capable of being cured, shall not have been cured
within 30 days after written notice thereof shall have been received by
the party alleged to be in breach.
10.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement pursuant to this Article 10, this Agreement (other than as set
forth in Sections 6.4(c) and 6.6) shall become void and of no effect with no
liability on the part of any party hereto (or of any of its Representatives);
provided, however, no such termination shall relieve any party hereto from any
liability for damages (including fees and out-of-pocket expenses) resulting from
any knowing or intentional breach of this Agreement by such party or any
liability for fees and out-of-pocket expenses incurred as a result of any breach
of this Agreement by such party.
ARTICLE 11.
MISCELLANEOUS
11.1 INTENTIONALLY DELETED.
11.2 NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date of receipt and shall be delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested), sent
by overnight courier or sent by telecopy, to the applicable party at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
49
(a) if to Seller: Performance Food Group Company
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Vice President, General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: F. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Purchaser: ▇▇▇▇▇▇▇▇ Brands International, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President and General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
11.3 CERTAIN DEFINITIONS; INTERPRETATION.
(a) For purposes of this Agreement, the following terms shall have
the following meanings:
(i) "Action" means any written claim, action, suit,
investigation or proceeding by or before any Governmental Authority.
(ii) "affiliate" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned
Person.
(iii) "Affiliated Group" means any affiliated group within the
meaning of Section 1504(a) of the Code or any group defined under a
similar provision of state, local or foreign law.
(iv) "▇▇▇▇▇▇▇ County Arrangements" shall mean any agreements
or arrangements among any of the Companies or the Subsidiaries and
the Development Authority of ▇▇▇▇▇▇▇ County, including, without
limitation, the Bond Purchase Loan Agreement, dated for purposes of
reference as of April 1, 2004, by and between the
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Development Authority of ▇▇▇▇▇▇▇ County and Fresh-Cuts Incorporated,
the Taxable Industrial Development Revenue Bond (Fresh-Cuts
Incorporated Project), Series 2004, the Limited Warranty Deed, dated
as of July 23, 2004, between Fresh Express Incorporated and the
Development Authority of ▇▇▇▇▇▇▇ County, the Lease Agreement, dated
as of April 1, 2004, between the Development Authority of ▇▇▇▇▇▇▇
County, as lessor, and Fresh-Cuts Incorporated, as lessee, the Tax
Agreement, dated for purposes of reference as of April 1, 2004, by
and among the Development Authority of ▇▇▇▇▇▇▇ County, Fresh-Cuts
Incorporated and the Board of Tax Assessors of ▇▇▇▇▇▇▇ County and
the ▇▇▇▇ of Sale, dated as of July 23, 2004, from Fresh-Cuts
Incorporated to the Development Authority of ▇▇▇▇▇▇▇ County.
(v) "Cleanup" means all actions reasonably required to (A)
cleanup, remove, treat or remediate Hazardous Substances in the
indoor or outdoor environment, including implementation of
engineering studies, preparation of cleanup program documents or
risk assessments or implementation of engineering controls, (B)
perform investigations and post-remedial monitoring and care, or (C)
respond to any requests by a Governmental Authority for information
or documents relating to cleanup, removal, treatment or remediation
or potential cleanup, removal, treatment or remediation of Hazardous
Substances in the indoor or outdoor environment.
(vi) "Code" means the Internal Revenue Code of 1986, as
amended.
(vii) "Company Release" shall mean the release, dated as of
the Closing Date, pursuant to which the Companies, on behalf of
themselves and the Subsidiaries, irrevocably and unconditionally
release the Seller and its affiliates (other than the Company and
the Subsidiaries) from any claims that the Companies and the
Subsidiaries may have had in the past, may now have or may have in
the future against any of the Seller and its affiliates (or their
respective successors and past, present and future assigns,
directors, officers, agents, attorneys and representatives) (other
than the Company and the Subsidiaries), relating to any events,
matters, causes, things, acts, omissions or conduct, occurring or
existing, at any time at or prior to the Closing (and other than as
otherwise specifically provided herein).
(viii) "control" (including the terms "controlled by" and
"under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership
of stock, as trustee or executor, by contract or credit arrangement
or otherwise.
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(ix) "EBITDA" shall mean the net income of the Companies and
the Subsidiaries before interest, taxes, depreciation and
amortization for the fiscal year ended January 1, 2005; provided,
that, any corporate allocation charge and any insurance allocation
charge included in the calculation of EBITDA shall equal the
corporate allocation charge and insurance allocation charge,
respectively, included in the calculation of EBITDA set forth in
Section 2.3(d) of the Disclosure Schedule.
(x) "Environmental Claim" means any actual or threatened
notice, directive, Action, abatement order or other Governmental
Order by a Governmental Authority or by any third party demanding or
alleging liability, including potential liability, for investigatory
costs or Cleanup costs, by a Governmental Authority demanding a
response to any requests for information or documents, or by a
Governmental Authority or any third party seeking recovery of costs
associated with natural resource damages, property damages or
personal injuries; in all cases arising out of, based on, or
resulting from (A) the presence, release or threatened release of
any Hazardous Substances at any property, or (B) any violation or
non-compliance or alleged violation or alleged non-compliance of any
applicable Environmental Law by the Companies or their Subsidiaries.
(xi) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended and the rules and regulations promulgated
thereunder.
(xii) "Governmental Authority" means any foreign, United
States federal, state or local governmental, regulatory or
administrative agency, commission, board or any court or arbitral
tribunal.
(xiii) "Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, binding agreement, determination or
award entered by or with any Governmental Authority; provided, that
with respect to the indemnification provided by Seller in Section
9.2(a)(iv) (other than with respect to claims for breach of
representation in Section 9.2(a)(iv)(D)) and indemnification
provided by Purchaser in Section 9.2(b)(iii), the term "Governmental
Order" shall not include any voluntary agreement or order entered
into by Seller or Purchaser, other than such agreements or orders
that are entered into in order to resolve an Environmental Claim or
violation of or non-compliance with applicable Environmental Law (it
being understood that any such agreements or orders, if voluntarily
entered into, are subject to the provisions of Section 9.3(c) if
applicable).
(xiv) "Intercompany Notes" shall mean those Revolving Credit
Notes dated as of October 15, 2004 by and between the Seller and the
Companies.
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(xv) "knowledge" of any Party shall mean the actual knowledge
of the executive officers of that Party, after due inquiry, and
shall, for purposes of Seller's knowledge, include knowledge of the
Persons listed on Section 11.3(a)(xiii) of the Disclosure Schedule.
(xvi) "Law" means any Governmental Order or any law (including
applicable common law), statute, ordinance, rule or regulation of
any Governmental Authority, or any binding agreement with any
Government Authority.
(xvii) "Permit" means any permit, franchise, authorization, or
other license or approval issued or granted by any Governmental
Authority.
(xviii) "Person" means an individual, corporation,
partnership, limited liability company, association, trust,
unincorporated organization, entity or group.
(xix) "Purchaser Material Adverse Effect" means any material
adverse change in or material adverse effect on the business,
results of operations or financial condition of Purchaser.
(xx) "Seller Release" shall mean the Release, dated as of the
Closing Date, pursuant to which Seller, on behalf of itself and its
affiliates (other than the Company and the Subsidiaries),
irrevocably and unconditionally releases the Companies and the
Subsidiaries from any claims that Seller and its affiliates (other
than the Company and the Subsidiaries) may have had in the past, may
now have or may have in the future against any of the Company and
the Subsidiaries (or their respective successors and past, present
and future assigns, directors, officers, agents, attorneys and
representatives), relating to any events, matters, causes, things,
acts, omissions or conduct, occurring or existing, at any time at or
prior to the Closing (other than as otherwise specifically provided
herein).
(xxi) "Seller Material Adverse Effect" means any material
adverse change in or material adverse effect on, or any event,
circumstance or development that, individually or in the aggregate,
has had or would reasonably be expected to have a material adverse
change in or material adverse effect on, the business, results of
operations or financial condition of the Business, the Companies and
their Subsidiaries, taken as a whole; provided, however, that
changes or effects (1) resulting primarily from or relating to
changes in economic conditions or financial or securities markets in
general or the industries and markets in which the Companies and
their Subsidiaries operate, including changes resulting from weather
or natural conditions, commodity prices, or changes in laws, rules
and regulations, (2) resulting primarily from the voluntary
termination of employment by employees of the Companies and their
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Subsidiaries between the date hereof and the Closing Date, (3)
resulting primarily from the execution and performance of this
Agreement and the announcement of this Agreement and the
transactions contemplated hereby, or (4) resulting primarily from
actions taken to obtain any approval or authorization under
applicable antitrust or competition laws for consummation of the
transaction contemplated by this Agreement, shall be excluded from
the determination of Seller Material Adverse Effect.
(xxii) "Subsidiary," of a Person means any corporation or
other legal entity of which such Person (either alone or through or
together with any other Subsidiary or Subsidiaries) is the general
partner or managing entity or of which at least a majority of the
stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or
others performing similar functions of such corporation or other
legal entity is directly or indirectly owned or controlled by such
Person (either alone or through or together with any other
Subsidiary or Subsidiaries). Unless otherwise stated herein,
"Subsidiary" shall refer to a Subsidiary of the Companies.
(xxiii) "Taxes" shall mean any and all taxes, fees, levies or
other assessments, including, without limitation, federal, state,
local or foreign income, gross receipts, excise, real or personal
property, sales, withholding, social security, occupation, use,
service, service use, value added, license, net worth, payroll
franchise or similar taxes, imposed by any Taxing Authority,
together with any interest, penalties or additions to Tax and
additional amounts imposed with respect thereto.
(xxiv) "Taxing Authority" shall mean any Governmental
Authority responsible for the imposition or collection of any Taxes.
(xxv) "Tax Return" shall mean any report, return, document,
declaration or other information or filing required to be supplied
to any Taxing Authority or jurisdiction (foreign or domestic) with
respect to Taxes.
(b) When a reference is made in this Agreement to Articles,
Sections, or Disclosure Schedule, such reference is to an Article or a
Section of, or Disclosure Schedule to, this Agreement, unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be
understood to be followed by the words "without limitation." When a
reference is made in this Agreement to notice having been received by any
of the Companies or Subsidiaries, it shall be deemed to include notices
received by Seller and vice versa. Whenever reference is made in this
Agreement to "preparation in accordance with GAAP," it shall mean in
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accordance with generally accepted accounting principles in the U.S.
consistently applied with the Financial Statements.
11.4 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon a determination that any term or other provision is
invalid, illegal or incapable of being enforced, Seller and Purchaser shall
negotiate in good faith to modify this Agreement so as to effect their original
intent as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the maximum extent possible.
11.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement,
including all exhibits and schedules attached hereto, and the Confidentiality
Agreement constitute the entire agreement and supersede any and all other prior
agreements and undertakings, both written and oral, among the parties hereto, or
any of them, with respect to the subject matter hereof and does not, and is not
intended to, confer upon any Person other than the parties hereto and those
Persons identified in Section 6.8 any rights or remedies hereunder. Purchaser's
confidentiality obligations under the Confidentiality Agreement shall terminate
upon the Closing.
11.6 AMENDMENT; WAIVER. This Agreement maybe amended only in a writing
signed by all parties hereto. Any waiver of rights hereunder must be set forth
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Agreement shall not in any way affect, limit or waive either
party's rights at any time to enforce strict compliance thereafter with every
term or condition of this Agreement.
11.7 BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective legal
representatives and successors. Notwithstanding the foregoing, this Agreement
shall not be assigned by any party hereto by operation of law or otherwise
without the express written consent of each of the other parties; provided,
however, that Purchaser may (a) assign its rights (but not its obligations)
under this Agreement to any wholly-owned Affiliates of Purchaser and (b) at or
following the Closing, collaterally assign its rights, interests and remedies in
and under this Agreement to the lenders and other secured parties (including any
agent, trustee or other representative acting for their benefit) in connection
with the financing effected to fund the purchase price payable hereunder (or any
refinancing thereof).
11.8 DISCLOSURE SCHEDULE. The Disclosure Schedule shall be construed with
and as an integral part of this Agreement to the same extent as if the same had
been set forth verbatim herein. Any matter disclosed pursuant to the Disclosure
Schedule shall be deemed to be disclosed for all purposes under this Agreement
to the extent a matter is disclosed in such a way as to make its relevance to
such other purpose reasonably apparent on its face but shall not be deemed to be
an admission or representation as to the materiality of the item so disclosed.
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11.9 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with, the laws of the State of Tennessee without regard
to the conflicts of laws provisions thereof. Each of the parties hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of Tennessee and the courts of the United States of
America located in the State of Tennessee for any litigation arising out of or
relating to this Agreement or the transactions contemplated hereby or any of the
other transactions contemplated hereby (and agrees not to commence any
litigation relating hereto except in such courts), and further agrees that
service of any process, summons, notice or document by U.S. registered mail to
its respective address set forth in Section 10.2, shall be effective service of
process for any litigation brought against it in any such court. Each of the
parties hereby irrevocably and unconditionally waives any objection to the
laying of venue of any litigation arising out of this Agreement or the
transactions contemplated hereby or any of the other transactions contemplated
hereby in the courts of the State of Tennessee or the courts of the United
States of America located in the State of Tennessee and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such litigation brought in any such court has been brought
in an inconvenient forum. Each of the parties hereto hereby irrevocably and
unconditionally waives any right it may have to trial by jury in connection with
any litigation arising out of or relating to this agreement, the transactions
contemplated hereby or any of the other transactions contemplated hereby.
11.10 ENFORCEMENT. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties hereto shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at Law or in equity.
11.11 CONSTRUCTION. The headings of Articles and Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. The language used in this Agreement is the language chosen by
the parties to express their mutual intent, and no rule of strict construction
shall be applied against any party.
11.12 COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts (including by facsimile or electronic .pdf submission), and
by the different parties in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which shall constitute one and the
same agreement.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
▇▇▇▇▇▇▇▇ BRANDS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman of the Board,
President and CEO
PERFORMANCE FOOD GROUP COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
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