SECURITIES PURCHASE AGREEMENT
i
By and Among
ECHO LAKE FOODS, INC.,
ELT, LLC,
ECHO LAKE HUNTINGTON, INC.,
XENITEL, INC.,
ECHO LAKE HUNTINGTON 435, LLC,
BLUE GRASS REAL ESTATE CO, LLC,
ECHO YORKVILLE, LLC,
ECHO LAKE PROPERTIES, LLC,
▇▇▇▇▇ PROPERTIES, LLC,
THE VOTING SECURITYHOLDERS SIGNATORY HERETO,
▇▇▇▇▇ ▇▇▇▇▇▇▇, in his capacity as Sellers’ Representative,
and
CAL-MAINE FOODS, INC.
Dated as of April 8, 2025
i
iv
vi
vii
viii
ix
LIST OF SCHEDULES
Schedule A Employment Agreement Counterparties
Schedule B-1 Reference Balance Sheet
Schedule B-2 Allocation Methodology
Schedule C R&W Insurance Policy
Schedule
1 Company Group Employees Employed by Company Group Affiliates
Schedule
2 Excluded Assets
Schedule
3(a) Knowledge of the Company Group
Schedule
3(b) Knowledge of Buyer
Schedule
4 Permitted Liens
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
1 Registered Intellectual Property
Schedule
2 Unregistered Trademarks
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
x
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
LIST OF EXHIBITS
Exhibit A Accounting Principles
Exhibit B Form of Closing Certificate
Exhibit C Form of Consideration Allocation Schedule
Exhibit D Form of Excluded Asset Assignment Agreement
Exhibit E Form of Echo Lake LLC Agreement
1
This Securities Purchase Agreement (this “Agreement”), dated as of the 8th day of April, 2025, is
by and among:
(a)
Cal-Maine Foods, Inc., a Delaware corporation (“Buyer”);
(b)
the following companies to be acquired, directly or indirectly, by Buyer on the terms and
subject to the conditions set forth in this Agreement (each, a “Company” and, collectively,
the “Companies” or the “Company Group”):
(i)
Echo Lake Foods, Inc., a Wisconsin corporation (“Echo Lake Foods”);
(ii)
ELT, LLC, a Wisconsin limited liability company (“ELT”);
(iii)
Echo Lake Huntington, Inc., a Wisconsin corporation (“Huntington”);
(iv)
Xenitel, Inc., a Wisconsin corporation (“Xenitel”);
(v)
Echo Lake Huntington 435, LLC, a Wisconsin limited liability company
(“Huntington 435”);
(vi)
Blue Grass Real Estate Co, LLC, a Wisconsin limited liability company (“Blue
Grass”); and
(vii)
Echo Yorkville, LLC, a Wisconsin limited liability company (“Yorkville”);
(c)
the following transferring entities and securityholders (each, a “Seller” and, collectively, the
“Sellers”):
(i)
Echo Lake Properties, LLC, a Wisconsin limited liability company (“Echo Lake
Properties”);
(ii)
Elkin Properties, LLC, a Wisconsin limited liability company (“▇▇▇▇▇
Properties”);
(iii)
the holders, collectively, of 100% of the issued and outstanding shares of Class A
voting common stock of Echo Lake Foods, as set forth on the signature pages
hereto (each, a “Voting Securityholder” and, collectively, the “Voting
Securityholders”); and
(d)
▇▇▇▇▇ ▇▇▇▇▇▇▇, in his capacity as Sellers’ Representative.
The Persons listed above in subparagraphs
“Party” and collectively as the “Parties.” Capitalized terms used but not defined elsewhere in the text of
this Agreement have the respective meanings set forth in
WITNESSETH
WHEREAS, the Securityholders collectively own all of the issued and outstanding Equity Interests
of Echo Lake Foods (the “Echo Lake Foods Equity Interests”), ELT (the “ELT Equity Interests”), Echo Lake
Properties and Elkin Properties in the respective amounts set forth on Schedule
, in each case which
interests are the only issued and outstanding Equity Interests of those Companies;
WHEREAS, Echo Lake Foods owns all of the issued and outstanding Equity Interests of Huntington
and Xenitel;
WHEREAS, Echo Lake Properties owns all of the issued and outstanding Equity Interests of
Huntington 435 (the “Huntington 435 Equity Interests”);
2
WHEREAS, ▇▇▇▇▇ Properties owns all of the issued and outstanding Equity Interests of Blue Grass
(the “Blue Grass Equity Interests”) and of Yorkville (the “Yorkville Equity Interests”);
WHEREAS, on the terms and subject to the conditions of this Agreement, the Sellers wish to sell,
and ▇▇▇▇▇ wishes to purchase, (a) all of the Echo Lake Foods Equity Interests, (b) the ELT Equity Interests,
(c) the Huntington 435 Equity Interests, (d) the Blue Grass Equity Interests and (e) the Yorkville Equity
Interests (collectively, the “Purchased Equity Interests”); and
WHEREAS, prior to or concurrently with the execution of this Agreement, and as a condition to the
willingness of, and material inducement to, Buyer to enter into this Agreement, each person listed on
Schedule A has entered into an employment agreement with Buyer or one of its Affiliates, each of which
restrictive covenant agreements and employment agreements shall become effective at and conditioned
upon the Closing;
NOW, THEREFORE, in consideration of the foregoing and of the mutual representations, warranties
and covenants contained herein, as well as other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN INTERPRETIVE MATTERS
1.1
Definitions
. In addition to the terms defined elsewhere herein, the following terms have the
following respective meanings when used herein with initial capital letters:
“2023 Financial Statements” has the meaning set forth in Section
“2024 Financial Statements” has the meaning set forth in Section
“Accounting Principles” the accounting methods, policies, practices, principles, bases and
procedures, including classification and estimation methodology as set forth on Exhibit A.
“Adjusted Equity Price” means the Estimated Adjusted Equity Price or the Final Adjusted Equity
Price, as applicable.
“Adjustment Escrow Account” means a bank account designated in writing by the Escrow Agent for
the purpose of holding and administering the Adjustment ▇▇▇▇▇▇ Amount.
“Adjustment Escrow Amount” means an amount equal to $4,000,000, as established in accordance
with Section
, together with any interest or other earnings accrued thereon while held in the
Adjustment Escrow Account.
“Affiliate” means, with respect to a specified entity, an entity that directly, or indirectly through one
or more intermediaries, controls, is controlled by or is under common control with, the entity specified. The
term “control” (including, with correlative meaning, the terms “controlled by” and “under common control
with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities, by contract or
otherwise.
“Affiliate Contracts” has the meaning set forth in Section
“Agreement” has the meaning set forth in the Preamble.
3
“Allocation Methodology” has the meaning set forth in Section
“Ancillary Agreements” means each of the Escrow Agreement and the Transition Services
Agreement.
“Annual Financial Statements” has the meaning set forth in Section
“Anti-Corruption Laws” has the meaning set forth in Section
“Blue Grass” has the meaning set forth in the Preamble.
“Blue Grass Equity Interests” has the meaning set forth in the Recitals.
“Business” means the business of the Company Group, as conducted as of the date hereof.
“Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on which the national
banking institutions in New York, New York or Milwaukee, Wisconsin are required to be closed.
“Buyer” has the meaning set forth in the Preamble.
“Buyer Closing Date Transaction” means any transaction engaged in by any member of the
Company Group on the Closing Date that occurs after the Closing or at the direction of Buyer, that is outside
the ordinary course of business, including any transaction engaged in by any member of the Company Group
in connection with the financing of any obligations of Buyer (or its Affiliate) to make a payment under this
Agreement.
“Buyer Indemnified Parties” has the meaning set forth in Section
“Buyer Plan” has the meaning set forth in Section
“Buyer Prepared Return” has the meaning set forth in Section
“Buyer Tax Claim” has the meaning set forth in Section
“Calculation Time” means 11:59 p.m. (Milwaukee, Wisconsin time) on the day immediately
preceding the Closing Date.
“Capital Lease Obligations” means, with respect to any Person, for any applicable period, the
obligations of such Person that are required to be classified and accounted for as capital obligations under
GAAP, and the amount of such obligations at any date will be the capitalized amount of such obligations at
such date determined by the Company Group (but calculated separately based on the subtotals for each
Transferor Group) in accordance with the Accounting Principles.
“Cash” means, with respect to the Company Group (but calculated separately based on the subtotals
for each Transferor Group), at any particular time, the sum of the fair market value (expressed in United
States dollars) of the aggregate cash and cash equivalents determined in accordance with the Accounting
Principles (including marketable securities, deposits, short term investments, treasury bills and treasury
notes with, in each case, an original maturity date of three months or less,), held by the Company Group.
Cash shall (a) not include any cash security deposits made or held by the Company Group, cash
collateralizing any obligation, cash in reserve, custodial cash and cash subject to a dominion, control or
similar agreement (other than those terminated at Closing) or otherwise subject to any legal, contractual or
other restriction on the ability to freely transfer or use such cash for any lawful purpose, including any cash
subject to repatriation and the imposition of any withholding Taxes or other Taxes on any such cash if it
4
were to be distributed or otherwise repatriated to the Company Group, (b) not include any cash held in any
third-party account owned solely by one or more Excluded Companies, (c) be reduced by all overdrafts and
issued and uncleared checks in excess of bank balances that would be reported as accounts payable or short-
term borrowings under GAAP and (d) not include any amounts paid to satisfy or discharge any Indebtedness,
Company Group Expenses or any cash distributions by the Company Group, in each case where such
amounts are paid after the Calculation Time but immediately prior to the Closing. For the avoidance of
doubt, Closing Cash will be reduced for checks, drafts and other wire transfers issued but not yet cleared
and will include checks, other wire transfers and drafts deposited or available for deposit but not yet cleared
for the account of the Company Group.
“cGMP” has the meaning set forth in Section
“Closing” has the meaning set forth in Section
“Closing Cash” means the aggregate sum of Cash held by Company Group (but calculated separately
based on the subtotals for each Transferor Group) as of immediately prior to the Closing.
“Closing Certificate” has the meaning set forth in Section
“Closing Date” has the meaning set forth in Section
“Closing Date Payment” has the meaning set forth in Section
“Closing Indebtedness” means the aggregate sum of the Indebtedness of the Company Group (but
calculated separately based on the subtotals for each Transferor Group) as of immediately prior to the
Closing.
“Closing Statement” has the meaning set forth in Section
“Closing Tax Liability Amount” means the Tax Liability Amount as of immediately prior to the
Closing.
“Closing Working Capital” means the Working Capital as of the Calculation Time, which, for
accounting purposes, shall be based on the facts and circumstances and information available to Buyer as
of the date on which the Closing Statement is delivered by Buyer to Sellers’ Representative with regards to
conditions as they exist as of the Calculation Time in accordance with Financial Accounting Standards
Board Accounting Standard Codification Topic 855, Subsequent Events and shall exclude (a) all fees and
expenses incurred by or for the account of Buyer or any of its Affiliates, (b) the effects of purchase
accounting arising from the Transactions, and (c) the effects of any actions taken by Buyer or its Affiliates
after the Closing and (d) any asset in respect of which any amounts have been included in Closing Cash.
“Code” means the Internal Revenue Code of 1986.
“Company” has the meaning set forth in the Preamble.
“Company Group” has the meaning set forth in the Preamble.
“Company Group Access Contact” has the meaning set forth in Section
“Company Group Data” means all data contained in the Company Group Information Technology
Systems or the Company Group’s databases and all other information and data compilations used by, or
necessary to the Business.
5
“Company Group Domain Names” has the meaning set forth in Section
“Company Group Employee List” has the meaning set forth in Section
“Company Group Employees” means individuals who (a) are employed by a member of the
Company Group or (b) (i) are employed by an Affiliate of a member of the Company Group, (ii) provide
services primarily in respect of the Business, and (iii) are listed on Schedule
1.
“Company Group Expenses” means, without duplication, all fees, charges, expenses and other
payments incurred or payable by the Company Group (but calculated separately based on the subtotals for
each Transferor Group) prior to the Closing and in connection with the negotiation, preparation and
execution of this Agreement and the consummation of the Transactions (including the Pre-Closing
Restructuring) that have not been paid as of immediately prior to the Closing (but calculated assuming the
Closing has been consummated), including (a) fees and disbursements of attorneys, accountants, investment
bankers and other advisory or transaction service providers that are payable by the Company Group and
(b) all severance payments or similar benefits, and all change of control, transaction, sale or retention
bonuses or other similar payments (other than grants or other issuances of Equity Interests) that any member
of the Company Group is obligated to pay in connection with the Transactions and that have not been paid
as of immediately prior to the Closing (including, in each case, the employer portion of any associated
payroll, employment, social security, Medicare, national insurance, contributions, unemployment or similar
Taxes or similar obligations related to any such payments, determined without regard to whether the
remittance of any such amounts to the applicable Governmental Authority has been deferred), but excluding
any arrangements implemented at the direction of Buyer or its Affiliates; provided, however, that Company
Group Expenses shall in no event include, without duplication, (i) the portion of the costs, fees and expenses
of the D&O Tail Policy to be paid by Buyer pursuant to Section
, (ii) the portion of the costs fees and
expenses of the R&W Insurance Policy to be paid by Buyer pursuant to Section
, (iii) any such items to
the extent included in the computation of Closing Indebtedness or Working Capital and (iv) any fees and
expenses to the extent they have been paid by or on behalf of the Company Group prior to the Closing.
“Company Group Information Technology Systems” has the meaning set forth in
Section
“Company Group Intellectual Property” means any and all Intellectual Property used or held for use
by, owned or purported to be owned by, or licensed to, any member of the Company Group, in each case,
that is material to the Business, excluding Open Source Licenses and Off the Shelf Software.
“Company Group Lease” means any Contract pursuant to which any member of the Company Group
leases, subleases, licenses or occupies Leased Real Property from another Person, and any amendments or
modifications thereto.
“Company Group Plan” means any Employee Plan that (a) is sponsored by a member of the
Company Group or (b) primarily covers current or former Company Group Employees.
“Company Group Privacy and Data Security Policies” means the Company Group’s past or present,
internal or public-facing policies, notices and statements concerning the privacy, security or Processing of
Personal Data.
“Competing Business” has the meaning set forth in Section
“Competitive Activity” means being directly or indirectly engaged in and/or being employed by,
promoting, assisting (financially or otherwise), consulting for the benefit of, having any governance role or
rights with respect to or having a financial or ownership interest in, any Competing Business; provided,
6
however, that a passive investment in the capital stock or other interest of an issuer whose securities are
listed on a national securities exchange or quotation system or traded in the over-the-counter market shall
not constitute a Competitive Activity so long as such Person does not, directly or indirectly (including
through such Person’s Affiliates), hold in the aggregate more than 2% of the outstanding shares or other
interests so listed or traded.
“Confidential Information” has the meaning set forth in Section
“Confidentiality Agreement” means that certain confidentiality agreement, dated as of
November 20, 2024, by and between Echo Lake Foods and Buyer.
“Conflicting Transaction” means any (a) reorganization, liquidation, dissolution or recapitalization
involving any member of the Company Group or any Transferor thereof, (b) merger or consolidation
involving any member of the Company Group or any Transferor thereof, (c) sale of all or any material assets
of any of the members of the Company Group (other than sales of inventory in the ordinary course of
business and sales of assets that are obsolete or no longer useful to the business of the applicable member
of the Company Group) or, except as not prohibited by Section
any rights to acquire, or securities convertible into or exchangeable for, any such equity securities) of any
member of the Company Group or any Transferor thereof or (d) similar transaction or business combination
involving any member of the Company Group, any Transferor thereof or their respective businesses or
assets.
“Consideration Allocation Schedule” has the meaning set forth in Section
“Continuing Employee” has the meaning set forth in Section
“Contract” means any contract, agreement, indenture, note, bond, loan, license, instrument, lease or
other agreement, whether oral or written, and in each case, that is legally binding, but excluding any
Employee Plans or purchase orders.
“Conversions” has the meaning set forth in Section
“Copyrights” means all copyrights and works of authorship (including any moral and economic
rights however denominated), and all copyright registrations and pending copyright applications, and any
renewals or extensions of any of the foregoing.
“D&O Expenses” has the meaning set forth in Section
“D&O Indemnifiable Claim” has the meaning set forth in Section
“D&O Indemnified Party” has the meaning set forth in Section
“D&O Indemnifying Party” has the meaning set forth in Section
“D&O Losses” has the meaning set forth in Section
“D&O Tail Policy” has the meaning set forth in Section
“Domain Names” means all Internet domain names and all Uniform Resource Locators (URLs).
“Echo Lake Foods” has the meaning set forth in the Preamble.
“Echo Lake Foods Contribution” has the meaning set forth in Section
7
“Echo Lake Foods Equity Interests” has the meaning set forth in the Recitals.
“Echo Lake Foods Group” means, collectively, Echo Lake Foods, Huntington and Xenitel.
“Echo Lake Foods Transferor” has the meaning set forth in Section
limited liability company into which Echo Lake Foods, Inc. is converted pursuant to Section
,
the form of which is attached hereto as Exhibit E.
“Echo Lake Properties” has the meaning set forth in the Preamble.
“Echo Lake Properties Group” means, collectively, Huntington 435 and ELT.
“▇▇▇▇▇ Properties” has the meaning set forth in the Preamble.
“▇▇▇▇▇ Properties Group” means, collectively, Blue Grass and Yorkville.
“ELT” has the meaning set forth in the Preamble.
“ELT Contribution” has the meaning set forth in Section
“ELT Equity Interests” has the meaning set forth in the Recitals.
“Employee Plan” means each “employee benefit plan” (as defined in Section 3(3) of ERISA,
whether or not subject to ERISA), and each other compensation or benefit plan, contract, program, policy,
arrangement or agreement, including any severance, termination, retention, change in control, incentive or
bonus, deferred compensation, pension, profit sharing, retirement, welfare, unemployment benefits, sick
leave, vacation pay, paid time off, disability, hospitalization, health, medical, life insurance, fringe benefit,
tax gross-up, tuition reimbursement, flexible spending account or scholarship, stock purchase, stock option,
equity or equity-based incentive compensation, employment, consulting or similar plan, contract, program,
policy, arrangement or agreement, in each case, whether written or unwritten, and that is (a) sponsored or
maintained by any member of the Company Group or to which any member of the Company Group is a
party, (b) to which any member of the Company Group is required to contribute, (c) in which any employee
or service provider of any member of the Company Group participates related to their services provided to
such member of the Company Group or (d) with respect to which any member of the Company Group has
any liability or obligation (including contingent liability).
“Environmental Laws” means all Laws pertaining to the prevention of pollution and protection of
health and safety (to the extent relating to Hazardous Materials), the environment or natural resources or
relating to the use, generation, management, manufacture, processing, treatment, storage, transportation,
remediation, cleanup, handling, disposal or Release or threatened Release of, or exposure to, Hazardous
Materials currently in effect in any and all jurisdictions in which the Company Group’s facilities are located
or in which its operations are conducted, including the Clean Air Act, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the Federal Water Pollution Control Act, the Resource
Conservation and Recovery Act of 1976, the Safe Drinking Water Act, the Toxic Substances Control Act,
the Hazardous Materials Transportation Act, the Emergency Planning and Community Right-to-Know Act,
the Oil Pollution Act, the Occupational Safety and Health Act and any state or local Laws similar thereto
and any regulations promulgated under any of the foregoing Laws.
“EPIA” has the meaning set forth in Section
“Equity Interests” has the meaning set forth in Section
8
“Equity Purchase” has the meaning set forth in Section
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that together with any
member of the Company Group would be treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.
“Escrow Agent” means Citibank, N.A., as the Escrow Agent under the Escrow Agreement.
“Escrow Agreement” means the Escrow Agreement, to be entered into at the Closing by and among
the Sellers’ Representative, Buyer and the Escrow Agent, in a form mutually agreeable to the parties thereto.
“Estimated Adjusted Equity Price” means an amount with respect to the Company Group (but
calculated separately based on the subtotals and Purchase Price allocations for each Transferor Group) equal
to (a) the Purchase Price,
minus
value of the Estimated Adjustment Amount,
plus
(c) if the Estimated Adjustment Amount is a positive
number, the Estimated Adjustment Amount,
minus
minus
Indemnification Escrow Amount.
“Estimated Adjustment Amount” means an amount with respect to the Company Group (but
calculated separately based on the subtotals for each Transferor Group) equal to, without duplication, (a) the
Estimated Cash,
minus
minus
(c) the Estimated Indebtedness,
plus
minus
excess, if any, of the Target Working Capital over the Estimated Working Capital,
minus
(f) the Estimated
Tax Liability Amount.
“Estimated Cash” means the estimated Closing Cash, as set forth on the Closing Certificate delivered
to Buyer pursuant to Section
“Estimated Company Group Expenses” means the estimated Company Group Expenses, as set forth
in the Closing Certificate delivered to Buyer pursuant to Section
“Estimated Indebtedness” means the estimated Closing Indebtedness, as set forth on the Closing
Certificate delivered to Buyer pursuant to Section
“Estimated Tax Liability Amount” means the estimated Tax Liability Amount, as set forth in the
Closing Certificate delivered to Buyer pursuant to Section
“Estimated Working Capital” means the estimated Working Capital of the Company Group (but
calculated separately based on the subtotals for each Transferor Group), as set forth on the Closing
Certificate delivered to Buyer pursuant to Section
“Excluded Asset Assignment Agreement” means the Excluded Asset Assignment Agreement to be
entered into between Echo Lake Foods and Echo Lake Foods Transferor to distribute the Excluded Assets
from Echo Lake Foods to Echo Lake Foods Transferor, which instrument shall be substantially in the form
set forth on Exhibit D.
“Excluded Assets” means those assets, properties, claims, rights and interests set forth on
Schedule
2.
“Excluded Assets Distribution” has the meaning set forth in Section
9
“Excluded Companies” means, collectively, The ▇▇▇▇▇ Company, LLC, a Wisconsin limited liability
company, Elkin Operations, Inc., a Wisconsin corporation, Ailco Equipment Finance Group, Inc., a
Wisconsin corporation, Aluma Tec Industries, Inc., a Wisconsin corporation, Seller Tank Truck Services,
Inc., a Wisconsin corporation.
“Existing Credit Facility” means that certain Credit Agreement, dated as of July 31, 2018, by and
among Associated Bank, National Association, as administrative agent, Echo Lake Foods and the lenders
party thereto, as the same has been amended from time to time.
“F Reorganization” has the meaning set forth in Section
“FCPA” has the meaning set forth in Section
“FDA” means the U.S. Food and Drug Administration.
“FDCA” has the meaning set forth in Section
“Final Adjusted Equity Price” means an amount with respect to the Company Group (but calculated
separately based on the subtotals and Purchase Price allocations for each Transferor Group) equal to (a) the
Purchase Price,
minus
Final Adjustment Amount,
plus
(c) if the Final Adjustment Amount is a positive number, the Final
Adjustment Amount,
minus
minus
Amount.
“Final Adjustment Amount” means an amount with respect to the Company Group (but calculated
separately based on the subtotals for each Transferor Group) equal to, without duplication, (a) Closing Cash,
minus
minus
plus
Closing Working Capital over the Target Working Capital,
minus
Capital over the Closing Working Capital,
minus
“Final Adjustment Amount Determination Date” has the meaning set forth in Section
“Final Closing Certificate” has the meaning set forth in Section
“Financial Statements” has the meaning set forth in Section
“Food and Beverage Laws” has the meaning set forth in Section
“Fraud” means, with respect to any Party, an actual and intentional fraud involving a knowing and
intentional misrepresentation or a knowing and intentional omission, in each case, of a material fact with
respect to the applicable representations and warranties made by such Party in Article
Agreement or any certificate delivered pursuant to this Agreement, made with the specific intent to deceive
or mislead (as opposed to any fraud claim based on constructive knowledge, negligent misrepresentation or
omission or a similar theory).
“FSIS” has the meaning set forth in Section
“FTC” means the Federal Trade Commission.
“FTCA” has the meaning set forth in Section
“GAAP” means generally accepted accounting principles in effect from time to time in the United
States of America.
10
“Governmental Authority” means any international organization or agency, any U.S. and non-U.S.
national, federal, state, county, city, local, municipal and any other political subdivision or government, any
governmental, regulatory or quasi-governmental authority of any nature (including any agency, department,
commission, board, branch, self-regulatory organization, court, official, entity, arbitrator, bureau or
instrumentality) and any body exercising, or entitled to exercise any administrative, executive, judicial,
legislative, police, regulatory or Tax authority or power of any nature.
“Hazardous Material” means any substance, material or waste that is listed, classified or regulated
as hazardous or toxic or as a pollutant or contaminant pursuant to any Environmental Law, or that is
otherwise regulated by or for which liability or standards of care may be imposed under Environmental
Laws, including petroleum or petroleum products, radioactive materials, asbestos or asbestos-containing
material, lead or lead-containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls
and per- and polyfluoroalkyl substances.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“Huntington” has the meaning set forth in the Preamble.
“Huntington 435” has the meaning set forth in the Preamble.
“Huntington 435 Equity Interests” has the meaning set forth in the Recitals.
“Improvements” has the meaning set forth in Section
“Inactive Company Group Employee” has the meaning set forth in Section
“Income Tax” means the United States federal income Tax and any United States state or local or
non-U.S. net income Tax or any franchise or business profits Tax incurred in lieu of a Tax on net income
(but excluding, for the avoidance of doubt, any sales, use, real or personal property, transfer or similar
Taxes).
“Indebtedness” means, with respect to the Company Group (but calculated separately based on the
subtotals and Purchase Price allocations for each Transferor Group), at any date, without duplication, (a) all
obligations of the Company Group for borrowed money (or issued in substitution for or exchange of
indebtedness for borrowed money), whether short-term or long-term, and whether secured or unsecured,
(b) all obligations of the Company Group evidenced by bonds, debentures, notes or similar instruments and
all reimbursement obligations of the Company Group under or pursuant to letters of credit or other similar
instruments or arrangements by which the Company Group assures a creditor against loss, in each case,
solely to the extent drawn, (c) all obligations of the Company Group upon which interest charges are
customarily paid (other than any Taxes or any trade payables incurred in the ordinary course of business),
(d) all obligations of the Company Group under conditional sale or other title retention agreements relating
to property or assets purchased by the Company Group, (e) all guarantees, whether direct or indirect, by the
Company Group of Indebtedness of others or Indebtedness of any other Person secured by any assets of the
Company Group, (f) all Capital Lease Obligations of the Company Group, (g) any “applicable employment
taxes” (as defined in Section 2302(d)(1) of the CARES Act) that the Company Group has elected to defer
in respect of a Pre-Closing Tax Period pursuant to Section 2302 of the CARES Act, in each case, to the
extent not subsequently paid prior to the Closing; (h) all obligations in respect of (i) non-qualified deferred
compensation, post-retirement welfare benefits and/or pensions under any Employee Plan, in each case, to
the extent unfunded or underfunded, (ii) accrued deferred compensation and gain and profit sharing
obligations, (iii) accrued severance expense or similar accrued exit payments or termination indemnities
payable to any current or former employee, director, officer or independent contractor of the Company
Group (but excluding for clarity, any such expenses, payments and indemnities that can be triggered solely
11
due to an involuntary termination or constructive termination (e.g., good reason event) of employment by
Buyer, or any member of the Company Group after Closing), (i) the employer-side employment Taxes,
social or national insurance contributions or similar obligations payable with respect to the items described
in the foregoing clause (h), (j) any dividends or distributions payable by the Company Group on or after the
Calculation Time to any pre-Closing holder of Equity Interests, (k) any payables between the Company
Group, on the one hand, and any Seller or any Affiliate of any Seller, on the other hand (to the extent not
included in Company Group Expenses); (l) all obligations of the Company Group for accrued but unpaid
interest, unpaid prepayment or redemption penalties, overdrafts, premiums or payments and unpaid fees and
expenses that are payable in connection with retirement or prepayment of any of the foregoing obligations
as if such obligations were repaid at the Closing, (m) all outstanding legal expense obligations related to
litigation settled on or prior to Closing, including obligations related to unpaid legal settlements and unpaid
legal fees, in each case, whether or not accrued, (n) all accounts receivable credit balances of the Company
Group, (o) all remaining obligations related to fiscal year 2024 audit fees, (p) all obligations under forward
currency exchanges, interest rate protection agreements, swap agreements and hedging arrangements, in
each case, at the value due assuming the obligation is terminated or settled at the Closing, and (q) all
obligations of any deferred or unpaid purchase price of property, business, asset, equipment, service,
purchase price settlement or adjustment obligations, and contingency payments (other than accounts payable
included in the calculation of Working Capital), in each case, to the maximum amount payable.
Indebtedness shall not include (1) any amounts reflected in Working Capital or Company Group Expenses,
(2) any amounts available under any debt instrument to the extent undrawn or uncalled, (3) trade payables
incurred in the ordinary course of business, (4) any amounts reflected in the Tax Liability Amount, or (5) any
payables or indebtedness between a member of the Company Group, on the one hand, and another member
of the Company Group, on the other hand.
“Indemnification Escrow Account” means a bank account designated in writing by the Escrow Agent
for the purpose of holding and administering the Indemnification Escrow Amount.
“Indemnification Escrow Amount” means an amount equal to $5,000,000, as established in
accordance with Section
, together with any interest or other earnings accrued thereon while held
in the Indemnification Escrow Account; provided, however, that a portion of the Indemnification Escrow
Amount may be released on the terms and subject to the conditions set forth in accordance with Section
“Indemnified Taxes” means, without duplication, any of the following: (a) all Taxes of any Seller,
Securityholder or their respective Affiliates imposed on any member of the Company Group, including any
Taxes of any Seller, Securityholder or their respective Affiliates resulting from the Pre-Closing
Restructuring; (b) all Taxes imposed on any member of the Company Group that are incurred for a Pre-
Closing Tax Period; (c) all Taxes for which any member of the Company Group is held liable by reason of
being included in any “affiliated group” (as defined in Section 1504(a) of the Code without regard to the
limitations contained in Section 1504(b) of the Code) or any other group of corporations filing Tax Returns
on a combined, consolidated, unitary or similar basis that, at any time on or before the Closing Date, includes
or has included any member of the Company Group or any direct or indirect predecessor of any member of
the Company Group; (d) all Taxes of any Person (other than the members of the Company Group) for which
any member of the Company Group is liable as a transferee or successor, by contract, or otherwise, which
Taxes are attributable to an event or transaction occurring prior to the Closing, (e) all Transfer Taxes for
which Sellers are liable pursuant to Section
, and (f) all Taxes attributable to Echo Lake Foods not
qualifying as an “S corporation” for purposes of Subchapter S of the Code and Huntington and Xenitel each
not qualifying as a “qualified subchapter S subsidiary” as defined under Section 1361(b)(3)(B) of the Code
(and, in each case, as of the respective Qualification Dates set forth in Section
; provided, however,
that “Indemnified Taxes” shall not include any Taxes included as a liability for purposes of determining Tax
Liability Amount, Working Capital, Company Group Expenses, or Indebtedness, in each case, as finally
determined under this Agreement.
12
“Independent Accountant” means Grant Thornton; provided, however, that if Grant Thornton is
unable or unwilling to accept such engagement, then the Independent Accountant will be a nationally
recognized independent accounting, financial advisory or boutique specialty firm with an active practice
area focused on post-mergers and acquisitions purchase price dispute resolution that is reasonably
acceptable to both the Sellers and Buyer.
“Intellectual Property” means all Patents, Copyrights, Marks and Trade Secrets, including the right
to sue or otherwise recover for any and all past, present and future infringements and misappropriations
thereof.
“Intellectual Property Licenses” means (a) licenses or sublicenses of Intellectual Property granted
by any member of the Company Group to any third party (excluding non-exclusive licenses and sublicenses
of Intellectual Property entered into in the ordinary course of business); (b) licenses or sublicenses of
Intellectual Property or Software granted by any third party to any member of the Company Group (other
than licenses for Off-the-Shelf Software and Open Source Licenses) and (c) trademark co-existence or
consent agreements.
“Intended Tax Treatment” has the meaning set forth in Section
“IRS” means the Internal Revenue Service.
“Key Customers” has the meaning set forth in Section
“Key Suppliers” has the meaning set forth in Section
“Knowledge” and any derivations thereof means, the actual knowledge, after reasonable inquiry of
those employees reporting directly to such Persons who would reasonably be expected to have knowledge
of the fact, event or circumstance in question that is in their area of responsibility of (a) with respect to the
Company Group or any Transferor, the individuals identified on Schedule
3(a); (b) with respect to
Buyer, the individuals identified on Schedule
3(b); and (c) with respect to any Voting Securityholder,
such Voting Securityholder.
“Law” means any U.S. federal, state, county, city and any non-U.S. or other government statute, law,
regulation, rule, Order, ordinance, principle of common law or code and any permit or license granted by or
under the authority of any of the foregoing.
“Leased Real Property” means the real property that is leased, subleased, licensed or occupied by
any member of the Company Group from another Person.
“Lien” means with respect to any property or asset, any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, license, charge, easement, encumbrance or security interest in respect of such
property or asset.
“Losses” means, without duplication, losses, damages, claims, reasonable and documented costs and
expenses, interest, awards, judgments and penalties (including reasonable and documented attorneys’ and
consultants’ fees and expenses and other reasonable costs of defending, investigating or settling claims)
suffered or incurred by an indemnified party.
“Marks” means all trademarks, service marks, trade dress, trade names, logos, slogans, corporate
names, fictitious and other business names used in connection with the conduct of an entity’s business to
identify any product, service, business or company, and registrations and applications for registration and
13
any renewals or extensions thereof, together in each case with the goodwill of the business connected with
the use of or symbolized by each of the foregoing.
“Material Adverse Effect” means any change, event, circumstance, occurrence, state of facts,
development or effect that, individually or in the aggregate, (a) has, or could reasonably be expected to have,
a material adverse effect on the business, assets, results of operations or financial condition of the Company
Group, taken as a whole or (b) prevents or materially impairs, or could reasonably be expected to prevent
or materially impair, the consummation of the Transactions; provided, however, that, with respect to
clause (a), changes, events, circumstances, occurrences, facts, developments or effects relating to the
following shall not be taken into account in determining whether a Material Adverse Effect has occurred:
(i) changes in economic, financial, regulatory or political conditions or events or the financing, banking,
currency or capital markets; (ii) changes after the date hereof in Laws or Orders or interpretations thereof
or changes after the date hereof in accounting rules (including GAAP) or any interpretation thereof;
(iii) changes affecting generally any of the industries (or segments thereof), markets or geographical areas
in which the Company Group conducts the Business; (iv) any disaster, calamity, epidemic, pandemic,
weather condition, military action, armed hostilities or war (regardless of whether declared) or any
escalation or worsening thereof, regardless of whether occurring or commenced before or after the date of
this Agreement; (v) any national or international political, labor or social conditions, (vi) any failure by the
Company Group to meet any projections, forecasts, estimates or financial analyses (provided, however, that
the underlying cause or causes of such failure may constitute a Material Adverse Effect); (vii) any actions
taken or omitted to be taken by, with the express written consent of, or at the express request of, Buyer or
any of its Affiliates (other than compliance with Section
; or (viii) the negotiation or execution of this
Agreement of the announcement or existence thereof, the identity of Buyer or its Affiliates or the compliance
by any Person with any term of any agreement, certificate or document in connection with the Transactions
(including, in each case, the impact thereof on relationships, contractual or otherwise, with, or actual or
potential loss or impairment of, customers, suppliers, vendors, partners, employees or Governmental
Authorities); provided, however, that, in the case of the foregoing clauses (i), (ii), (iii), (iv) and (v), any such
change, event, circumstance, occurrence, state of facts, development or effect shall not be deemed to be
excluded solely to the extent it has a materially disproportionate adverse effect on the results of operations
or financial condition of the Company Group, taken as a whole, as compared to other Persons similarly
situated in the same industry. For the avoidance of doubt, a “Material Adverse Effect” will be measured
against only past performance of the Company Group and not against any forward-looking statements,
projections or forecasts of the Company Group or any other Person.
“Material Contracts” has the meaning set forth in Section
“Maximum Premium” has the meaning set forth in Section
“Nonparty Affiliates” has the meaning set forth in Section
“Objection Notice” has the meaning set forth in Section
“Off-the-Shelf Software” means non-exclusive licenses for software that is (a) licensed under
“shrink-wrap” or “click-through” contracts or agreements; (b) generally commercially available; and
(c) licensed for a fee of no more than $100,000 per year.
“Open Source License” means non-exclusive licenses for software that (a) licenses software or other
material as “free software” or “open source software” or (b) is, or is substantially similar to, a license now
or in the future approved by the Open Source Initiative and listed at http://www.opensource.org/licenses,
which licenses include all versions of the GNU GPL, the GNU LGPL, the GNU Affero GPL, the MIT
license, the Eclipse Public License, the Common Public License, the CDDL, the Mozilla Public License,
the Academic Free License, the BSD license and the Apache License.
14
“Order” means any judgment, injunction, order, ruling, award, writ or decree that is issued by a
Governmental Authority.
“Organizational Documents” means any charter, certificate of incorporation, certificate of formation,
articles of association, bylaws, limited liability company agreement, operating agreement, partnership
agreement or similar formation or governing documents and instruments of (a) each member of the
Company Group and (b) the respective Transferors thereof.
“Other Indemnitors” has the meaning set forth in Section
“Outside Date” has the meaning set forth in Section
“Owned Real Property” means all real property that is owned by any member of the Company
Group.
“Party” or “Parties” has the meaning set forth in the Preamble.
“Passthrough Return” has the meaning set forth in Section
“Patents” means all patents and patent applications of any kind, including design patents and design
registrations, utility models, gebrauchsmuster, patentable inventions and invention disclosures and all
reissues, divisionals, continuations, continuations-in-part, provisionals, reexaminations, substitutes and
extensions of any of the foregoing.
“PCI DSS” has the meaning set forth in Section
“Permits” has the meaning set forth in Section
“Permitted Equity Interest Encumbrances” means Liens arising pursuant to applicable federal, state
and provincial securities Laws, Liens arising as a result of actions taken by Buyer or any of its Affiliates,
and Liens imposed by the Organizational Documents.
“Permitted Liens” means (a) Liens for utilities, Taxes, assessments or other similar governmental
charges that are not delinquent, that may hereafter be paid without penalty, or that are being contested in
good faith by appropriate proceedings and for which appropriate reserves have been established in
accordance with GAAP, (b) any construction, mechanics’, carriers’, workmen’s, repairmen’s,
materialmen’s, warehousemen’s and other similar Liens arising or incurred in the ordinary course of
business, (c) non-exclusive licenses of Intellectual Property entered into in the ordinary course of business,
(d) Liens under the Existing Credit Facility, to the extent paid off in full at the Closing, (e) Liens arising in
the ordinary course of business that are immaterial, individually or in the aggregate, (f) Liens reflected or
reserved against or otherwise disclosed on the balance sheets included in the Financial Statements or notes
thereto or securing liabilities reflected in such balance sheets or notes thereto; (g) Liens arising under or
created by this Agreement or any of the Ancillary Agreements; (h) zoning, entitlement, building codes and
other land use Laws regulating the use or occupancy of real property or the activities conducted thereon;
(i) Liens arising under workmen’s compensation, unemployment insurance, social security, retirement and
similar Laws; (j) pledges and deposits to secure the performance of bids, trade Contracts, leases, surety and
appeal bonds, performance bonds and other obligations of a similar nature, in each case in the ordinary
course of business; and (k) Liens listed on Schedule
4.
“Person” means an individual, a corporation, a partnership, a limited liability company, an
association, a trust, a joint stock company, a joint venture, an unincorporated organization, a business entity
or any Governmental Authority.
15
“Personal Data” means any information defined as “personal data,” “personally identifiable
information,” “individually identifiable health information,” or “personal information” or similar or
comparable term under any Privacy Law.
“Pre-Closing Covenant” has the meaning set forth in Section
“Pre-Closing Restructuring” has the meaning set forth in Section
“Pre-Closing Tax Period” means (a) for purposes of Income Taxes, any Tax period that ends on or
before the Closing Date, and with respect to any Straddle Period, the portion of such Straddle Period ending
on and including the Closing Date, and (b) for purposes of non-Income Taxes, any Tax period that ends on
or before the Calculation Time, and with respect to any Straddle Period, the portion of such Straddle Period
ending on the Calculation Time.
“Privacy Laws” means all Laws relating to the protection or Processing of Personal Data that are
applicable to the Company Group.
“Pro Rata Share” means, with respect to each Transferor, the applicable percentage as set forth in
the Closing Statement of any additional payments or liabilities to which such Transferor is entitled or liable
pursuant to this Agreement following the Closing Date.
“Proceedings” has the meaning set forth in Section
“Processing” means any operation performed on Personal Data, including the collection, creation,
receipt, access, use, handling, compilation, analysis, monitoring, maintenance, retention, storage,
transmission, transfer, protection, disclosure, distribution or disposal of Personal Data.
“Property Taxes” has the meaning set forth in Section
“Proposed Allocation” has the meaning set forth in Section
“PTE Election” means any election under applicable state or local Income Tax Law made by or with
respect to any member of the Company Group pursuant to which such member of the Company Group will
incur or otherwise be liable for any state or local Income Tax liability under applicable state or local Law
that would have been borne (in whole or in part) by the direct or indirect equity owners of such member of
the Company Group had no such election been made (including any “Specified Income Tax Payment” as
defined in IRS Notice 2020-75).
“Purchase Price” means an amount equal to $258,080,663.
“Purchased Equity Interests” has the meaning set forth in the Recitals.
“QSub Election” has the meaning set forth in Section
“Qualification Dates” has the meaning set forth in Section
“Qualifying Order” has the meaning set forth in Section
“R&W Insurance Policy” means any Buyer-Side Representations and Warranties Insurance Policy
obtained by Buyer, a copy of which is attached hereto as Schedule C.
“Registered Intellectual Property” has the meaning set forth in Section
16
“Reinhart” has the meaning set forth in Section
“Related Parties” has the meaning set forth in Section
“Release” means any release, spill, emission, leaking, pumping, pouring, emptying, escape,
injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials
into or through the indoor or outdoor environment or into or out of any property, including the movement
of Hazardous Materials through or in the air, soil, sediment, surface water or groundwater.
“Restricted Party” has the meaning set forth in Section
“Restricted Territory” has the meaning set forth in Section
“Sanctioned Country” means a country that is, at the then-relevant time, the target of comprehensive
territory-based applicable Sanctions (which, as of the date of this Agreement, includes the so-called People’s
Republic of Luhansk, and the so-called People’s Republic of Donetsk, and the Crimea regions of Ukraine,
Cuba, Iran, North Korea and Syria).
“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or
enforced from time to time by (a) the U.S. government, including those administered by OFAC, the U.S.
Department of State, the USDA and the FDA, (b) the United Nations Security Council, the European Union,
any European Union member state or Her Majesty’s Treasury of the United Kingdom, or (c) any other
applicable economic or financial sanctions or trade embargoes imposed, administered, or enforced by any
other country, except to the extent inconsistent with U.S. Law.
“Schedule” means any disclosure schedule delivered in connection with the execution of this
Agreement.
“Securities Act” has the meaning set forth in Section
“Security Incident” has the meaning set forth in Section
“Securityholders” means the holders, collectively, of 100% of the issued and outstanding Equity
Interests of Echo Lake Foods, Echo Lake Properties, ELT and Elkin Properties.
“Seller Returns” has the meaning set forth in Section
“Seller Tax Claim” has the meaning set forth in Section
“Sellers” has the meaning set forth in the Preamble.
“Sellers’ Representative” has the meaning set forth in Section
“Software” means computer software programs, including tool sets, compilers, higher level
“proprietary” languages and related documentation, whether in source code, object code or human readable
form; provided, however, that Software does not include Off-the-Shelf Software.
“Specified Liabilities” has the meaning set forth in Section
“Specified Tax Refund” means the Kentucky sales and use Tax refund receivable by Echo Lake
Foods with respect to the 2018 through 2021 Tax period in an estimated amount equal to approximately
$900,000.
17
“Statement Date” has the meaning set forth in Section
“Straddle Period” means (a) for purposes of Income Taxes, any Tax period that includes (but does
not end on) the Closing Date, and (b) for purposes of non-Income Taxes, any Tax period that includes (but
does not end on) the Calculation Time.
“Submission” has the meaning set forth in Section
“Submission Deadline” has the meaning set forth in Section
“Subsidiary” means, with respect to a specified entity, (a) in the case of a corporation or limited
liability company, 25% or more of the capital stock or membership interests, as applicable, the holders of
which are regularly entitled to vote for the election of directors or managers, is owned directly or indirectly
by such entity, or (b) in the case of a trust, partnership or other entity, a trust, partnership or entity of which
such specified entity owns directly or indirectly 25% or more of the beneficial interest or equity.
“Target Working Capital” means an amount equal to $36,000,000.
“Tax Claim” has the meaning set forth in Section
“Tax Liability Amount” means with respect to the Company Group (but calculated separately for
each Transferor Group), without duplication and determined as of the Closing Date, the amount of any
unpaid Income Taxes of any member of the Company Group itself (whether or not then due) for any Pre-
Closing Tax Period and solely to the extent such unpaid Income Taxes relate to Tax Returns of the Company
Group that have not yet come due and been filed as of the Closing Date or a Tax Return with respect to such
Income Taxes has been filed but the amount shown as due thereon has not been paid as of the Closing Date
(which amount shall not be an amount less than zero in any jurisdiction or in the aggregate), which amount
shall be calculated: (i) by calculating any Income Taxes for Straddle Periods in accordance with
Section
treating any agreed or required adjustments initiated prior to Closing in respect of a Tax period (or portion
thereof) ending after the Closing Date pursuant to Section 481 of the Code (or any similar provision of state,
local or non-U.S. Law) for any Pre-Closing Tax Period as having occurred in a Pre-Closing Tax Period;
(iv) by using the Company Group’s past practices to the extent permitted by applicable Law under a “more
likely than not” (or higher) level of authority; (v) by taking into account any applicable prepayments or
estimated payments of Income Taxes by the Company Group on or before the Closing Date; (vi) by taking
into account any Transaction Tax Deductions to the extent deductible by the applicable member of the
Company Group under applicable Law under a “more likely than not” (or higher) level of authority to the
extent they will actually reduce the relevant unpaid Income Tax liability as a matter of applicable Law; and
(vii) by excluding all deferred Tax liabilities and deferred Tax assets; provided, however, that the Tax
Liability Amount shall not include any Taxes included as a liability for purposes of determining Working
Capital, Company Group Expenses, or Indebtedness, in each case, as finally determined under this
Agreement.
“Tax Refund” has the meaning set forth in Section
“Tax Return” means any report, statement, form, return, election, schedule, claim for refund or other
document or information relating to Taxes or required to be supplied to a Governmental Authority in
connection with Taxes, including any amendment or supplement thereto.
“Taxes” means any and all U.S. federal, state, local or non-U.S. income, franchise, gross receipts,
alternative or add-on minimum, ad valorem, property, sales, use, value added, excise, stamp, withholding,
payroll, employment, unemployment, occupation, license, excise or windfall profit tax or any customs duty
18
and any other tax, levy or other similar assessment by a Governmental Authority or other tax of any kind or
any charge of any kind in the nature of (or similar to) taxes whatsoever imposed by a Governmental
Authority, together with any interest, fine, penalty or other additional amount imposed by a Governmental
Authority with respect thereto.
“Third Party Claim” has the meaning set forth in Section
“Trade Control Laws” means all applicable trade, export control, import and antiboycott Laws and
regulations imposed, administered or enforced by the U.S. government, including the Arms Export Control
Act (22 U.S.C. § 1778), the International Emergency Economic Powers Act (50 U.S.C. §§ 1701–1706),
Section 999 of the Internal Revenue Code, the U.S. customs laws at Title 19 of the U.S. Code, the Export
Control Reform Act of 2018 (50 U.S.C. §§ 4801-4861), the International Traffic in Arms Regulations (22
C.F.R. Parts 120–130), the Export Administration Regulations (15 C.F.R. Parts 730-774), the U.S. customs
regulations at 19 C.F.R. Chapter 1 and the Foreign Trade Regulations (15 C.F.R. Part 30).
“Trade Secrets” means all trade secrets, know-how and confidential or proprietary information,
including ideas, research in progress, algorithms, data, designs, processes, formulae, drawings, schematics,
blueprints, flow charts, models, strategies, prototypes, customer lists, supplier lists, mailing lists, business
plans and techniques that derive independent economic value, actual or potential, from not being generally
known or readily ascertainable by others, including all rights to limit the use or disclosure thereof by any
Person.
“Transaction Tax Deduction” means all Tax deductions or losses of any member of the Company
Group resulting from the payment of the following amounts related to the Transactions, without duplication:
(a) any Company Group Expenses, or (b) any fees, expenses, interest (including unamortized original issue
discount and other amounts treated as interest for federal Income Tax purposes), prepayment premiums and
penalties paid or payable with respect to the prepayment of debt and the write-off or acceleration of the
amortization of deferred financing costs incurred by any member of the Company Group with respect to the
repayment or termination of Indebtedness.
“Transactions” means the Equity Purchase, the F Reorganization, the ELT Contribution and the other
transactions contemplated hereby and by the Ancillary Agreements.
“Transfer Taxes” has the meaning set forth in Section
“Transferor” means (a) with respect to the Echo Lake Foods Group, Echo Lake Foods Transferor,
(b) with respect to the Echo Lake Properties Group, Echo Lake Properties, and (c) with respect to the Elkin
Properties Group, Elkin Properties.
“Transferor Group” means each of the Echo Lake Foods Group, the Echo Lake Properties Group
and the Elkin Properties Group.
“Transition Services Agreement” means a Transition Services Agreement to be entered into between
the Excluded Companies and the Company Group to provide certain transition services to and/or from the
Company Group in a form mutually acceptable to Buyer and the Sellers’ Representative.
“Unaudited Financial Statements” has the meaning set forth in Section
“USDA” means the United States Department of Agriculture.
“Voting Securityholders” has the meaning set forth in the Preamble.
19
“WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and
similar applicable Laws related to plant closings, relocations, mass layoffs and employment losses.
“Working Capital” means, with respect to the Company Group (but calculated separately based on
the subtotals for each Transferor Group), (a) the current assets of the Company Group,
minus
liabilities of the Company Group, in each case, calculated as of the Calculation Time in accordance with the
Accounting Principles, as set forth in Exhibit A; provided, however, that Working Capital will not include
(i) Cash, (ii) Indebtedness, (iii) Company Group Expenses, (iv) the Tax Liability Amount, but for the
avoidance of doubt, will include any sales, use, real or personal property, payroll Taxes or any other non-
Income Taxes of the Company Group, (v) any deferred Tax assets and liabilities or (vi) any assets or
liabilities to the extent specifically excluded from such calculations as set forth in the Accounting Principles
on Exhibit A; provided further that Working Capital shall include any receivables between the Company
Group, on the one hand, and any Seller or any Affiliate of any Seller, on the other hand, to the extent arising
in the ordinary course of business and settled to an account owned by the Company Group within 30 days
of Closing. Solely for illustrative purposes, set forth on Schedule B-1 is a Reference Balance Sheet as if the
Closing had occurred on the Statement Date.
“Xenitel” has the meaning set forth in the Preamble.
“Yorkville” has the meaning set forth in the Preamble.
“Yorkville Equity Interests” has the meaning set forth in the Recitals.
1.2
Certain Interpretive Matters
. For purposes of this Agreement:
(a)
unless otherwise specified, all references to Sections, Articles, Schedules or Exhibits
are to the Sections, Articles, Schedules or Exhibits of or to this Agreement;
(b)
each term defined in this Agreement has the meaning assigned to it;
(c)
each accounting term not otherwise defined in this Agreement has the meaning
commonly applied to it in accordance with GAAP;
(d)
words in the singular include the plural and
vice versa,
expressly requires;
(e)
pronouns in masculine, feminine or neuter genders shall be construed to state and
include any other gender;
(f)
the words “herein,” “hereby,” “hereof,” “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular Section, Article or other
subdivision;
(g)
the term “including” means “including, without limitation,”;
(h)
with respect to the Company Group, the term “ordinary course of business” will be
deemed to refer to the conduct of the business of the Company Group in a manner consistent with
the ordinary course of business of the Company Group consistent with past practice;
(i)
all references to “$” or dollar amounts will be to the lawful currency of the United
States;
20
(j)
to the extent the term “day” or “days” is used, it will mean calendar days unless
otherwise specified;
(k)
all references to any federal, state, local or foreign Law shall be deemed to also refer
to all rules and regulations promulgated thereunder, unless the context requires otherwise;
(l)
except as otherwise specifically provided in this Agreement, any statute, rule or
regulation defined or referred to herein means such statute as from time to time amended,
supplemented or modified, including by succession of comparable successor statutes, rules or
regulations, as applicable;
(m)
unless the context otherwise requires, all references to any agreement or instrument
means such agreement or instrument as from time to time amended, modified or supplemented,
including by waiver or consent;
(n)
no provision of this Agreement will be interpreted in favor of, or against, any of the
Parties by reason of the extent to which any such Party or its counsel participated in the drafting
thereof or by reason of the extent to which any such provision is inconsistent with any prior draft
hereof or thereof;
(o)
any document or item will be deemed “delivered,” “provided” or “made available”
within the meaning of this Agreement if such document or item (i) is included in the electronic data
room or (ii) actually delivered or provided to Buyer or any of its representatives, including via email,
in each case, at least one day prior to the date of this Agreement;
(p)
in the computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including” and the words “to” and “until” mean “to but excluding”
and the word “through” means “to and including.” Whenever the last day for the exercise of any
privilege or the discharge of any duty hereunder shall fall upon a day that is not a Business Day, the
Party having such privilege or duty may exercise such privilege or discharge such duty on the next
succeeding day that is a Business Day; and
(q)
The Schedules constitute a part of this Agreement and are incorporated into this
Agreement for all purposes as if fully set forth herein. Any disclosure made in any Schedule to this
Agreement shall be deemed to be disclosures made with respect to all representations, warranties,
covenants and Schedules contained in this Agreement to the extent the applicability thereto is
reasonably apparent from the disclosure. Neither the specification of any dollar amount in any
representation, warranty or covenant contained in this Agreement nor the inclusion of any specific
item in any Schedule is intended to imply that such amount, or higher or lower amounts, or the item
so included or other items, are or are not material. No Party shall use the fact of setting forth of any
such amount or the inclusion of any such item in any dispute or controversy between the Parties as
to whether any obligation, item or matter not described herein or included in any Schedule is or is
not material or could have a Material Adverse Effect for purposes of this Agreement. Neither the
specification of any item or matter in any representation, warranty or covenant contained in this
Agreement nor the inclusion of such specific item in any Schedule is intended to imply that such
item or matter, or other items or matters, are or are not in the ordinary course of business. No Party
shall use the fact of the setting forth or the inclusion of any specific item or matter in any dispute or
controversy between the Parties as to whether any obligation, item or matter not described herein or
included in any Schedule is or is not in the ordinary course of business for purposes of this
Agreement. Matters included in the Schedules are not necessarily limited to matters required by this
Agreement to be included in the Schedules and such matters may be set forth for informational
purposes and do not necessarily include other matters of a similar nature. The information set forth
21
in this Agreement and the Schedules is disclosed solely for the purposes of this Agreement and no
information set forth herein or therein shall be deemed to be an admission by any Party to any third
party of any matter whatsoever, including any violation of any Law or breach of any Contract.
Nothing in the Schedules is intended to broaden the scope of any representation or warranty
contained in this Agreement or to create any covenant.
ARTICLE II
SALE AND PURCHASE OF SECURITIES; CLOSING
2.1
Pre-Closing Actions; Sale and Purchase of Equity
.
(a)
Prior to the Closing, the Sellers will take the following actions or cause the following
actions to be taken and deliver to Buyer for review and comment, five Business Days prior to
execution, drafts of documents reflecting the following steps:
(i)
At least two Business Days prior to the Closing, each Securityholder will
cause a new corporation, Meinerz Holdings, Inc., to be duly incorporated under the Laws of
the State of Wisconsin (such new corporation, the “Echo Lake Foods Transferor”);
(ii)
The Securityholders will contribute all issued and outstanding Echo Lake
Foods Equity Interests to Echo Lake Foods Transferor, in exchange for shares of capital stock
of the Echo Lake Foods Transferor, which the Securityholders will own in the same classes
and the same proportions in which they hold their Echo Lake Foods Equity Interests (the
“Echo Lake Foods Contribution”);
(iii)
On, and effective as of, the date of the Echo Lake Foods Contribution and as
an integrated “reorganization” effected in accordance with Section 368(a)(1)(F) of the Code
and Rev. Rul. 2008-18, Echo Lake Foods Transferor shall file a valid IRS Form 8869 electing
to treat Echo Lake Foods as a “qualified subchapter S subsidiary” (as defined in
Section 1361(b)(3)(B) of the Code) for federal and applicable state Income Tax purposes (the
“QSub Election”);
(iv)
Echo Lake Foods Transferor will join in the execution of this Agreement as
an additional Party hereto, with the rights and obligations set forth herein for Echo Lake
Foods Transferor as both a Transferor and a Seller;
(v)
At least one Business Day after the effective time for and mailing of the QSub
Election:
(A)
Echo Lake Foods will convert from a Wisconsin corporation to a
Delaware limited liability company;
(B)
Echo Lake Foods will cause Xenitel to convert from a Wisconsin
corporation to a Delaware limited liability company;
(C)
Echo Lake Foods will cause Huntington to convert from a Wisconsin
corporation to a Delaware limited liability company (such conversion, together with
the conversions set forth in subparagraphs
, the “Conversions” and,
together with the Echo Lake Foods Contribution and the QSub Election, the
“F Reorganization”).
22
(D)
Echo Lake Foods will distribute the Excluded Assets to Echo Lake
Foods Transferor pursuant to the Excluded Asset Assignment Agreement (the
“Excluded Assets Distribution”).
(E)
Except as expressly set forth herein or the context otherwise requires,
any reference to Echo Lake Foods, Xenitel or Huntington herein includes Echo Lake
Foods, Inc., Xenitel, Inc. and Echo Lake Huntington, Inc., respectively, as well as,
which such entity was converted.
(vi)
The Securityholders who own ELT Equity Interests will contribute all of the
ELT Equity Interests to Echo Lake Properties as a capital contribution for no consideration
(the “ELT Contribution” and, collectively with the F Reorganization and the Excluded Assets
Distribution, the “Pre-Closing Restructuring”).
(vii)
The Sellers will complete the Pre-Closing Restructuring no later than three
Business Days after all other conditions to Closing set forth in Section
(other than those that by their terms are to be satisfied at the Closing, but subject to the
satisfaction thereof); provided, however, that if the Sellers fail to meet that deadline solely
because of one or more Governmental Authority’s failure to process, or provide evidence of,
the Pre-Closing Restructuring within such time period, then such failure shall not be deemed
to be a breach of this covenant; provided further that the closing condition set forth in
Section
such Governmental Authority. Buyer and its representatives shall have the right, acting in
good faith, to review and comment upon the documentation used for the Pre-Closing
Restructuring. The Sellers’ Representative will review Buyer’s comments to the
documentation used for the Pre-Closing Restructuring in good faith and shall incorporate any
reasonable comments timely provided by Buyer with respect thereto.
(b)
At the Closing, upon the terms and subject to the conditions contained herein, the
following transactions will occur (collectively, the “Equity Purchase”).
(i)
The Sellers will cause Echo Lake Foods Transferor to sell to Buyer, free and clear of
any and all Liens (other than Permitted Equity Interest Encumbrances), and Buyer
agrees to purchase from Echo Lake Foods Transferor all of the issued and outstanding
Echo Lake Foods Equity Interests;
(ii)
The Sellers will cause Echo Lake Properties to sell to Buyer, free and clear of any
and all Liens (other than Permitted Equity Interest Encumbrances), and Buyer agrees
to purchase, all of the issued and outstanding Huntington 435 Equity Interests and
ELT Equity Interests; and
(iii)
The Sellers will cause Elkin Properties to sell to Buyer, free and clear of any and all
Liens (other than Permitted Equity Interest Encumbrances), and Buyer agrees to
purchase, all of the issued and outstanding Blue Grass Equity Interests and Yorkville
Equity Interests.
(c)
Each of the Sellers irrevocably waives any rights of first refusal, preemptive rights,
consent rights, voting rights, restrictions on transfer or other rights pertaining to such transactions,
whether arising under any Organizational Document of any such Person or otherwise. In connection
with the acquisition by Buyer of the Echo Lake Foods Equity Interests pursuant to Section
,
23
effective as of the Closing, Buyer (i) shall be admitted as a member of Echo Lake LLC and (ii) by
executing this Agreement agrees to be bound by the terms of the Echo Lake LLC Agreement.
2.2
Closing Date Payment
. At the Closing, upon the terms and subject to the conditions
contained herein, Buyer will pay or cause to be paid to Transferors an aggregate amount equal to the Closing
Date Payment, as follows:
(a)
to Echo Lake Foods Transferor, cash in an amount equal to the applicable portion of
the Estimated Adjusted Equity Price set forth on the Consideration Allocation Schedule for the Echo
Lake Foods Group, by wire transfer of immediately available funds to the account specified in
writing by the Sellers’ Representative at least three Business Days prior to the Closing;
(b)
to Echo Lake Properties, cash in an amount equal to the applicable portion of the
Estimated Adjusted Equity Price set forth on the Consideration Allocation Schedule for the Echo
Lake Properties Group, by wire transfer of immediately available funds to the account specified in
writing by the Sellers’ Representative at least three Business Days prior to the Closing;
(c)
to Elkin Properties, cash in an amount equal to the applicable portion of the Estimated
Adjusted Equity Price set forth on the Consideration Allocation Schedule for the Elkin Properties
Group, by wire transfer of immediately available funds to the account specified in writing by the
Sellers’ Representative at least three Business Days prior to the Closing (the amounts set forth in
subparagraphs
, collectively, the “Closing Date Payment”);
(d)
upon execution and delivery of the Escrow Agreement by the Sellers’ Representative,
Buyer and the Escrow Agent, to the Escrow Agent, by wire transfer of immediately available funds:
(i)
to the Adjustment Escrow Account, cash in an amount equal to the
Adjustment Escrow Amount to be held in the Adjustment Escrow Account; and
(ii)
to the Indemnification Escrow Account, cash in an amount equal to the
Indemnification Escrow Amount to be held in the Indemnification Escrow Account;
(e)
on behalf of the applicable Transferor and Company, to each holder of Indebtedness
of the Company Group from which Buyer shall have received a payoff letter (including under the
Existing Credit Facility), the amount of Indebtedness to be repaid as of the Closing Date pursuant to
such payoff letter (to the extent taken into account in determining the amount of the Closing Date
Payment); and
(f)
on behalf of the applicable Transferor and Company, to (i) each Person to whom non-
compensatory Company Group Expenses are owed, as set forth in the Closing Certificate and (ii) the
Company Group, for further distribution via the Company Group’s payroll to the recipients thereof
as set forth in the Closing Certificate, any compensatory Company Group Expenses, in each case,
the respective amounts set forth in the Closing Certificate and to the respective accounts specified
in writing by the Sellers’ Representative at least three Business Days prior to the Closing; and
(g)
The Closing Date Payment will be calculated in accordance with the terms of this
Agreement, and the payment of the Closing Date Payment pursuant to this Section
on the Closing Date by Buyer by wire transfer of immediately available funds to the respective
accounts of the Sellers specified in writing by the Sellers’ Representative at least three Business
Days prior to the Closing.
24
(h)
Notwithstanding anything to the contrary in this Agreement, subject to the actual
payment by or on behalf of Buyer of the amounts required to be paid to Transferors hereunder, Buyer
shall not have any liability to any Person for any payment made in accordance with the calculations
set forth in the Consideration Allocation Schedule or any other payment made to or for the benefit
of the Sellers pursuant to this Section
, based on the written instructions of the Sellers’
Representative (including with respect to any claim that the Consideration Allocation Schedule or
such other written instruction is incomplete or inaccurate).
2.3
Closing Certificate
. No later than three Business Days prior to the Closing Date, the Sellers’
Representative will deliver to Buyer (a) a certificate in substantially the form attached hereto as Exhibit B
(for the avoidance of doubt, the numbers in Exhibit B are for illustrative purposes only and will be revised
for the Closing in accordance with this Agreement) (the “Closing Certificate”) setting forth in reasonable
detail the Sellers’ Representative’s good faith estimate of: (i) the Estimated Adjustment Amount (and each
component thereof and including the subtotal for each Transferor Group), (ii) the Estimated Adjusted Equity
Price (including the subtotal for each Transferor Group) and (iii) the Closing Date Payment (including the
subtotal for each Transferor Group), in each case, as calculated in accordance with the applicable definitions
set forth in this Agreement and the Accounting Principles, and (b) a schedule in the form of, and consistent
with the formulae and methodologies underlying, the Consideration Allocation Schedule attached hereto as
Exhibit C (the “Consideration Allocation Schedule”) setting forth the applicable portion of the Estimated
Adjusted Equity Price payable to each Transferor. While the numbers reflected in Exhibit C are illustrative,
the formulae and methodologies underlying such numbers shall be the same formulae and methodologies
used in preparing the Consideration Allocation Schedule delivered pursuant to this Section
. Buyer and
its representatives shall have the right, acting in good faith, to review and comment upon the Estimated
Working Capital, the Estimated Indebtedness and the Estimated Cash and any other item set forth in the
Closing Certificate, and shall provide any such comments to the Sellers’ Representative no later than one
Business Day prior to the Closing Date and the Sellers shall promptly provide Buyer and its representatives
with reasonable access to the books, records, work papers, employees and accountants of the Company
Group and any information reasonably requested by Buyer and its representatives in connection with their
review of the Closing Certificate and the Sellers will cause the Company Group to reasonably cooperate in
connection with such review, and such review and access shall be subject to the Confidentiality Agreement.
The Sellers’ Representative will review Buyer’s comments to the Closing Certificate in good faith and may
incorporate such comments into the Closing Certificate in its reasonable judgment; provided, however, that
the Sellers’ Representative’s determination of the Closing Certificate, after giving good faith consideration
to any such comments, shall be conclusive for determining the Estimated Adjustment Amount, Estimated
Adjusted Equity Price, the Closing Date Payment and the Consideration Allocation Schedule. The Closing
Certificate, taking into account any adjustments made as a result of Buyer’s comments that the Sellers’
Representative incorporates therein, as well as any other adjustments mutually agreed by the Sellers’
Representative and Buyer prior to the Closing, shall be deemed the “Final Closing Certificate.” For the
avoidance of doubt, Buyer shall have no obligation to comment on the Closing Certificate. Buyer’s failure
to identify any questions or changes to the Closing Certificate shall not indicate any acceptance or waiver,
or otherwise affect Buyer’s right to prepare the Closing Statement in accordance with Section
2.4
Post-Closing Adjustment
.
(a)
As promptly as practicable, but in no event later than 90 days following the Closing,
Buyer will prepare in good faith and deliver to the Sellers’ Representative a written statement (the
“Closing Statement”) setting forth Buyer’s calculation of (i) Closing Cash, (ii) Closing Working
Capital, (iii) Closing Indebtedness, (iv) Company Group Expenses, (v) the Final Adjustment
Amount, (vi) the Closing Tax Liability Amount, and (vii) the Adjusted Equity Price calculated based
on items (i) through (vi) of this sentence. Each such calculation shall also include the subtotal of
such calculation for each Transferor Group. Buyer’s computations in the Closing Statement shall be
25
determined in a manner consistent with the applicable definitions set forth in this Agreement and the
Accounting Principles, and shall not reflect any changes in accounting policy or any other matter.
The Parties agree that (i) the adjustment contemplated by this Section
change between Estimated Cash and Closing Cash, the change between Estimated Working Capital
and Closing Working Capital, the change between Estimated Indebtedness and Closing Indebtedness
and Estimated Company Group Expenses and Company Group Expenses, and that such changes can
be measured only if each calculation is done in a manner consistent with Exhibit B, the Accounting
Principles and the applicable definitions in this Agreement, and (ii) Closing Cash, Closing Working
Capital, Closing Indebtedness and Company Group Expenses shall not include any item that is an
asset or liability of an Excluded Company, except, and solely to the extent, that such item was
included in such calculation in the Closing Certificate.
(b)
After receipt of the Closing Statement, the Sellers’ Representative and its
representatives will have reasonable access to, and be allowed to make copies of, all relevant books
and records (including accountant work papers, but subject to entering into customary access letters
as required by such accountant), and reasonable access to accountants and employees of Buyer and
the Company Group, in each case to the extent reasonably necessary to complete their review of the
Closing Statement and during normal business hours and in a manner that does not unreasonably
interfere with normal operations of the Company Group, and Buyer will cause the Company Group
to cooperate in good faith with the Sellers’ Representative and its representatives in connection with
such review.
(c)
If, within 45 days following the timely delivery of the Closing Statement by Buyer,
the Sellers’ Representative has not given Buyer notice of its objection to any item in the Closing
Statement or its calculation of the Final Adjustment Amount (an “Objection Notice”), then the
Closing Statement will be deemed final and binding on Buyer and the Sellers.
(d)
If the Sellers’ Representative timely delivers an Objection Notice, then Buyer and the
Sellers’ Representative will consult in good faith to resolve the disputed items set forth in the
Objection Notice and the Final Adjustment Amount. If all disputed items set forth in the Objection
Notice are resolved in writing by the Sellers’ Representative and Buyer, then the Closing Statement,
as revised to reflect the written resolution of the Sellers’ Representative and Buyer, will be final and
binding on the Parties. If the Sellers’ Representative and Buyer are unable to resolve the
disagreement with respect to any disputed item and the Final Adjustment Amount within 30 days
following delivery of the Objection Notice, the remaining disputed items may be submitted to the
Independent Accountant by either Buyer or the Sellers’ Representative to make a final determination
of the remaining disputed items and the Final Adjustment Amount in accordance with this
Section
. If the remaining disputed items are submitted to the Independent Accountant, Buyer
and the Sellers’ Representative will each execute a customary engagement letter with respect to the
engagement of the Independent Accountant. In resolving any disputed item, the Independent
Accountant shall (i) act as an expert and not as an arbitrator and (ii) limit its determination to each
unresolved disputed item. If resolution of the final disputed items and the Final Adjustment Amount
is submitted to the Independent Accountant, then (x) the Sellers’ Representative will deliver to the
Independent Accountant the relevant Objection Notice, (y) Buyer will deliver to the Independent
Accountant the Closing Statement and (z) each of Buyer and the Sellers’ Representative will submit
a supporting brief to the Independent Accountant, each within ten Business Days of retaining the
Independent Accountant (the “Submission Deadline”). Each of Buyer and the Sellers’
Representative may make an oral presentation to the Independent Accountant, in which case Buyer
or the Sellers’ Representative, as applicable, will provide prompt prior notice of such presentation
to the other Party, which Party will be entitled to attend or have a representative attend such
presentation (the supporting brief, Closing Statement or Objection Notice, as applicable, and any
26
material submitted at such oral presentation being referred to as a Party’s “Submission”). Neither
Party shall have any
ex parte
communications or meetings with the Independent Accountant without
the prior written consent of the other Party. Buyer and the Sellers’ Representative will instruct the
Independent Accountant (A) to determine whether Buyer’s Submission or the Sellers’
Representative’s Submission reflects the more accurate calculation of the Final Adjustment Amount
(
i.e.
, the Independent Accountant may select only the Final Adjustment Amount proposed by Buyer
or the Sellers’ Representative, as applicable, in the Closing Statement or Objection Notice, as
applicable, as further described in their respective Submissions, as the Final Adjustment Amount)
and (B) to deliver its written determination of the Final Adjustment Amount to Buyer and the Sellers’
Representative no later than the 20th day after the Submission Deadline. For the avoidance of doubt,
the reference in the immediately preceding sentence to a Party’s Submission of the Final Adjustment
Amount refers to the total Final Adjustment Amount for the Company Group, not the subtotal
calculation for an individual Transferor Group. The Independent Accountant will be given
reasonable access to all the records of Buyer and the Company Group to determine the Final
Adjustment Amount, and the Independent Accountant shall have the authority to make
determinations only in respect of those specific items that remain in dispute and all determinations
shall be based solely on the Submissions and not by independent review. The Final Adjustment
Amount determined by the Independent Accountant pursuant to this Section
binding and conclusive on all Parties, absent manifest error or fraud. The date that the Independent
Accountant notifies the Parties of the determination of the Final Adjustment Amount is referred to
in this Agreement as the “Final Adjustment Amount Determination Date.” The costs, fees and
expenses of the Independent Accountant shall be borne by the Party whose Submission is not chosen
by the Independent Accountant as the Final Adjustment Amount.
(i)
If, upon determination of the Final Adjustment Amount pursuant to this
Section
, the Final Adjusted Equity Price exceeds the Estimated Adjusted Equity Price as
determined at the Closing, then, no later than five Business Days following the Final
Adjustment Amount Determination Date, (A) Buyer and the Sellers’ Representative will
provide a joint written instruction to the Escrow Agent to release the amounts in the
Adjustment Escrow Account to the Sellers’ Representative, including any interest accrued
thereon, for disbursement to Transferors in accordance with the Consideration Allocation
Schedule and their respective Pro Rata Shares, and (B) Buyer will pay to the Sellers’
Representative, for the benefit of Transferors, by wire transfer of immediately available funds
to an account designated by the Sellers’ Representative (for disbursement to the Transferors
in accordance with their Pro Rata Shares), an amount equal to the amount that the Final
Adjusted Equity Price exceeds the Estimated Adjusted Equity Price.
(ii)
If, upon determination of the Final Adjustment Amount pursuant to this
Section
, the Estimated Adjusted Equity Price as determined at the Closing exceeds the
Final Adjusted Equity Price, then, no later than five Business Days following the Final
Adjustment Amount Determination Date, Buyer and the Sellers’ Representative will provide
a joint written instruction to the Escrow Agent to pay to Buyer, on behalf of the Sellers, by
wire transfer of immediately available funds from the Adjustment Escrow Account to the
account designated by Buyer, an amount equal to such excess, including any interest accrued
thereon. To the extent there remains a balance of the Adjustment Escrow Account after the
payment of such excess to Buyer, including any interest accrued thereon, then Buyer and the
Sellers’ Representative will provide a joint written instruction to the Escrow Agent to release
the remaining balance in the Adjustment Escrow Account to the Sellers’ Representative, for
disbursement to Transferors in accordance with their respective Pro Rata Shares. To the
extent the absolute value of the excess of the Estimated Adjusted Equity Price over the Final
Adjusted Equity Price exceeds the then-remaining funds in the Adjustment Escrow Account,
27
then, within five Business Days after the Final Adjustment Amount Determination Date, the
Sellers shall cause to be paid through the Sellers’ Representative to Buyer the amount of such
Adjustment Escrow Account shortfall, by wire transfer of immediately available funds to the
account designated by Buyer.
(iii)
For all Tax purposes, Buyer and the Sellers agree to treat any payment made
pursuant to this Section
required by Law.
2.5
Withholding Rights
. Buyer and any of its Affiliates will be entitled to deduct and withhold
from the consideration otherwise payable to any of Transferors pursuant to this Agreement such amounts as
are required to be deducted and withheld with respect to the making of such payment under applicable Laws
related to Taxes. Other than any deduction or withholding in respect of payments that are treated as
compensation for Tax purposes, before either Buyer or any of its Affiliates makes any such deduction or
withholding, Buyer shall promptly provide the Sellers’ Representative notice of the intention to make such
deduction or withholding and, in reasonable detail, the authority, basis, and method of calculation for the
proposed deduction or withholding (and Buyer shall use commercially reasonable efforts to provide such
notice at least five days prior to such deduction or withholding being made). Buyer shall cooperate in good
faith to avoid or minimize the need to make such deduction or withholding to the extent permitted by
applicable Law. To the extent that any such amounts are so deducted or withheld by any Person pursuant
to this Section
, such Person shall timely and properly remit such amounts to the appropriate
Governmental Authority in accordance with applicable Law, and any such amounts that are deducted or
withheld and remitted to the appropriate Governmental Authority will be treated for all purposes of this
Agreement as having been paid to such Person in respect of which such deduction or withholding was made.
2.6
Closing
. The closing of the Transactions (the “Closing”) will take place remotely via the
electronic exchange of documents and signature pages, as soon as practicable, but no later than the fifth
Business Day after the satisfaction or waiver of all of the conditions to the obligations of the Parties set forth
in
satisfaction thereof at the Closing and (b) the completion of the Pre-Closing Restructuring, but subject to
the completion thereof in accordance with Section
, or at such other time and place and on such other
date as the Sellers’ Representative and Buyer shall agree (the “Closing Date”).
2.7
Relationship Among the Sellers; Sellers’ Representative
.
(a)
Each Seller, by executing this Agreement and agreeing to the terms hereof, including
the consideration payable to such Seller hereunder, hereby appoints Scott Meinerz to serve as the
representative (the “Sellers’ Representative”) of such Seller to act, with full power of substitution,
as a representative by and for the benefit of the Sellers, as the exclusive agent and attorney-in-fact
to act on behalf of each Seller in connection with, and to facilitate the consummation of the
Transactions, the Escrow Agreement and any other Ancillary Agreement.
(b)
Without limiting the generality of Section
, the scope of the Sellers’
Representative’s appointment shall include: (i) acceptance of any payments hereunder or under the
Escrow Agreement or any other Ancillary Agreement (in each case, net of applicable withholding
Taxes) and delivery of wire instructions to Buyer in connection therewith; (ii) delivering any funds
hereunder or under the Escrow Agreement or any other Ancillary Agreement; (iii) determining
whether the conditions to closing in
including waiving any such condition if the Sellers’ Representative, in the Sellers’ Representative’s
sole and absolute discretion, determines that such waiver is appropriate; (iv) taking any action that
may be necessary or desirable, as determined by the Sellers’ Representative in the Sellers’
28
Representative’s sole and absolute discretion, in connection with the termination of this Agreement
in accordance with
; (v) taking any and all actions that may be necessary or desirable, as
determined by the Sellers’ Representative in the Sellers’ Representative’s sole and absolute
discretion, in connection with the amendment of this Agreement in accordance with Section
;
(vi) accepting notices on behalf of such Seller in accordance with Section
all actions that may be necessary or desirable, as determined by the Sellers’ Representative in the
Sellers’ Representative’s sole and absolute discretion, in connection with the payment of the costs
and expenses incurred with respect to any member of the Company Group or such Seller in
accordance with Section
; (viii) executing and delivering, in the Sellers’ Representative’s
capacity as the representative of such Seller, any and all notices, documents or certificates to be
executed by the Sellers’ Representative, on behalf of such Seller, in connection with this Agreement,
the Escrow Agreement and the other Ancillary Agreements; (ix) granting any consent or approval
on behalf of such Seller under this Agreement; (x) enforcing and protecting the rights and interests
of the Sellers and to enforce and protect the rights and interest of the Sellers’ Representative arising
out of or under or in any manner relating to this Agreement, the Escrow Agreement and the other
Ancillary Agreements; (xi) refraining from enforcing any right of the Sellers or the Sellers’
Representative arising out of, under, or in any manner relating to this Agreement, the Escrow
Agreement and the other Ancillary Agreements; provided, however, that no such failure to act on the
part of the Sellers’ Representative, except as otherwise provided in this Agreement, the Escrow
Agreement and the other Ancillary Agreements, shall be deemed a waiver of any such right or
interest by the Sellers’ Representative or by the Sellers unless such waiver is in writing signed by
the waiving party or by the Sellers’ Representative; and (xii) taking any and all other actions and
doing any and all other things provided in or contemplated by this Agreement, the Escrow Agreement
or any other Ancillary Agreement to be performed by such Seller or by the Sellers’ Representative
on behalf of such Seller. As the representative of the Sellers, the Sellers’ Representative will act as
the agent for all Sellers and shall have authority to bind each Seller in accordance with this
Agreement, and Buyer may rely on such appointment and authority until the receipt of written notice
of the appointment of a successor (in which case Buyer may rely on such appointment and authority
of such successor). Such agency and proxy are coupled with an interest, and are therefore
irrevocable without the consent of the Sellers’ Representative, and survive the death, incompetency,
bankruptcy or liquidation of any of the Sellers and the consummation of the Transactions, the Escrow
Agreement or any other Ancillary Agreement.
(c)
All decisions, actions, consents and instructions of the Sellers’ Representative
authorized to be made, taken or given pursuant to this Section
of the Sellers, and no such Person shall have any right to object, dissent, protest or otherwise contest
the same, except for the fraud or willful misconduct of the Sellers’ Representative in connection
therewith. Neither the Sellers’ Representative nor any agent employed by the Sellers’ Representative
shall incur any liability to any Seller relating to the performance of in the Sellers’ Representative’s
duties as authorized hereunder or the failure to act, except for actions or omissions constituting fraud
or willful misconduct of the Sellers’ Representative in connection therewith as may be determined
in a final, non-appealable Order of a court of competent jurisdiction. The Sellers’ Representative
shall not have by reason of this Section
any Seller, except in respect of amounts actually received on behalf of such Person. The relationship
created between the Sellers’ Representative and any Seller shall not be construed as a joint venture
or any form of partnership for purposes of U.S. federal or state Law, including federal or state Tax
purposes. The Sellers’ Representative shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of this Agreement.
(d)
The Sellers’ Representative, in the Sellers’ Representative’s capacity as the Sellers’
Representative, shall not have any liability to Buyer for any default under this Agreement by any
29
other Seller. Buyer shall be entitled to rely upon, and shall be deemed to have relied upon and shall
have no liability therefor, all actions taken or omitted to be taken by the Sellers’ Representative
pursuant to this Agreement.
(e)
In the event that the Sellers’ Representative becomes unable to perform the Sellers’
Representative’s responsibilities or resigns from such position, the holders of a majority of the
Class A Voting Common Stock of Echo Lakes Foods as of the date hereof shall select another
representative to fill such vacancy and such substituted representative shall (i) be deemed to be the
Sellers’ Representative (or, if applicable, a Person included in the Sellers’ Representative) for all
purposes of this Agreement and (ii) exercise the rights and powers of, and be entitled to the
indemnity, reimbursement and other benefits of, the Sellers’ Representative (or, if applicable, a
Person included in the Sellers’ Representative); provided, however, that any such replacement
Sellers’ Representative must provide Buyer with prompt notice that such Person has been appointed
replacement Sellers’ Representative, together with reasonable documentary evidence of such
appointment.
(f)
The Sellers agree to indemnify the Sellers’ Representative for, and to hold the Sellers’
Representative harmless against, any Losses incurred without fraud or willful misconduct on the part
of the Sellers’ Representative, arising out of or in connection with the Sellers’ Representative
carrying out the Sellers’ Representative’s duties under this Section
, including costs and expenses
of successfully defending the Sellers’ Representative against any claim of liability with respect
thereto. The Sellers’ Representative may consult with counsel of the Sellers’ Representative’s own
choice and will have full and complete authorization and protection for any action taken and suffered
by it in good faith and in accordance with the opinion of such counsel. The indemnity obligations
of this Section
Representative or the termination of this Agreement pursuant to
Securityholders agree, on behalf of all Securityholders, that the Sellers’ Representative shall be able
to deduct his out-of-pocket expenses (including fees and expenses of legal counsel, accountants or
other agents or experts) incurred in serving in that capacity, and any amounts to which he is entitled
pursuant to the indemnification provisions in this Section
, from Echo Lake Foods Transferor,
prior to any distribution to the Securityholders.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
REGARDING THE COMPANY GROUP AND TRANSFERORS
Except as set forth in a Schedule, the Sellers hereby jointly and severally represent and warrant to
Buyer as follows:
3.1
Organization; Qualification; Authorization
.
(a)
The Companies and Transferors are corporations or limited liability companies, as
applicable, duly formed, duly organized, validly existing and in good standing under the Laws of the
State of Wisconsin, with full power and authority to own, operate and lease its properties and assets
and to carry on the Business in all material respects. Except as disclosed on Schedule
Companies and Transferors are duly qualified to do business and are in good standing as a foreign
corporation or limited liability company in each jurisdiction where the character of its properties and
assets or the nature of the Business makes such qualification necessary, except where the failure to
be so qualified or in good standing, individually or in the aggregate, would not, and could not
reasonably be expected to be, material to the Company Group, taken as a whole.
30
(b)
The Sellers have made available to Buyer true and complete copies of the
Organizational Documents. No Company or Transferor is in default or violation of any term,
condition or provision of the Organizational Documents.
(c)
Each Company and Transferor has all necessary power and authority to execute and
deliver this Agreement and the Ancillary Agreements to which such Company or Transferor is a
party and the capacity and authority to make and perform the representations, warranties, covenants
and agreements made by such Company or Transferor herein and therein. The execution and
delivery of this Agreement and the Ancillary Agreements by each Company or Transferor and the
consummation of the Transactions have been duly authorized by all necessary action on the part of
such Company or Transferor, and no other proceedings by such Company or Transferor or any other
Person are necessary to authorize this Agreement and the other Ancillary Agreements to which such
Company or Transferor is a party or for such Company and Transferor to consummate the
Transactions. This Agreement has been duly executed and delivered by the Company Group and
Transferors and constitutes, and as of the Closing, each Ancillary Agreement to which any Company
or Transferor is a party, will constitute, when executed and delivered by such Company or Transferor,
in each case assuming the due authorization, execution and delivery by Buyer and the Sellers and
the other parties thereto (other than the applicable Company or Transferor), the legal, valid and
binding obligation of such Company or Transferor, enforceable against such Company or Transferor
in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar Laws affecting creditors’ rights generally and to general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law).
3.2
Non-Contravention; Consents
. Except as set forth on Schedule
, neither the execution or
delivery of this Agreement or the Ancillary Agreements to which any Company or Transferor is a party nor
the consummation of the Transactions will (a) conflict with or result in a breach or violation of, or cause
acceleration, or constitute (with or without due notice or lapse of time or both) a default under, or give rise
to any right of termination, cancellation, acceleration, right to payment or loss of right under, any of the
terms, conditions or provisions of (i) any of the Organizational Documents or the organizational documents
of any Company or Transferor or (ii) any Contract, Permit, Law or Order to which any Company or
Transferor is a party or to which any Company or Transferor or the assets thereof are subject, (b) result in
the creation of any Lien (other than a Permitted Lien) on any properties or assets of any Company or
Transferor or (c) require any Company or Transferor to obtain the consent of or provide notice to any third
party (other than a Governmental Authority) not already obtained, except, in the case of clauses (a)(ii) (with
respect to any Contract or Permit only) and (c), where such conflict, breach, default or creation, or the failure
to obtain such consent, exemption or action or provide such notice, would not reasonably be expected to be
material to the Company Group, taken as a whole. Except as expressly contemplated by this Agreement,
no consent, action, approval or authorization of, or registration, declaration or filing with, any Governmental
Authority is required to authorize, or is otherwise required in connection with, the execution and delivery
of this Agreement or any Ancillary Agreement to which any Company or Transferor is a party or the
consummation of the Transactions by the Company Group or the Transferors or the validity or enforceability
of this Agreement or such Ancillary Agreement, except for such filings and approvals, if any, as may be
required under the HSR Act.
3.3
Governmental Authorizations
. Except as set forth on Schedule
, the Company Group
holds all licenses, permits, consents, authorizations, approvals, registrations, listings, clearances, variances,
exemptions, orders and approvals of such Governmental Authorities as are necessary to carry on the
Business or to own or lease its properties and assets (the “Permits”). The Company Group is in compliance
in all material respects with the terms and requirements of its Permits, and (a) the Permits are in full force
and effect; (b) no violations or defaults are or have been recorded in respect of any Permit and the Company
Group has not received any written notice or other written communication, or to the Knowledge of the
31
Company Group, oral notice or communication from any Governmental Authorities or any other Person
regarding any actual, alleged or potential violation of, or failure to comply with any of the Permits; and
(c) no proceeding, action or claim is pending or, to the Knowledge of the Company Group, threatened to
revoke, withdraw, modify, suspend, cancel, terminate or limit any Permit, except, in each case, where the
failure to be in compliance with or in possession of such Permits, individually or in the aggregate, is not,
and could not reasonably be expected to be, material to the Company Group, taken as a whole.
3.4
Capitalization
. Schedule
Company and each Transferor, including the type and number of issued and outstanding Equity Interests for
each Company and Transferor and the record and beneficial owner thereof. Except as set forth on
Schedule
interests, shares of capital stock or other securities of any member of the Company Group or any Transferor,
(ii) securities of any member of the Company Group or any Transferor convertible into, exchangeable or
exercisable for equity interests or other securities of any member of the Company Group or any Transferor,
(iii) options, warrants, purchase rights, subscription rights, exchange rights or other rights to purchase or
acquire from any member of the Company Group or any Transferor, or obligations of any member of the
Company Group or any Transferor to transfer, sell or issue, any equity interests or other securities, including
securities convertible into or exchangeable for, or otherwise repurchase, redeem or otherwise acquire, any
equity interests or other securities of any member of the Company Group or any Transferor, (iv) profits
interests, equity appreciation rights, participations, phantom equity or similar rights with respect to any
member of the Company Group or any Transferor or (v) bonds, debentures, notes, or other items of
Indebtedness that entitle the holders to vote (or that are convertible or exercisable for or exchangeable into
securities that entitle the holders to vote) with equityholders, or other securities of any member of the
Company Group or any Transferor on any matter (the items in clauses (i) through (v) being referred to
collectively as the “Equity Interests”). Except as set forth on Schedule
Organizational Documents, none of the Equity Interests is subject to any voting trust agreement, option,
proxy, right of first refusal or contract restricting or otherwise relating to the voting, distribution rights or
disposition of such Equity Interests. All Equity Interests of each member of the Company Group and each
Transferor were duly authorized and validly issued in compliance with applicable securities Laws and, are
free of and were not issued in violation of, any preemptive rights, purchase or call options, rights of first
refusal, subscription rights or similar rights, are not subject to any unsatisfied capital commitments and are
free and clear of any Liens (other than Permitted Equity Interest Encumbrances).
3.5
Financial Statements
.
(a)
Attached as Schedule
Company Group’s audited combined balance sheets and related audited combined statements of
income, combined statements of equity and combined statements of cash flows as, at and for the
year ended December 31, 2024, together with any notes and schedules thereto (collectively, the
“2024 Financial Statements”), and (B) the Company Group’s audited combined balance sheets and
related audited combined statements of income, combined statements of equity and combined
statements of cash flows as, at and for the year ended December 31, 2023, together with any notes
and schedules thereto (collectively, the “2023 Financial Statements,” and, together with the 2024
Financial Statements, the “Annual Financial Statements”), and (ii) the Company Group’s unaudited
combined interim balance sheet and related unaudited combined statement of income as, at and for
the two months ended February 28, 2025 (the “Statement Date”) (the “Unaudited Financial
Statements”).
(b)
The Annual Financial Statements and the Unaudited Financial Statements (together,
the “Financial Statements”) (i) fairly present in all material respects the financial position of the
Company Group as of the dates indicated therein, and the results of operation and cash flows of the
32
Company Group for the periods indicated therein, except as otherwise noted therein (subject, in the
case of the Unaudited Financial Statements, to normal year-end adjustments that are expected to be
consistent with past practice and not material, individually or in the aggregate, in nature or amount),
and (ii) except for the items set forth on Schedule
, have been prepared in accordance with
GAAP, applied on a consistent basis (except as may be indicated in the notes thereto or, in the case
of Unaudited Financial Statements, for the absence of footnotes and normal year-end adjustments
that are expected to be consistent with past practice and not material, individually or in the aggregate,
in nature or amount).
(c)
No member of the Company Group has any liabilities whether or not of a nature
required by GAAP to be reflected on a balance sheet of the Company Group, other than (i) liabilities
reflected in, reserved against or otherwise described in the 2024 Financial Statements or the notes
thereto or the Unaudited Financial Statements, (ii) liabilities incurred in the ordinary course of
business since the Statement Date (none of which is a liability resulting from noncompliance with
any applicable Laws or Permits or breach of any Material Contract), (iii) liabilities arising under this
Agreement, any Ancillary Agreement or the Transactions, (iv) the items set forth on Schedule
or (v) liabilities that, individually or in the aggregate, are not, and could not reasonably be expected
to be, material to the Company Group, taken as a whole.
(d)
No member of the Company Group is party to any “off balance sheet arrangement.”
The Financial Statements have been prepared in accordance with the books and records of the
Company Group that (i) have been kept in the ordinary course consistent with past practice, (ii) have
been maintained in all material respects in compliance with GAAP, (iii) are true and complete in all
material respects and (iv) correctly and accurately reflect all material dealings and transactions in
respect of the business, assets, liabilities and affairs of the Company Group. All corporate
proceedings and actions reflected in the financial books and records of the Company Group have
been conducted or taken in compliance in all material respects with all applicable Laws and with the
respective Organizational Documents. Except as disclosed in Schedule
, in the past two years,
the Company Group’s auditors have not identified any material weaknesses or significant
deficiencies in the Company Group’s internal controls over financial reporting that adversely affect,
or could reasonably be expected to adversely affect, the Company Group’s ability to record, process,
summarize and report financial information. In the past three years, the Company Group has not
identified and has not received written notice by the Company Group’s auditors of any fraud or
allegations of fraud, whether or not material, that involves management or other employees who
have a role in the Company Group’s financial reporting.
3.6
No Adverse Changes
. There has been no Material Adverse Effect since December 31, 2024.
Except as set forth on Schedule
, since December 31, 2024 to the date of this Agreement, the Company
Group has operated in the ordinary course of business and has not taken any action that, if taken after the
date of this Agreement, would require Buyer’s consent under Section
3.7
Sufficiency of Assets
. Except for the Excluded Assets or as set forth on Schedule
assets and properties owned, leased and licensed by the members of the Company Group (including the
Company Group Leases, contractual rights and Intellectual Property) are sufficient in all material respects
for the conduct of the business of the Company Group as currently conducted, and (b) without limiting the
generality of the foregoing, none of the assets and properties used by the Company Group in connection
with the conduct of the business of the Company Group (including contractual rights and Intellectual
Property) are owned, leased or licensed by any Seller or any Affiliate or Related Party thereof that is not a
member of the Company Group.
33
3.8
Real Property
.
(a)
Schedule
Owned Real Property and the record owner thereof. The Company Group has good and marketable
fee simple title to all Owned Real Property, free and clear of all Liens other than Permitted Liens.
There are no outstanding options, rights of first offer or rights of first refusal to purchase or lease the
Owned Real Property or any portion thereof or interest therein or any other real property.
(b)
Schedule
Leases. The Company Group holds a valid and existing leasehold interest in the Leased Real
Property, free and clear of all Liens other than Permitted Liens, and each Company Group Lease is
a valid and binding obligation of the applicable Company, enforceable by such Company and, to the
Knowledge of the Company Group, each other party thereto, in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors’ rights, and by general equitable principles.
None of the Company Group has received any written notice regarding any violation or breach or
default under any Company Group Lease that has not since been cured. No event, development or
condition has occurred that, with the giving of notice or lapse of time (or both), could reasonably be
expected to constitute a material breach of or default under any Company Group Lease by any
member of the Company Group or, to the Knowledge of the Company Group, any other party
thereto. The Company Group has not assigned, transferred or pledged any interest in any of the
Company Group Leases. Neither the whole nor any part of the Owned Real Property or Leased Real
Property is subject to any pending suit for condemnation or other taking by any Governmental
Authority, and, to the Knowledge of the Company Group, no such condemnation or other taking is
threatened or contemplated. The use and occupancy of the Owned Real Property and Leased Real
Property by the Company Group and the conduct of the business thereat as presently conducted does
not violate in any material respect: (i) any applicable Laws (including zoning, building and land use
Laws) nor (ii) any easements, covenants, rights of way or other encumbrances applicable to the
Owned Real Property or Leased Real Property.
(c)
Except as set forth on Schedule
, there are no leases, subleases, licenses, or
other agreements granting to any Person the right of use or occupancy of any portion of the Owned
Real Property or Leased Real Property (except under the Company Group Leases). All buildings,
structures, facilities and improvements located on the Owned Real Property and Leased Real
Property, including all buildings, structures, facilities and improvements that are under construction
(collectively, “Improvements”) comply in all material respects with certificates of occupancy or
similar Permits to the extent required by Laws for the use thereof. The Improvements are in all
material respects: (A) in good operating condition and repair (ordinary wear and tear excepted) and
(B) suitable and adequate for continued use in the manner in which they are presently being used.
The Company Group has rights of ingress and egress to each Owned Real Property and Leased Real
Property to conduct the Business in the ordinary course of business. No security deposit or portions
thereof deposited with respect to any Leased Real Property has been applied in respect of a breach
or default with respect to the Company Group Lease thereof that has not been redeposited in full.
No Company owes any brokerage commissions with respect to any Owned Real Property or Leased
Real Property (other than any contingent obligation in respect of any future lease extensions). There
are no unpaid and presently due charges, debts, liabilities, claims or obligations arising from the
construction, occupancy, ownership, use or operation of the Owned Real Property and/or Leased
Real Property or the Business operated thereon that could give rise to any mechanic
’
s or
materialmen
’
s or other statutory Liens (A) against the Owned Real Property or Leased Real Property,
or any part thereof or (B) for which any member of the Company Group will be responsible. There
34
are no outstanding disputes with the owners of the Leased Real Property that have not been resolved
prior to the date of this Agreement.
3.9
Title to Assets
. Except as reflected or reserved against or otherwise disclosed in the Financial
Statements, (i) and, except as a result of dispositions in the ordinary course of business since the Statement
Date, the Company Group has good and valid title to, a valid leasehold or licensed interest in or otherwise
has the right to use all material personal tangible and intangible property and assets, claims and rights
reflected in the balance sheet contained in the Unaudited Financial Statements or acquired since the
Statement Date used (or held for use) in the Business, free and clear of all Liens other than Permitted Liens
and (ii) such assets described in the foregoing clause (i) constitute all of the assets necessary for the
Company Group to carry on the Business. All material personal property owned or leased by the Company
Group is in sufficiently good operating condition and repair (ordinary wear and tear excepted) to permit its
use in continuing the operations of the Business in the manner in which they are presently being used and
as consistent with past practice in all material respects.
3.10
Litigation, Orders, Etc.
(a)
Except as (i) set forth in Schedule
(A) is not, and could not reasonably be expected to be, material to the Company Group, taken as a
whole, or will not prevent or materially delay, and (B) could not reasonably be expected to prevent
or materially delay, the consummation of the Transactions, there are no, and in the last five years
there have been no, actions, suits, proceedings, claims, demands, requests for injunctive relief or, to
the Knowledge of the Company Group, inquiries, requests for information or investigations
(collectively, “Proceedings”) pending or, to the Knowledge of the Company Group, threatened
against any member of the Company Group or any of their respective assets in any court or before
any other Governmental Authority, or before any arbitrator.
(b)
Except as (i) individually or in the aggregate, is not, and could not reasonably be
expected to be, material to the Company Group, taken as a whole, and (ii) could not reasonably be
expected to prevent or materially delay, the consummation of the Transactions, no member of the
Company Group is party to, or otherwise bound by or subject to (including with respect to any of its
assets and properties) any Order of any court or other Governmental Authority or arbitrator having
jurisdiction over it or any Order. All Orders to which any member of the Company Group is subject
are listed in Schedule
3.11
Compliance With Laws
. Except as set forth in Schedule
Company Group is, and has been in the last five years, in compliance in all material respects with any
applicable Law or Order, and (b) no member of the Company Group has received at any time during the
past five years any written or, to the Knowledge of the Company Group, oral notice, Order or complaint
from any Governmental Authority alleging that any member of the Company Group is not in compliance
with any applicable Law, and to the Knowledge of the Company Group, no such notice, Order or complaint
is threatened, except, in each case, for such non-compliance that, individually or in the aggregate, is not, or
could not reasonably be expected to be, material to the Company Group, taken as a whole.
3.12
Intellectual Property and Intellectual Property Licenses; Data Protection
.
(a)
Schedule
1 contains a complete and accurate list of all Intellectual Property
that is owned by the Company Group that is subject to an application or registration (collectively,
the “Registered Intellectual Property”), including, for each item, the name of the owner of record,
and, where applicable, the jurisdiction, registration or application number, filing date and issue date.
Schedule
2 contains a complete and accurate list of all material unregistered Marks owned
by the Company Group and the name of the owner thereof.
35
(b)
Schedule
or purported to be owned by the Company Group (“Company Group Domain Names”).
(c)
Except as set forth on Schedule
(i)
The Company Group is the owner of the entire right, title and interest in and
to the Registered Intellectual Property identified in Schedule
Liens, except for Permitted Liens. The Company Group either owns or has a valid license,
or otherwise has the right to use all other Company Group Intellectual Property and the
Company Group Domain Names. The Company Group possesses sufficient rights in the
formulae of the products commercially distributed by the Company Group as of the date
hereof such that the Company Group would be able to provide such product formulae to
alternate third-party manufacturers to use such formulae. No funding, facilities or personnel
of any educational institution or Governmental Authority were used, directly or indirectly, to
develop or create, in whole or in part, any owned Company Group Intellectual Property.
(ii)
(A) All registrations for Registered Intellectual Property identified in
Schedule
Registered Intellectual Property so identified are pending and in good standing. To the
Knowledge of the Company Group, no written claim has been made or threatened in the past
five years that any of the Registered Intellectual Property is invalid or unenforceable.
(iii)
All fees necessary to maintain the Registered Intellectual Property and
Domain Names have been paid. The consummation of the Transactions will not result in the
loss or impairment of or payment of any additional amounts with respect to the Company
Group’s right to own, use or hold for use any Company Group Intellectual Property or
Company Group Domain Names.
(iv)
To the Knowledge of the Company Group, no third party is currently
interfering with, infringing upon, violating or misappropriating any of the Intellectual
Property identified in Schedule
Property.
(v)
The Company Group and the operation of the Business do not violate, infringe
or misappropriate any Intellectual Property of any Person, and they have not violated,
infringed or misappropriated any such Intellectual Property. No written allegation, claim,
action or other proceeding has been brought or made in the past five years, and, to the
Knowledge of the Company Group, there is no good faith basis for a third party to bring any
action or proceeding or to claim or allege, that the Company Group or the operation of the
Business infringe upon, misappropriate, or violate the Intellectual Property rights of any third
party, or have infringed upon, misappropriated or violated such rights.
(vi)
The Company Group has taken all reasonable steps to maintain the owned
Company Group Intellectual Property and to protect and preserve the confidentiality of all
Trade Secrets included in the owned Company Group Intellectual Property, including
requiring all Persons having access thereto to execute written non-disclosure agreements.
(vii)
No present or former employee, officer, consultant or individual contractor of
the Company Group has any right, title or interest in any Company Group Intellectual
Property. Each current and former employee, manager, officer, consultant and individual
contractor of the Company Group who is or has been involved in the development of any
Intellectual Property by or for the Company Group has executed and delivered to the
36
Company Group a written, valid and enforceable contract that assigns to the Company Group
all right, title and interest in and to any such Intellectual Property.
(viii)
To the Knowledge of the Company Group, the Company Group owns or has
a valid right to access and use all computer systems, networks, hardware, software, databases,
websites and equipment used to process, store, maintain and operate data, information and
functions used in the operation of the Business (collectively, the “Company Group
Information Technology Systems”). The Company Group Information Technology Systems
owned or controlled by the Company Group have been properly maintained, in all material
respects, in accordance with standards set by manufacturers or otherwise in accordance with
industry standards. To the Knowledge of the Company Group, the Company Group
Information Technology Systems are in good working condition to effectively perform all
information technology operations used by the Company Group. Since January 1, 2023, no
complaint relating to an improper use or disclosure of, or a breach in the security of, any
Company Group Data has been made or, to the Knowledge of the Company Group,
threatened against the Company Group. To the Knowledge of the Company Group, since
January 1, 2023, there has been no (A) unauthorized disclosure of any third-party proprietary
or confidential information in the possession, custody or control of any of the Company
Group or (B) breach of any of the Company Group’s security procedures wherein
confidential information has been disclosed to a third party.
(d)
Intellectual Property Licenses
. Schedule
Property Licenses, other than licenses for Off-the-Shelf Software and Open Source Licenses. All
Intellectual Property Licenses are valid, binding and enforceable on all parties thereto, and, to the
Knowledge of the Company Group, there exists no event or condition that violates or breaches or
will result in a violation or breach of, or otherwise constitutes (with or without due notice or lapse
of time or both) a default by any party thereunder.
(e)
The Company Group has implemented and maintained administrative, technical and
physical safeguards to protect the confidentiality, privacy and security of Personal Data that, when
implemented, are appropriate to the nature and risks that are presented by the Personal Data
Processed by the Company Group.
(f)
Except as set forth on Schedule
, the Company Group has, in the five years
prior to the date of this Agreement, entered into written agreements with each material service
provider, processor or other third party that Processes Personal Data for or on its behalf that contain
commercially reasonable provisions requiring such service providers, processors and other third
parties to comply with applicable Privacy Laws. To the Knowledge of the Company Group and with
respect to Personal Data Processed on the Company Group’s behalf, in the last five years, such
service providers, processors or other third parties have materially complied with the provisions in
such agreements regarding compliance with applicable Privacy Laws and, with respect to credit card
information processed for or on behalf of the Company Group, the Payment Card Industry Data
Security Standard (“PCI DSS”).
(g)
In the past five years, to the Knowledge of the Company Group, no Personal Data in
the possession or control of the Company Group has been subject to any data breach or other security
incident that presented a material risk of unauthorized Processing of such Personal Data (a “Security
Incident”) and the Company Group has not been required to notify any Governmental Authority or
other Person of any Security Incident under any applicable Privacy Law or Contract. In the past five
years, the Company Group has complied, in all material respects, with Privacy Laws applicable to
Personal Data in its custody, possession or control. In the past five years, to the Knowledge of the
37
Company Group, no Personal Data held or Processed by any service provider, processor or other
third party for and on behalf of the Company Group has been subject to any Security Incident,
including any Security Incident that would require the Company Group to notify any Governmental
Authority or other Person of any Security Incident under any applicable Law or Contract.
(h)
In the past five years, the Company Group has not received any written notice
(including any enforcement notice), letter or complaint from a Governmental Authority or Person
alleging noncompliance with any Privacy Law, and there has not been any audit, investigation (to
the Knowledge of the Company Group), enforcement action or other Proceeding or action by a
Governmental Authority relating to any actual, alleged or suspected Security Incident or violation
of any Privacy Law, or the Company Group Privacy and Data Security Policies, and, to the
Knowledge of the Company Group, there are no facts or circumstances that could reasonably be
expected to give rise to any of the foregoing.
(i)
The Company Group has conducted security risk assessments and has used
reasonable efforts to address and remediate all material threats and deficiencies identified in such
security risk assessments. The execution, delivery and performance of this Agreement and the
consummation of the Transactions, including the transfer of all Personal Data, will not conflict with
any applicable Privacy Laws or the Company Group Privacy and Data Security Policies and will not
require consent of or notice to any Person concerning such Person’s Personal Data.
3.13
Material Contracts
.
(a)
Schedule
(collectively, the “Material Contracts”):
(i)
all of the contracts, leases, licenses and other agreements (other than any
Employee Plan) involving payments by or to the Company Group of at least $300,000
annually;
(ii)
all of the individual purchase orders for purchase of goods or raw materials
(but excluding service requests, equipment purchases, equipment maintenance or orders for
purchase of equipment parts) involving payments by the Company Group in excess of
$200,000;
(iii)
(A) all notes, bonds, indentures and other instruments and agreements
evidencing or creating Indebtedness of the Company Group, (B) all contracts that restrict the
incurrence of Indebtedness or payment of dividends, or (C) all contracts that grant a Lien
(other than a Permitted Lien) or restricts the granting of Liens on any property or asset that
is material to the Company Group;
(iv)
all contracts between a member of the Company Group, on the one hand, and
(a) any Seller or any Affiliate, director, manager, officer of the Company Group (other than
another member of the Company Group) or, to the Knowledge of the Company Group, any
direct or indirect beneficial owner or individual related by blood, marriage or adoption to
any such individual or any entity in which any such Person or individual owns any beneficial
interest (the “Related Parties”), on the other hand (such contracts, “Affiliate Contracts”);
(v)
all joint venture, limited liability company, development, partnership
agreements or similar contracts that involve a sharing of profits or losses of any member of
the Company Group;
38
(vi)
all contracts containing covenants that (A) materially limit the freedom of the
Company Group to engage, or to compete with any Person, in the Business; (B) granting the
other party “most favored nation” status or equivalent preferential pricing or payment terms
that materially limit the operations or conduct of the Company Group, (C) granting the other
party exclusivity or similar rights that, in each case, materially limit the operations or conduct
of the Company Group, or (D) granting a right of first refusal or right of first offer with
respect to an acquisition of any material asset of the Company Group;
(vii)
all contracts providing for employment, severance or change in control
payments between any member of the Company Group and any of its employees, officers,
equityholders or directors, in each case, other than any Employee Plan or employment
agreement or offer letter that provides for at-will employment and may be terminated at any
time without liability for severance or similar benefits;
(viii)
any settlement or similar agreement, the performance of which will involve
payment by any member of the Company Group after the Statement Date or that restricts or
imposes obligations on any member of the Company Group;
(ix)
all contracts regarding acquisitions or dispositions pursuant to which any
member of the Company Group has any continuing “earn out” or other contingent payment
obligations (including any potential purchase price adjustment payments), or any surviving
material obligations;
(x)
agreements under which any member of the Company Group has advanced
or loaned monies to any other Person or otherwise agreed to advance, loan or invest any
funds (other than advances to the Company Group’s employees in the ordinary course of
business) to the extent such advance or loan remains outstanding or the obligation to make
future advances or loans remains (regardless of whether subject to any condition or
contingency);
(xi)
all collective bargaining agreements or other similar contracts with a labor
union or labor organization;
(xii)
(A) any contract with a Key Customer or Key Supplier, (B) any contract with
a Governmental Authority, (C) any material Intellectual Property Licenses and (D) any
assignments of owned Company Group Intellectual Property (excluding assignments of
owned Company Group Intellectual Property to the Company Group by any employee,
officer, consultant or contractor of the Company Group entered into in the ordinary course
of business);
(xiii)
any contract containing any future capital expenditure obligations of any
member of the Company Group in excess of $75,000; and
(xiv)
any outstanding and binding commitment to enter into any Contract of the
types described in the foregoing clauses
(b)
Except as individually or in the aggregate, are not, and could not reasonably be
expected to be material to the Company Group, taken as a whole, no member of the Company Group
is, or, but for a requirement that notice be given or that a period of time elapse or both, would be, in
default under any Material Contract and, to the Knowledge of the Company Group, no other party
to any Material Contract is in breach of any Material Contract. All of the Material Contracts of the
Company Group are legal, valid and binding obligations of the applicable member of the Company
39
Group and, to the Knowledge of the Company Group, the other parties thereto, enforceable in
accordance with their respective terms (except as the enforceability thereof may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting
creditors’ rights generally and to general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at Law), and are in full force and effect.
Except as set forth on Schedule
received any written or, to the Knowledge of the Company Group, other notice of any breach or
default under any Material Contract, and (ii) the Company Group has not received any written or, to
the Knowledge of the Company Group, other notice that the counterparty to any Material Contract
intends to terminate, accelerate or adversely modify in any material respect the terms of any such
Material Contract. The Company Group has made available to Buyer copies of each Material
Contract, including any amendment, modification or supplement thereto.
3.14
Environmental Laws
.
(a)
Except as set forth on Schedule
, each member of the Company Group is, and
has been in the last five years, in compliance, in all material respects, with all applicable
Environmental Laws, and no operations, properties or assets of the Company Group are subject to
any remedial obligations under any Environmental Law.
(b)
Without limiting Section
, and except as set forth on Schedule
member of the Company Group is subject to any existing, pending or, to the Knowledge of the
Company Group, threatened, action, suit, inquiry, investigation or proceeding by or before any court
or other Governmental Authority under any Environmental Law.
(c)
All Permits, if any, required to be obtained, filed or issued by the Company Group
under any Environmental Law have been duly obtained, filed or issued, except, in where the failures
to obtain, file or issue such Permits, individually or in the aggregate, are not, and could not
reasonably be expected to be, material to the Company Group, taken as a whole, and the Company
Group is, and has been in the last five years, in compliance in all material respects with the terms
and conditions of all such Permits except as may be set forth and described on Schedule
(d)
Except as set forth on Schedule
, in the past five years, no member of the
Company Group has received from any Person any written notice, claim, demand, inquiry, Order or
request for information alleging any violation of or liability under any Environmental Law, which,
in each case, either remains pending or unresolved, or is the source of ongoing obligations or
requirements.
(e)
Except as set forth on Schedule
, there has been no Release of, or exposure to,
any Hazardous Material on, at, under or from the Owned Real Property, the Leased Real Property,
any real property formerly owned, leased or operated by any member of the Company Group or any
other location in a manner that has given rise to, or could reasonably be expected to give rise to, any
remedial or corrective action, obligation or any material liability on the part of any member of the
Company Group under Environmental Laws.
(f)
No member of the Company Group has assumed or provided indemnity against any
liability of any other Person under any Environmental Laws, including any obligation for corrective
or remedial action.
40
3.15
Taxes
.
(a)
References to Echo Lake Foods or the Company Group in this Section
any predecessor of Echo Lake Foods or Person that merged with or was liquidated or converted into
the Company (including prior to the Pre-Closing Restructuring).
(b)
Each member of the Company Group has timely filed (or has had filed on its behalf)
all income and other material Tax Returns that it was required to file (taking into account extensions
properly obtained) under applicable Laws. All such Tax Returns were true, correct and complete in
all material respects and were prepared in material compliance with all applicable Laws. All income
and other material Taxes required to be paid by any member of the Company Group that are due and
payable (whether or not shown on a Tax Return) either have been paid by it or are reflected in
accordance with GAAP in the most recent financial statements of such member of the Company
Group.
(c)
There are no Liens for Taxes outstanding against any of the assets or properties of the
Company Group (other than Permitted Liens).
(d)
No action, suit, proceeding or audit is pending, being conducted or threatened in
writing against or with respect to the members of the Company Group regarding Taxes. No
outstanding deficiencies have been asserted in writing or assessments made in writing as a result of
any examinations of any Tax Return of the Company, in each case, that have not been settled or paid
in full.
(e)
The members of the Company Group have withheld and paid to the appropriate
Governmental Authority all material amounts of Taxes required to have been withheld and paid in
connection with any amounts paid or owing to any employee, independent contractor, creditor,
equity holder or other Person.
(f)
No member of the Company Group has granted an extension, or become the
beneficiary of any extension of time, in which any Tax may be assessed or collected by any Tax
authority that remains in effect.
(g)
No written claim has been made by a Governmental Authority in a jurisdiction in
which a member of the Company Group does not file Tax Returns that such member is or may be
required to file a Tax Return in, or subject to taxation by, such jurisdiction.
(h)
No member of the Company Group (i) is or has been in the last five years a member
of any affiliated, combined, consolidated, unitary or similar group for Tax purposes, (ii) is liable for
the Taxes of another Person under Treasury Regulations Section 1.1502-6 (or comparable provisions
of state, local or non-U.S. Tax law), as a transferee or successor, by contract or otherwise as a matter
of Law, or (iii) is currently party to or has any obligation under any Tax allocation, Tax sharing, Tax
indemnity, Tax reimbursement agreement or similar arrangement with respect to Taxes (other than
customary commercial agreements entered into in the ordinary course of business, the principal
purpose of which is not related to Taxes).
(i)
No member of the Company Group will be required to include any material item of
income in, or exclude any material item of deduction from, taxable income for any Tax period
beginning after the Closing Date as a result of any (i) change in or use of an incorrect method of
accounting for a taxable period ending on or prior to the Closing Date, (ii) “closing agreement” as
described in Section 7121 of the Code (or any corresponding or similar provision of state, local or
non-U.S. Law) entered into on or prior to the Closing Date, (iii) installment sale or open transaction
41
disposition made on or prior to the Closing Date, or (iv) prepaid amount received or paid, or deferred
revenue accrued, on or prior to the Closing Date.
(j)
No member of the Company Group is or has been a party to any “listed transaction”
within the meaning of Treasury Regulations Section 1.6011-4(b).
(k)
Each member of the Company Group has collected all material sales and use Taxes
required to be collected, and has remitted, or will remit on a timely basis, such amounts to the
appropriate Governmental Authorities, or has been furnished properly completed exemption
certificates and has maintained all such records and supporting documents in the manner required
by all applicable sales and use Tax statutes and regulations.
(l)
No member of the Company Group that is a partnership for U.S. federal Income Tax
purposes has made any election to apply the provisions of Section 1101 of the Bipartisan Budget Act
of 2015 (Partnership Audits and Adjustments) for any taxable period prior to January 1, 2018.
(m)
In the past five years, no member of the Company Group has distributed Equity
Interests of another Person, or has had its Equity Interests distributed by another Person, in a
transaction that was purported or intended to be governed in whole or in part by Sections 355 or 361
of the Code.
(n)
At all times from August 3, 2013 until immediately prior to the QSub Election, Echo
Lake Foods has been and shall be validly treated for federal Income Tax purposes as an
“S corporation” within the meaning of Sections 1361 and 1362 of the Code and was validly treated
in a similar manner for purposes of the Income Tax Laws of all states and localities in which it has
been subject to taxation. At all times from October 16, 2013 until immediately prior to the
Conversions, Huntington was treated as a “qualified subchapter S subsidiary” of Echo Lake Foods,
within the meaning of Section 1361(b)(3)(B) of the Code, and was validly treated in a similar manner
for purposes of the Income Tax Laws of all states and localities in which it has been subject to
taxation. At all times from August 27, 2022 until immediately prior to the Conversions, Xenitel was
treated as a “qualified subchapter S subsidiary” of Echo Lake Foods, within the meaning of
Section 1361(b)(3)(B) of the Code, and was validly treated in a similar manner for purposes of the
Income Tax Laws of all states and localities in which it has been subject to taxation. The respective
dates of initial qualification and termination as an S corporation or qualified subchapter S subsidiary,
as applicable, represented in this Section
Dates.” At all times from the QSub Election until the effective date of the Conversions, Echo Lake
Foods has been and shall be treated as a “qualified subchapter S subsidiary” of Echo Lake Foods
Transferor, within the meaning of Section 1361(b)(3)(B) of the Code, and was validly treated in a
similar manner for purposes of the Income Tax Laws of all states and localities in which it has been
subject to taxation. At all times from and after the effective date of the Conversions, Echo Lake
Foods, Huntington and Xenitel have each been treated as a disregarded entity of Echo Lake Foods
Transferor for federal Income Tax purposes, and have been validly treated in a similar manner for
purposes of the Income Tax Laws of all states and localities in which they have been subject to
taxation. Echo Lake Foods, Huntington and Xenitel have not, since the effective date of the
Conversions, elected to be treated as an association taxable as a corporation for any federal, state or
local Income Tax purposes. Except as expressly contemplated by the Pre-Closing Restructuring,
from August 3, 2013 until immediately prior to the F Reorganization, no Person has taken or failed
to take any action that could cause or otherwise result in the termination of the status of Echo Lake
Foods as an S corporation during such period. Echo Lake Foods is not and never has been subject
to Tax under Section 1375 of the Code. No Governmental Authority has ever challenged or
threatened in writing to challenge the status of the Echo Lake Foods as an S corporation for Tax
42
purposes. All holders of Equity Interests of Echo Lake Foods Transferor and Echo Lake Foods are
(and have been) eligible “S corporation” shareholders.
(o)
No member of the Company Group has ever been a “United States real property
holding company” within the meaning of Section 897(c)(2) of the Code.
(p)
No member of the Company Group has elected to defer the payment of any
“applicable employment taxes” (as defined in Section 2302(d)(1) of the CARES Act) pursuant to
Section 2302 of the CARES and no member of the Company Group has claimed any “employee
retention credit” pursuant to Section 2301 of the CARES Act.
(q)
Each member of the Company Group (other than those otherwise described in
Section
federal Income Tax status indicated opposite its name on Schedule
3.16
Employee Plans
.
(a)
Schedule
identifies whether each material Employee Plan is a Company Group Plan and the sponsor of such
Company Group Plan. The Sellers have delivered or caused to be delivered to Buyer the following
with respect to each Employee Plan, as applicable: (i) all current plan documents (or, with respect
to any unwritten Employee Plan, a written summary thereof), related trust agreements and all
amendments thereto; (ii) insurance contracts and policies and certificates of coverage and all
amendments thereto since the last plan document restatement; (iii) all current summary plan
descriptions and summaries of material modifications thereto; (iv) the Form 5500 annual reports and
accompanying schedules and financial statements, as filed, for the three most recently completed
plan years; (v) annual testing (including nondiscrimination and coverage testing) results for the three
most recently completed plan years; (vi) the most recent determination letter, advisory letter or
opinion letter issued by the IRS; (vii) material administrative or service provider agreements;
(viii) documents related to any open disputes related to the plan; and (ix) all non-routine
correspondence received from or provided to the Department of Labor, the Pension Benefit Guaranty
Corporation, the IRS or any other Governmental Authority during the past six years.
(b)
Except as set forth on Schedule
, each Employee Plan has been administered
and maintained in all respects in accordance with its terms and applicable Law, including ERISA
and the Code, and all filing and disclosure requirements imposed on the plan sponsor thereunder.
There is no pending or threatened action, claim or lawsuit relating to any Employee Plan (other than
routine claims for benefits). There is no audit, inquiry, investigation or examination pending or
threatened by the IRS, the Department of Labor, the Pension Benefit Guaranty Corporation or any
other Governmental Authority with respect to any Employee Plan.
(c)
Each Employee Plan that is intended to be a qualified plan within the meaning of
Section 401(a) of the Code is so qualified and no circumstances exist (i) that could result in loss of
such qualification under Section 401(a) of the Code or (ii) that could result in a penalty under the
IRS Closing Agreement Program if discovered during an IRS audit or investigation. Each such
Employee Plan either has received a favorable and currently effective determination letter from the
IRS or is in the form of a preapproved plan document that is the subject of a favorable opinion or
advisory letter from the IRS on which it is entitled to rely.
(d)
No fiduciary (within the meaning of Section 3(21) of ERISA) of any Employee Plan
subject to Part 4 of Subtitle B of Title I of ERISA has committed a breach of fiduciary duty with
respect to that Employee Plan that could subject a member of the Company Group or an employee
43
of a member of the Company Group to any liability (including liability on account of an
indemnification obligation). No member of the Company Group has incurred any excise Taxes
under Chapter 43 of the Code with respect to any Employee Plan and nothing has occurred with
respect to any Employee Plan that could reasonably be expected to subject any member of the
Company Group to any such Taxes.
(e)
No Company Group Plan, and no member of the Company Group or ERISA Affiliate
sponsors, has sponsored, contributes to, has contributed to or has any liability (including contingent
liability) with respect to: (i) a plan subject to Title IV of ERISA, including any defined benefit plan
(as defined in Section 3(35) of ERISA); (ii) a multiemployer plan (as defined in Section 3(37)
or 4001(a)(3) of ERISA); (iii) a multiple employer plan subject to Sections 4063 or 4064 of ERISA;
or (iv) a plan subject to Section 302 of ERISA or Section 412 of the Code. No Company Group
Plan, and no member of the Company Group, sponsors, has sponsored, contributes to, has
contributed to, has or had an obligation to contribute to or has any liability (including contingent
liability) with respect to a multiple employer welfare arrangement (as defined in Section 3(4)(A) of
ERISA) or a voluntary employees’ beneficiary association under Section 501(c)(9) of the Code. No
member of the Company Group nor any ERISA Affiliate has any liability as a result of a violation
of COBRA. No member of the Company Group has any liability under Sections 502(i) or 502(l) of
ERISA.
(f)
With respect to each Employee Plan for which a separate fund of assets is or is
required to be maintained, full and timely payment and contribution has been made of all amounts
due and required under the terms of such Employee Plan or applicable Law and all obligations
accrued on or prior to the Closing Date that relate to directors, officers, employees or consultants of
any member of the Company Group and that are not yet due have either been made or have been
accrued in the Financial Statements. All premiums, fees and administrative expenses required to be
paid under or in connection with the Company Group Plans for the period on or before the Closing
Date have been paid or have been accrued in full on the Financial Statements.
(g)
No Employee Plan or member of the Company Group provides, or has any obligation
to provide, current or former employees of the Company Group (or any beneficiaries thereof) welfare
benefits (including medical and life insurance benefits) after such Person terminates employment
with the Company Group or its applicable Affiliate, except for the coverage continuation
requirements of COBRA or continued coverage until the end of the month during which termination
occurs. No Employee Plan or member of the Company Group provides, or has any obligation to
provide, welfare benefits to any Person who is not a current or former employee of a member of the
Company Group or its Affiliates, or a beneficiary thereof.
(h)
Except as set forth on Schedule
, each Employee Plan that is or has been a
nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been
administered, operated and maintained in all respects according to the requirements of Section 409A
of the Code, and no member of the Company Group or, with respect to a current or former director,
officer, employee or consultant of any member of the Company Group, or Affiliate thereof, has been
required to withhold or pay any Taxes as a result of a failure to comply with Section 409A of the
Code. No member of the Company Group has any obligation to make a “gross-up” or similar
payment in respect of any Taxes that may become payable under Section 409A of the Code.
(i)
The Company Group and its Affiliates have complied in all respects with the
applicable provisions of the Patient Protection and Affordable Care Act of 2010 and the Health Care
and Education Reconciliation Act of 2010, to the extent applicable, including the employer shared
responsibility provisions relating to the offer of “affordable” health coverage that provides
44
“minimum essential coverage” to “full-time” employees (as those terms are defined in
Section 4980H of the Code and related regulations) and the applicable employer information
reporting requirements under Sections 6055 and 6056 of the Code.
(j)
Neither the execution of this Agreement nor the consummation of the Transactions
(either alone or in combination with another event) will or can reasonably be expected to (i) entitle
any current or former director, officer, employee or consultant of the Company Group or any
Affiliate thereof to any payment (including severance pay or similar compensation), any cancellation
of Indebtedness or any increase in compensation, (ii) accelerate the time of payment, funding or
vesting under any Employee Plan, or (iii) result in any increase in benefits payable under any
Employee Plan. No amount paid or payable (whether in cash, in property or in the form of benefits)
in connection with the Transactions (either alone or in combination with another event) will be a
“parachute payment” or an “excess parachute payment” with respect to any “disqualified individual”
in respect of the Company Group, in each case, within the meaning of Section 280G of the Code.
No entity (including any entity that is not a Company or Transferor) that is a member of an affiliated
group (within the meaning of Section 280G of the Code) in which any Company is also a member
is a corporation (other than an S Corporation or QSub) for U.S. federal Income Tax purposes. No
Employee Plan provides for, and no member of the Company Group has any obligation to make a
“gross-up” or similar payment in respect of any Taxes that may become payable under Section 4999
of the Code.
(k)
No Employee Plan is subject to any Law of any jurisdiction outside of the United
States of America.
3.17
Labor Matters
. Except as set forth on Schedule
, in the last five years:
(a)
No member of the Company Group is or has been in the last five years a party to, is
or has been in the last five years bound by, is or has been in the last five years negotiating, or has
been in the last five years asked to negotiate a collective bargaining agreement or other agreement
or understanding with any labor organization. There is not currently, nor has there been in the last
five years, any organized effort by any labor union to organize any employees of any member of the
Company Group into one or more collective bargaining units. No member of the Company Group
is or has been in the last five years a party to, and is not affected by or threatened with, any dispute
or controversy with a labor union or with respect to unionization or collective bargaining involving
any of its current or former employees (including any actual or threatened labor strikes, work
slowdown, lock-outs, work stoppages, interruptions of work, picketing, arbitrations, grievances,
unfair labor practice charges or proceedings, or other disputes involving a labor organization or with
respect to unionization or collective bargaining), and none are pending or, to the Knowledge of the
Company Group, threatened.
(b)
Each member of the Company Group is in compliance and has complied in all
material respects with all applicable Laws that relate to employment and to the operation of the
Business, including applicable Laws that relate to wages, hours, wage payment, employee record
keeping, labor, employment, fair employment practices, terms and conditions of employment,
workers’ compensation, occupational safety and health, plant closings, withholding of Taxes,
discrimination in employment, disability rights or benefits, equal employment opportunity,
immigration (including applicable I-9 applicable Laws), reasonable accommodations, labor relations
and collective bargaining, employee leave issues and unemployment insurance, and are not liable
for any arrears of wages or any Taxes or penalties for failure to comply with the foregoing. There is
no pending or, to the Knowledge of the Company Group, threatened claim, investigation or other
Proceeding in respect of any such applicable Laws (including any employment discrimination charge
45
or employment-related multi-claimant or class action claims), nor, to the Knowledge of the Company
Group, is there any basis therefor.
(c)
No claim with respect to payment of wages, salary, overtime, commissions, bonuses,
premiums, fees or other compensation of any kind has been asserted, or is now pending or, to the
Knowledge of the Company Group, threatened by or before any Governmental Authority, with
respect to current or former employees or independent contractors of any member of the Company
Group, and there is no charge or other proceeding with respect to alleged violation of any collective
bargaining requirements or occupational safety or health standards that has been asserted or is now
pending or, to the Knowledge of the Company Group, threatened with respect to any member of the
Company Group. No material charge or complaint of discrimination in employment or employment
practices for any reason, including age, sex, race, religion, national origin, veteran status or other
legally protected category, has been asserted or is now pending or threatened before the United States
Equal Employment Opportunity Commission or other Governmental Authority by current or former
employees of any member of the Company Group. No member of the Company Group is subject to
any pending material investigation by any Governmental Authority respecting any current or former
employees of any member of the Company Group. There are no outstanding, unsatisfied obligations
to reinstate, re-engage, pay compensation to or comply with any recommendation or declaration of
any court or any other tribunal in respect of any of the employees, whether past or present.
(d)
Each member of the Company Group is and has been in full compliance with the
WARN Act, and no member of the Company Group has taken any action that could at any time
require notification of any of the current or former employees of any member of the Company Group
pursuant to the provisions of the WARN Act or that could cause any member of the Company Group
to have liability thereunder.
(e)
Each Company Group Employee is employed at will and may terminate his or her
employment or be terminated from such employment at any time for any or no reason with or without
prior notice.
(f)
Each Company Group Employee is legally authorized to work in the United States.
Each member of the Company Group has completed and maintains in its files Forms I-9 with respect
to each of its employees. The qualifications for employment of each current and former employee
of each member of the Company Group have been reviewed and confirmed by such member of the
Company Group.
(g)
(i) No officer, director or management level employee of any member of the
Company Group (A) has been the subject of an allegation of sexual harassment or sexual assault by
any employee of any member of the Company Group, nor (B) to the Knowledge of the Company
Group, has engaged in any such conduct, and (ii) no member of the Company Group has entered
into any settlement agreements related to allegations of sexual harassment or sexual assault by any
current or former employee or individual independent contractor.
3.18
Company Group Employee List; Contractor List
.
(a)
Schedule
in each case, listing, as applicable, each such Company Group Employee’s: (i) name; (ii) job
location (city and state); (iii) date of hire; (iv) employing entity; (v) annual base salary or hourly
rate, as applicable, and target bonus opportunity; (vi) most recent annual bonus received; (vii) title
or functional position; (viii) classification as exempt or non-exempt; (ix) leave status (including
leave type and return to work date); (x) vacation/paid time off balance or annual vacation
entitlements; (xi) full-time or part-time status; and (xii) visa status (including visa type and
46
expiration date) (the “Company Group Employee List”). There are a sufficient number of Company
Group Employees to operate the Business in all material respects in the manner in which it is
currently conducted. No Affiliate of any member of the Company Group (other than another
member of the Company Group) employs any individuals who exclusively devote their working
time to the Business but who are not considered Company Group Employees, and the members of
the Company Group do not employ any individuals who do not provide services primarily in respect
of the Business.
(b)
Schedule
independent contractor whose services have been retained by a member of the Company Group,
identifying in each case: (i) the applicable Company Group member; (ii) the individual’s employer
(if any); (iii) brief description of services provided; (iv) engagement start date; (v) the total amount
paid in calendar year 2024 and year to date in calendar year 2025; and (vi) whether the individual’s
services to the Company Group may be terminated without cause and without penalty upon notice,
or details of any required notice period.
3.19
Brokerage Agreements
. Except as set forth on Schedule
, no member of the Company
Group has entered into any agreement with any Person, firm or corporation for the payment of any
commission, brokerage or “finder’s fee” in connection with the Transactions or for which it could otherwise
become liable.
3.20
Suppliers
. Schedule
components, parts, packaging) of the Company Group, taken as a whole (based on aggregate dollar amounts
paid directly by the Company Group), during the years ended December 31, 2023 and December 31, 2024
and during the two months ended on the Statement Date (collectively, the “Key Suppliers”). Schedule
includes the total dollar volume for the Key Suppliers during such periods. Except as set forth on
Schedule
, there are no minimum purchase contracts or understandings between the Company Group,
on the one hand, and any Key Supplier, on the other hand. Since the Statement Date, no member of the
Company Group has received any written, or to the Knowledge of the Company Group, oral notice or
proposal from a Key Supplier (a) requiring or proposing modifications in the terms on which such Key
Supplier conducts business with the Company Group, (b) terminating or cancelling its relationship with the
Company Group or (c) informing or notifying a member of the Company Group of any violation of, or non-
compliance with, any Laws.
3.21
Customers
. Schedule
as a whole (based on aggregate revenues) during the years ended December 31, 2023 and
December 31, 2024 and during the two months ended on the Statement Date (the “Key Customers”).
Schedule
Statement Date, no member of the Company Group has received any written notice or proposal from a Key
Customer (a) requiring or proposing modifications in the terms on which such Key Customer conducts
business with the Company Group, (b) terminating or cancelling its relationship with the Company Group
or (c) informing or notifying a member of the Company Group of any violation of, or non-compliance with,
any Laws.
3.22
Product Liability
. Except as set forth on Schedule
, in the past five years, the Company
Group has not (a) recalled any products or received an Order or request to recall any products by any
Governmental Authority, customer or supplier or (b) been subject to, or received any written or, to the
Knowledge of the Company Group, oral notice of any, claim arising from or caused by any product offered
for sale, sold or distributed by the Company Group. The Company Group has no Knowledge of any fact or
condition that could reasonably be expected to (i) impose a duty to recall, withdraw, remove or undertake
corrective action in any material respect or (ii) result in any material product liability claim, in each case,
47
with respect to any products offered for sale, sold or distributed by the Company Group in the past five
years.
3.23
Food Safety Requirements
.
(a)
All products being distributed, sold, manufactured or developed by the Company
Group that are subject to the jurisdiction of the FDA, USDA, FTC, any comparable state or foreign
Governmental Authority have been formulated and are being processed, labeled, stored, tested,
packed, transported, distributed, manufactured, marketed, advertised and promoted in compliance
with all applicable requirements under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and
other Laws, including current Good Manufacturing Practices (“cGMP”) for foods, the facility
registration, prior import notice and recordkeeping requirements of the Public Health Security and
Bioterrorism Preparedness and Response Act of 2002, the allergen disclosure requirements of the
Food Allergen Labeling and Consumer Protection Act of 2004, the FDA Food Safety Modernization
Act, as applicable, the Egg Products Inspection Act (“EPIA”), the Organic Foods Production Act,
the Sanitary Food Transportation Act and all comparable state and foreign Laws (collectively, “Food
and Beverage Laws”).
(b)
To the Knowledge of the Sellers, none of the Company Group’s products have been
the subject of any warning letter, notice of violation, notice of warning, seizure, injunction,
regulatory enforcement action or criminal action issued, initiated or threatened by the FDA, USDA,
FTC or any comparable state or foreign Governmental Authority during the five-year period prior to
the date hereof.
(c)
No member of the Company Group has received any FDA Form 483 notice of
inspectional observations, notice of adverse findings, untitled letters or warning letters from the
FDA, or noncompliance record from USDA or Food Safety and Inspection Service (“FSIS”) or been
subject to any material investigation by any Governmental Authority, or been subject to any penalty,
fine, Sanction, assessment, audit, request for corrective or remedial action or other material
compliance or enforcement-related action or material communication, in each case in writing, from
any Governmental Authority (including FDA and USDA).
(d)
For the five-year period prior to the date hereof, each member of the Company Group
has been in material compliance with the Federal Trade Commission Act (“FTCA”) with respect to
the advertising and promotion, product descriptions and claims for the products they sell. To the
Knowledge of the Sellers, all claims about the Company Group’s products are appropriately
substantiated and are truthful and non-misleading under both the FDCA and the FTCA. No member
of the Company Group has received written notice of and, to the Knowledge of the Company Group,
there is no written claim filed by the FTC against any member of the Company Group alleging any
violation of any of the Laws implemented by it.
(e)
The Company Group’s products are neither adulterated nor misbranded within the
meaning of the FDCA or EPIA, nor do they contain unapproved food additives or ingredients that
are not generally recognized as safe, nor are they products that may not, under Sections 404, 505
or 512 of the FDCA, be introduced into United States commerce. For the five-year period prior to
the date hereof, no member of the Company Group has, in connection with any Company Group
product, either voluntarily or as requested by a Governmental Authority initiated, conducted or
issued, or caused to be initiated, conducted or issued, any recall, or market withdrawal.
(f)
No member of the Company Group has or, to the Knowledge of the Company Group,
any of its Representatives, been convicted of any crime or engaged in any conduct that could result
in debarment or exclusion under 21 U.S.C. Section 335a(a), 21 U.S.C. Section 335a(b) or any
48
similar legal requirements. No claims, actions, proceedings or investigations that have resulted, or
could reasonably be expected to result, in such a debarment or exclusion are pending or, to the
Knowledge of the Company Group, threatened against any member of the Company Group or the
managers, officers, employees or agents of any member of the Company Group.
3.24
Inventory
. All of the finished goods inventory of the Business (a) is merchantable, fit for its
intended purpose, of a quality and quantity fully usable and saleable in the ordinary course of business, and
(b) is not obsolete, defective or damaged, except for those items that have been reserved against in the
Financial Statements. Except as set forth on Schedule
, no member of the Company Group has made
sales on consignment or granted return privileges to buyers of its finished goods other than spoilage, defect
or damage allowances in the ordinary course of business. All finished goods inventories not written-off in
accordance with GAAP have been reflected on the Company Group’s books at cost or net realizable value,
whichever is lower.
3.25
Certain Business Relationships with the Company Group.
Except for the Affiliate Contracts,
the Organizational Documents, any Employee Plan or employment or consulting agreements with any
employee, officer or consultant of any Company or any of their Subsidiaries or as set forth on Schedule
,
no Related Party is a party to any agreement, contract, commitment, transaction or other arrangement with
any Company or any of their Subsidiaries or has any interest in any property or assets owned or leased by
any Company or any of their Subsidiaries.
3.26
Insurance
. Schedule
location, insured, insurer, amount of coverage, type of insurance and policy number) maintained by the
Company Group other than insurance policies maintained to provide benefits under any Employee Plan.
All such policies are in full force and effect, all premiums with respect thereto covering all periods up to
and including the Closing Date have been paid, and no written notice of cancellation or termination has been
received by any member of the Company Group with respect to any such policy. There is no default under
any such policy and no insurer has advised any member of the Company Group in writing that it intends to
reduce coverage, increase premiums or fail to renew any existing policy or binder. There is no material
claim pending with respect to any member of the Company Group under any such policies as to which
coverage has been questioned, denied or disputed in writing, or, to the Knowledge of the Company Group,
orally by the underwriters of such policies (other than pursuant to a customary reservation of rights notice
or in connection with claims for benefits under the Employee Plans).
3.27
Certain Payments
. No member of the Company Group or any manager, officer or other
employee of any member of the Company Group, or to the Knowledge of the Company Group, any agent,
representative or third party acting on behalf of the Company Group has:
(a)
offered or used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to any political campaign or activity;
(b)
offered, authorized, promised, or used any corporate funds for any direct or indirect
unlawful payments to any Person or foreign or domestic “Government Official,” which includes:
(i)
any officer, employee, or Person acting in an official capacity or performing
public duties or functions on behalf of (A) any government, including all levels and
subdivisions of government from national to local; (B) any department, committee, agency
or instrumentality of government; (C) any business or commercial entity owned, managed or
controlled by a government; or (D) any political party or official thereof;
(ii)
any candidate for public office;
49
(iii)
any officer, employee or agent of a public international organization,
including for example the United Nations, the International Monetary Fund or the World
Bank; or
(iv)
any relative of any Government Official;
(c)
violated any provision of the U.S. Foreign Corrupt Practices Act of 1977 (the
“FCPA”), the U.K. Bribery Act of 2010, or any statute, regulation or any other applicable laws, rules
or regulations of relevant jurisdictions prohibiting bribery and corruption, including local anti-
corruption laws in the countries in which the Company Group conducts business (“Anti-Corruption
Laws”);
(d)
offered, authorized, promised or given any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment or gift of money or anything of value to any
Government Official or Person;
(e)
established or maintained, or is maintaining, any fund of corporate monies or other
properties for the purpose of supplying funds for any of the purposes described in the foregoing
subparagraphs
(f)
knowingly received any unlawful discounts or rebates in violation of any statute or
regulation relating to antitrust or competition.
No member of the Company Group or any manager, officer or other employee of any member of the
Company Group, or to the Knowledge of the Company Group, any agent, representative or third party acting
on behalf of the Company Group has been the subject of any Proceedings by any Governmental Authority,
any customer, or other business partner regarding actual or alleged violations of any Anti-Corruption Laws.
No such Proceeding is pending or, to the Knowledge of the Company Group, threatened, and there are no
circumstances that are likely to give rise to any such investigation, inquiry, allegations or proceedings.
3.28
Trade Control Laws; Sanctions
.
(a)
During the past five years, the Company Group and its directors, officers, employees
and agents, have (i) conducted the Business in compliance with applicable Trade Control Laws and
Sanctions in all material respects, (ii) not engaged in a transaction or dealing with or involving a
Sanctioned Country or a Person that is the subject or target of applicable Sanctions and (iii) not been
the subject of or otherwise involved in, enforcement actions or, to the Knowledge of the Company
Group, investigations by any Governmental Authority or other actions with respect to any actual or
alleged violations of Trade Control Laws or Sanctions, and not been notified in writing (or, to the
Knowledge of the Company Group, orally) of any such pending or threatened actions.
(b)
During the past five years, no member of the Company Group or any director, officer,
employee or, to the Knowledge of the Company Group, agent of any member of the Company Group
has: (i) been the subject or target of Sanctions, (ii) been subject to debarment or any list-based
designations under any Trade Control Law, (iii) maintained or maintains any offices, branches,
operations, assets, investments, employees or agents in a Sanctioned Country or (iv) engaged in
transactions, dealings or activities that could reasonably be expected to cause such Person to become
a target of Sanctions.
3.29
No Other Representations or Warranties
. PRIOR TO ITS EXECUTION OF THIS
AGREEMENT, BUYER HAS CONDUCTED AN INDEPENDENT INVESTIGATION AND HAS
FORMED AN INDEPENDENT JUDGMENT CONCERNING THE CURRENT CONDITION AND
50
AFFAIRS OF THE COMPANY GROUP. IN MAKING ITS DECISION TO EXECUTE THIS
AGREEMENT AND TO ENTER INTO THE TRANSACTIONS, BUYER HAS RELIED AND WILL
RELY SOLELY UPON THE REPRESENTATIONS AND WARRANTIES REGARDING THE
COMPANY GROUP AND TRANSFERORS SET FORTH IN
FORTH IN
CERTIFICATE DELIVERED PURSUANT HERETO AND HAS NOT AND WILL NOT BE ENTITLED
TO RELY ON ANY OTHER STATEMENTS OR ADVICE FROM THE COMPANY GROUP, ANY
SUBSIDIARY OF THE COMPANY GROUP, ANY SELLER OR THEIR RESPECTIVE AFFILIATES OR
REPRESENTATIVES. BUYER ACKNOWLEDGES THAT: (a) IT HAS HAD THE OPPORTUNITY TO
VISIT WITH THE COMPANY GROUP AND MEET WITH THEIR REPRESENTATIVES TO DISCUSS
THE COMPANY GROUP, THE BUSINESS AND THE COMPANY GROUP’S CONDITION AND
PROSPECTS, AND (b) EXCEPT AS EXPRESSLY SET FORTH IN
EACH CASE, AS QUALIFIED BY THE SCHEDULES) OR IN ANY CERTIFICATE DELIVERED
PURSUANT HERETO, NO MEMBER OF THE COMPANY GROUP, NO SELLER AND NO OTHER
PERSON IS MAKING, AND EACH SUCH PERSON HEREBY EXPRESSLY DISCLAIMS, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, AS TO ANY
MEMBER OF THE COMPANY GROUP, THE BUSINESS, OR ANY SELLER OR ANY OF THEIR
RESPECTIVE ASSETS, LIABILITIES OPERATIONS OR BUSINESS (INCLUDING ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE). WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, NO SELLER NOR ANY OTHER PERSON
WILL HAVE OR BE SUBJECT TO ANY LIABILITY TO BUYER OR ANY OTHER PERSON
RESULTING FROM THE DISTRIBUTION TO BUYER, OR BUYER’S USE OF, ANY PROJECTIONS
OR FORECASTS MADE AVAILABLE TO BUYER OR ITS REPRESENTATIVES IN ANY “DATA
ROOMS,” “VIRTUAL DATA ROOMS,” MANAGEMENT PRESENTATIONS OR IN ANY OTHER
FORM IN EXPECTATION OF, OR IN CONNECTION WITH, THE TRANSACTIONS, OR IN RESPECT
OF ANY OTHER MATTER OR THING WHATSOEVER (ELECTRONIC OR OTHERWISE) OR
OTHERWISE IN EXPECTATION OF THE TRANSACTION.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SECURITYHOLDERS
4.1
Representations of the Securityholders
. Each Voting Securityholder, jointly and severally,
hereby represents and warrants to Buyer as follows:
(a)
Organization, Existence and Good Standing.
If a Securityholder is an entity, such
Securityholder is duly organized (if applicable), validly existing and in good standing under the
Laws of the jurisdiction of its organization and such Securityholder is duly qualified to do business
and is in good standing as a foreign entity in each jurisdiction where the character of its properties
or the nature of its business makes such qualification necessary, except for failures to have such
power or authority that, individually or in the aggregate, will not prevent or materially delay, and
could not reasonably be expected to prevent or materially delay, the consummation of the
Transactions.
(b)
Authorization; Absence of Conflicts
.
(i)
Each Securityholder has all necessary power and authority to execute and
deliver this Agreement and the Ancillary Agreements to which such Securityholder is a party
and the capacity and authority to make and perform the representations, warranties,
covenants and agreements made by such Securityholder herein and therein. The execution
and delivery of this Agreement and the Ancillary Agreements by each Securityholder and the
51
consummation of the Transactions have been duly authorized by all necessary action on the
part of such Securityholder, and no other actions or other proceedings are necessary to
authorize this Agreement and the other Ancillary Agreements to which such Securityholder
is a party or for such Securityholder to consummate the Transactions. This Agreement has
been duly executed and delivered by each Voting Securityholder and constitutes, and as of
the Closing, each Ancillary Agreement to which a Securityholder is a party, will constitute,
when executed and delivered by such Securityholder, in each case assuming the due
authorization, execution and delivery by Buyer and the other parties to such Ancillary
Agreement, the legal, valid and binding obligation of such Securityholder, enforceable
against such Securityholder in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar Laws affecting creditors’ rights
generally and to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at Law).
(ii)
Neither the execution or delivery of this Agreement or the Ancillary
Agreements to which a Securityholder is a party nor the consummation of the Transactions
will conflict with or result in a breach or violation of, or cause acceleration, or constitute
(with or without due notice or lapse of time or both) a default under, or give rise to any right
of termination, cancellation or acceleration under, any of the terms, conditions or provisions
of (A) any contract, Law or Order to which such Securityholder is a party or to which such
Securityholder or such Securityholder’s assets are subject or (B) the governing documents
of such Securityholder, if applicable.
(iii)
No consent, action, approval or authorization of, or registration, declaration
or filing with, any Governmental Authority is required to authorize, or is otherwise required
in connection with, the execution and delivery of this Agreement or any Ancillary Agreement
to which a Securityholder is a party by such Securityholder or the performance by such
Securityholder of the terms hereof or thereof or the validity or enforceability of this
Agreement or such Ancillary Agreement, except for such filings and approvals, if any, as
may be required under the HSR Act.
(iv)
There are no actions, suits, investigations or other Proceedings pending or, to
the Knowledge of the Voting Securityholders, threatened against a Securityholder or
involving any of a Securityholder’s properties or assets in any court or before any other
Governmental Authority, or before any arbitrator except as, individually or in the aggregate,
will not, and not reasonably be expected to have, an adverse effect on such Securityholder’s
ability to perform such Securityholder’s obligations under this Agreement or otherwise
prevent, hinder or delay the consummation of the Transactions. No Securityholder is subject
to any outstanding Order that prohibits or otherwise restricts the ability of such
Securityholder to consummate fully the Transactions or any of the Ancillary Agreements to
which such Securityholder is a party.
(c)
Ownership of Equity Interests
. The Securityholders are the record and beneficial
owner of and has good and valid title to the number and class of Equity Interests set forth opposite
each Securityholder’s name on Schedule
all Liens (other than Permitted Equity Interest Encumbrances). Other than Equity Interests listed on
Schedule
, no Securityholder has any beneficial ownership of any Purchased Equity Interests or
any Equity Interest in any Company or any right of any kind to have any such Equity Interest issued.
Except as set forth on Schedule
, no Securityholder is a party to any contract (other than this
Agreement) that could require such Securityholder to sell or otherwise dispose of, or grant any
interest in, any of such Securityholder’s Equity Interests.
52
(d)
Brokerage Agreements.
No Person has acted as a broker, finder or financial advisor
for in connection with the Transactions based on any arrangement or agreement made by or on behalf
of any Securityholder or any Securityholder’s Affiliates for which Buyer or any member of the
Company Group could be liable following the Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Voting Securityholders as follows:
5.1
Organization and Qualification
. Buyer is a corporation duly organized, validly existing and
in good standing under the Laws of Delaware, with full power and authority to own, operate and lease its
properties and to carry on its business, and Buyer is duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where the character of its properties or the nature of its business
makes such qualification necessary, except for failures to have such power or authority that, individually or
in the aggregate, will not prevent or materially delay, and could not reasonably be expected to prevent or
materially delay, the consummation of the Transactions.
5.2
Authorization of Agreement; No Violation; No Consents; No Litigation
.
(a)
Buyer has all necessary power and authority to execute and deliver this Agreement
and the Ancillary Agreements to which it is a party and the capacity and authority to make and
perform the representations, warranties, covenants and agreements made by Buyer herein and
therein. The execution and delivery of this Agreement and the Ancillary Agreements by Buyer and
the consummation of the Transactions have been duly authorized by all necessary action on the part
of Buyer, and no other actions or other proceedings are necessary to authorize this Agreement and
the other Ancillary Agreements to which Buyer is a party or for Buyer to consummate the
Transactions. This Agreement has been duly executed and delivered by Buyer and constitutes, and
as of the Closing, each Ancillary Agreement to which Buyer is a party, will constitute, when executed
and delivered by Buyer, in each case assuming the due authorization, execution and delivery by the
other parties thereto, the legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other similar Laws affecting creditors’ rights generally and to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at Law).
(b)
Neither the execution or delivery of this Agreement or the Ancillary Agreements to
which Buyer is a party nor the consummation of the Transactions (i) will conflict with or result in a
breach or violation of, or cause acceleration, or constitute (with or without due notice or lapse of
time or both) a default under, or give rise to any right of termination, cancellation or acceleration
under, any of the terms, conditions or provisions of (A) any material Contract, Law or Order to which
Buyer is a party or to which Buyer or its assets is subject or (B) the certificate of incorporation or
other organizational document of Buyer, or (ii) require Buyer to obtain the consent of or provide
notice to any third party (other than a Governmental Authority) not already obtained.
(c)
No consent, action, approval or authorization of, or registration, declaration or filing
with, any Governmental Authority is required to authorize, or is otherwise required in connection
with, the execution and delivery of this Agreement or any Ancillary Agreement to which Buyer is a
party by Buyer or the performance by Buyer of the terms hereof or thereof or the validity or
enforceability of this Agreement or such Ancillary Agreement, except for such filings and approvals,
if any, as may be required under the HSR Act.
53
(d)
There are no actions, suits, investigations or other Proceedings pending or, to the
Knowledge of Buyer, threatened against Buyer or any of its Subsidiaries or involving any of their
respective properties or assets in any court or before any other Governmental Authority, or before
any arbitrator except as could not, individually or in the aggregate, have or be reasonably expected
to have an adverse effect on Buyer’s ability to perform its obligations under this Agreement or
otherwise prevent, hinder or delay the consummation of the Transactions. Buyer is not subject to
any outstanding Order that prohibits or otherwise restricts the ability of Buyer to consummate fully
the Transactions.
5.3
Financial Ability
. Buyer has, and will have at the Closing, on an unconditional basis, the
financial capability and cash in immediately available U.S. funds sufficient to fund the consummation of
the Transactions, to satisfy all other reasonably anticipated costs and expenses of Buyer arising in connection
therewith and payable at the Closing and to permit Buyer to perform in a timely manner all of its obligations
under this Agreement to be performed at the Closing.
5.4
Brokerage Agreements
. Buyer has not entered (directly or indirectly) into any agreement
with any Person, firm or corporation providing for the payment of any commission, brokerage or “finder’s
fee” in connection with the Transactions for which any Securityholder or any Affiliate thereof (excluding,
if the Closing occurs, any member of the Company Group) will have any responsibility.
5.5
Investment Intention
. Buyer is acquiring the Purchased Equity Interests for its own account,
for investment purposes only and not with a view to any public distribution thereof or with any intention of
selling, distributing or otherwise disposing of the Purchased Equity Interests in a manner that would violate
the registration requirements of the Securities Act of 1933 (the “Securities Act”). Buyer understands that
the Purchased Equity Interests have not been registered under the Securities Act and cannot be sold unless
subsequently registered under the Securities Act or an exemption from such registration is available. Buyer
is able to bear the economic risk of holding the Purchased Equity Interests for an indefinite period (including
total loss of its investment) and has sufficient knowledge and experience in financial and business matters
so as to be capable of evaluating the merits and risk of its investment.
ARTICLE VI
CERTAIN COVENANTS
6.1
Conduct of the Business Prior to the Closing Date
. The Sellers agree that, except (w) as
expressly set forth in or contemplated, permitted or required by this Agreement, (x) as required by applicable
Law, (y) as set forth in Schedule
be unreasonably withheld, conditioned or delayed), from the date hereof through the Closing Date or the
termination of this Agreement, each member of the Company Group shall use commercially reasonable
efforts to operate the Business in all material respects in the ordinary course of business consistent with past
practice and use commercially reasonable efforts to maintain intact their respective businesses and
relationships and goodwill with employees, customers, lenders, suppliers and others having material
business relationships with the Company Group in each case, in all material respects. Without limiting the
generality of the foregoing, except as expressly set forth in or contemplated, permitted or required by this
Agreement, as Buyer may approve in writing (which Buyer agrees shall not be unreasonably withheld,
conditioned or delayed), or as set forth in Schedule
, no member of the Company Group or Seller will:
(a)
except as expressly contemplated by the Pre-Closing Restructuring, amend the
Organizational Documents or any organizational document of any member of the Company Group
or any Transferor;
54
(b)
except for the F Reorganization and the ELT Contribution, (i) issue, authorize for
issuance, sell, grant, transfer, dispose of, subject to any Lien (other than Permitted Equity Interest
Encumbrances) any Equity Interests of any member of the Company Group or Transferor, including
pursuant to any split, combination, subdivision or reclassification of any such Equity Interest;
(ii) issue, authorize for issuance, sell, make or grant any option, warrant, call, right, commitment,
conversion right, right of first refusal, pledge, hypothecation or agreement of any character relating
to the Equity Interests of any member of the Company Group or Transferor; or (iii) issue, authorize
for issuance, grant, transfer, grant, dispose of or sell any securities or obligations convertible into or
redeem, acquire or purchase any Equity Interest of any member of the Company Group or
Transferor;
(c)
(i) incur any Indebtedness for borrowed money in addition to any Indebtedness
outstanding on the date hereof, except for borrowings made in the ordinary course of business under
the Existing Credit Facility, (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of any other Person,
except for the endorsement of checks for collection in the ordinary course of business or (iii) make
any loans, advances or capital contributions to, or investments in, any other Person; provided,
however, that clause (iii) shall not prohibit payments in connection with normal relocations, travel
advances or other advances to employees of the Company Group in the ordinary course of business
and not in excess of $5,000 individually or $25,000 in the aggregate;
(d)
(i) increase the base cash compensation payable to any officer, director, employee or
independent contractor, other than any such increases in the ordinary course of business that do not
on an annualized basis exceed 3% individually or 3% in the aggregate, (ii) create, establish, enter
into, amend or terminate any bonus plan, agreement, policy or other employee benefit plan, including
any retention or change in control bonus, (iii) materially increase the coverage or benefits available
under or otherwise amend any Employee Plan, (iv) hire or terminate the employment of any
employee or services of any independent contractor whose annual base compensation exceeds
$100,000, other than termination for “cause,” (v) transfer or reassign the duties of a Company Group
Employee such that he or she is no longer a Company Group Employee, (vi) transfer or reassign the
duties of an employee who is not a Company Group Employee such that he or she would become a
Company Group Employee other than to the extent such employee would not have annual base
compensation in excess of $100,000 and such transfer or reassignment is to fill a vacant position,
(vii) grant any severance or termination pay to any current or former officer, director, employee or
independent contractor, other than pursuant to agreements and arrangements already in place as of
the date of this Agreement, (viii) grant any equity or equity-based awards, (ix) loan or advance
money (other than advances for business expenses made in the ordinary course of business) or other
property to any current or former officer, director, employee or independent contractor, (x) take any
action to accelerate the vesting or payment of or to fund any benefit or payment to any current or
former officer, director, employee or independent contractor other than pursuant to existing
agreements or arrangements described on subsection (d)(x) of Schedule
terminate the terms of any restrictive covenant obligation of any Company Group Employee;
(e)
(i) except for sales of inventory in the ordinary course of business to the Company
Group’s customers and distributors and non-exclusive licenses in the ordinary course of business to
the Company Group’s customers, contractors, distributors, and suppliers, sell, transfer, mortgage,
license, lease or otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, license, lease
or otherwise dispose of or encumber, any (A) properties, real, personal or mixed, tangible or
intangible, that have a value on the books of the Company Group, either individually or in the
aggregate, in excess of $50,000 or (B) owned Company Group Intellectual Property or (ii) allow
such properties, rights or assets to become subject to any Liens (other than Permitted Liens);
55
(f)
make or commit to make any capital expenditure, capital addition or capital
improvement in an amount exceeding $100,000;
(g)
settle, cancel, compromise, release or provide a waiver with respect to any claim,
action or proceeding (i) if the amount payable by the Company Group could be in excess of $50,000
individually or, with all other settlements since the date of this Agreement, $150,000 in the
aggregate, (ii) if doing so would require any payments following the Closing or (iii) results in any
other liability or involving equitable remedies or an admission by any member of the Company
Group of wrongdoing or violation of Law (other than the payment of cash pursuant to clause (i)
above);
(h)
(i) declare, set aside or pay any distributions with respect to its equity or redeem any
equity for cash or otherwise (other than Tax distributions to the members of a Company (or its
applicable Transferor) in accordance with the applicable Organizational Documents and a final Tax
distribution immediately prior to the Closing with respect to estimated Tax liabilities of the members
of a Company through the Closing) or (ii) following the Calculation Time, use any Cash to repay
any Indebtedness or Company Group Expenses;
(i)
acquire any business (in any form of transaction) or assets or other property (other
than inventory, goods, supplies, raw materials and other equipment in the ordinary course of
business) or lease or sublease any real property;
(j)
recognize any labor union or labor organization as the representative of any of the
employees of the Company Group, or enter into any collective bargaining agreement or other
contract with a labor union or labor organization;
(k)
other than in the ordinary course of business, (i) enter into any contract that, had it
been entered into prior to the date of this Agreement, would be a Material Contract or (ii) terminate,
cancel, waive any material right under or materially amend any Material Contract or any contract
that, had it been entered into prior to the date of this Agreement, would be a Material Contract;
(l)
adopt a plan of liquidation, dissolution, merger, consolidation or other reorganization,
other than the F Reorganization or ELT Contribution;
(m)
make any material change with respect to accounting policies or procedures,
including the Accounting Principles, except as required by GAAP or change in Law;
(n)
cancel, terminate or allow to lapse any insurance policy, unless within 15 Business
Days of such cancellation, termination or lapse, replacement coverage with a substantially similar
limit is obtained with no gap in coverage;
(o)
(i) terminate, fail to renew, abandon, cancel, let lapse or fail to continue to prosecute
or defend any Registered Intellectual Property or (ii) fail to take reasonable steps to maintain the
confidentiality of all material Trade Secrets included in the owned Company Group Intellectual
Property;
(p)
(i) make, change or revoke any material Tax election (except as expressly
contemplated by the Pre-Closing Restructuring), (ii) change any accounting period or method with
respect to Taxes (except as expressly contemplated by the Pre-Closing Restructuring), (iii) file any
amended Tax Return, (iv) enter into any “closing agreement” as described in Section 7121 of the
Code, (v) settle or compromise any proceeding with respect to any Tax claim or assessment,
(vi) surrender any right to claim a material refund of Taxes, (vii) request any ruling with respect to
56
any Taxes or (viii) consent to any extension or waiver of the limitation period applicable to any Taxes
of any Company, in each case, except as required by applicable Law; or
(q)
agree to do any of the foregoing.
Notwithstanding anything to the contrary in this Agreement, nothing contained in this Agreement shall give
Buyer, directly or indirectly, the right to control or direct the Company Group’s operations prior to the
Closing. Prior to the Closing, the Company Group shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision over its business, assets and operations.
6.2
Access by Buyer
. From the date hereof until the Closing Date or the prior termination of this
Agreement pursuant to Section
and agents will be given reasonable access, upon reasonable notice and during normal business hours, to
the facilities, properties, management personnel (including appropriate access to outside accountants and
attorneys), books and records (including Tax, regulatory, financial, intellectual property, accounting,
commercial, logistical, R&D and human resources records) as Buyer may reasonably request for the purpose
of conducting an investigation of its financial condition, status, business, properties and assets or otherwise
with respect to the Transactions and for transition planning purposes; provided, however, that such
investigation will be conducted in a manner that does not unreasonably interfere with normal operations of
the Company Group; provided further that (i) all requests for access shall be directed to such Person(s) as
the Sellers’ Representative may designate in writing from time to time (the “Company Group Access
Contact”), (ii) such access shall be conducted under the supervision of the Company Group Access Contact
or other applicable personnel specifically designated by a Company Group Access Contact in writing,
(iii) no Personal Data shall be disclosed or used other than in compliance with applicable Privacy Law,
(iv) Buyer shall not (and shall not permit any of its representatives or Affiliates to), contact any customer,
supplier, distributor or other material business relation of the Company Group (in each case that is known
by Buyer to have such relationship with the Company Group) for the purpose of discussing, and shall not
discuss, the Company Group, the Business or the Transactions without the prior written consent of the
Sellers’ Representative, which consent shall not be unreasonably withheld, conditioned or delayed
(provided, however, that nothing herein shall prevent Buyer from having conversations with any of the
foregoing in the ordinary course of business of Buyer and its Affiliates unrelated to the Company Group,
the Business or the Transactions) and (v) nothing herein shall require any member of the Company Group
or its representatives to furnish to Buyer or provide Buyer with information that (A) is subject to an attorney-
client privilege or an attorney work-product privilege or confidentiality obligations, (B) outside legal
counsel for the Company Group reasonably concludes may give rise to antitrust or competition Law issues
or otherwise violate applicable Laws or (C) violate any Law or Contract disclosed on Schedule
containing confidentiality obligations that would prohibit disclosures to Buyer under these circumstances;
provided further that (x) in the case of clause (v), the Parties shall use their respective commercially
reasonable efforts to make appropriate substitute arrangements to allows such disclosure under
circumstances in which such restrictions apply and (y) Buyer will, and will direct its employees,
representatives and agents to, keep all information furnished to Buyer in connection with the Transactions
confidential in accordance with the terms and conditions of the Confidentiality Agreement. Any disclosure
during Buyer’s investigation pursuant to this Section
qualifications, or limitations to the representations or warranties of any member of the Company Group,
Transferors or Voting Securityholders, nor shall any such disclosure in any way limit Buyer’s rights under
this Agreement with respect to any such representations or warranties. Notwithstanding anything herein to
the contrary, prior to the Closing, Buyer shall have no right to perform any invasive or subsurface
investigations of the properties or facilities of any member of the Company Group without the prior written
consent of the Sellers’ Representative.
57
6.3
Satisfaction of Closing Conditions; Competition Filings; Required Consents
.
(a)
From the date hereof through the Closing Date or the prior termination of this
Agreement pursuant to Section
, each Party agrees to use its reasonable best efforts to satisfy
the conditions to the Closing set forth in
(b)
Subject to the terms and conditions herein provided, each Party shall make, or cause
to be made, any filings required by such Party under any applicable antitrust or competition Laws
as soon as practicable after the date hereof (but, with respect to any HSR Act submission, in no event
later than 15 Business Days after the date hereof) and request early termination of any waiting
periods in connection with such competition filings. Each Party shall be responsible for its
respective filing fees incurred in connection with all filings contemplated by this Section
(c)
Notwithstanding anything to the contrary in this Agreement, each Party shall use its
reasonable best efforts to (i) make, after the filings contemplated by Section
other submissions required or reasonably requested by any Governmental Authority under such
Laws, (ii) cooperate with one another in preparing and making all such filings and submissions and
timely seeking all such consents, Permits, authorizations or approvals, (iii) keep the Sellers’
Representative and the Company Group’s counsel informed in all material respects and on a
reasonably timely basis of any substantive or material procedural communication relating to the
Transactions received by such party from, or given by such party to, the FTC, the Antitrust Division
of the Department of Justice or any other Governmental Authority or in connection with any
proceeding relating to the Transactions pending or threatened by a private party (iv) permit Buyer or
the Sellers’ Representative, as applicable, to review any such substantive or material procedural
communication and incorporate reasonable comments thereto, (v) use reasonable best efforts to
consult with Buyer or the Sellers’ Representative, as applicable, in advance of any meeting or
conference with any Governmental Authority relating to the Transactions or in connection with any
proceeding relating to the Transactions pending or threatened by a Person other than a Governmental
Authority, (vi) give Buyer or the Sellers’ Representative, as applicable, the opportunity to attend and
participate in such meetings and conferences (to the extent permitted by such Governmental
Authority or other Person), and (vii) take, or cause to be taken, all other actions necessary or
advisable to consummate and make effective the Transactions on or prior to the Outside Date.
Notwithstanding anything to the contrary in this Agreement, in no event will Buyer be obligated to
propose or agree to accept any undertaking or condition, to enter into any consent decree, to make
any divestiture, to accept any operational restriction or take any other action that, in the reasonable
judgment of Buyer, could be expected to limit the right of Buyer to own or operate all or any portion
of its respective businesses or assets. Neither the Sellers nor any of their respective Affiliates shall,
without Buyer’s written consent, in Buyer’s sole discretion, discuss or commit to any divestiture
transaction, or discuss or commit to alter their businesses or commercial practices in any way, or
otherwise take or commit to take any action that limits Buyer’s freedom of action with respect to, or
Buyer’s ability to retain any of the businesses, product lines or assets of, the Company Group or
otherwise receive the full benefits of this Agreement. Neither Buyer, on the one hand, nor Sellers
nor the Company Group, on the other hand, shall litigate with any Governmental Authorities to
oppose any enforcement action or remove any court or regulatory Orders impeding the ability to
consummate the Transactions without the written consent of the other (to be the written consent of
the Sellers’ Representative in the case of Sellers and the Company Group); provided, however, that
Buyer shall direct the defense of the Transactions in any investigation, litigation, enforcement action,
court or regulatory Order, or negotiations with any Governmental Authority; provided further that
Buyer shall reasonably consult with the Sellers and in good faith consider their views regarding the
strategy and process relating to the defense.
58
(d)
No Party shall consent to any voluntary delay of the consummation of the
Transactions hereby at the behest of any Governmental Authority without the consent of Buyer or
the Sellers’ Representative, as applicable, which consent shall not be unreasonably withheld,
conditioned or delayed.
(e)
Buyer shall not, and shall cause its Affiliates not, acquire or agree to acquire, by
merging with or into or consolidating with, or by purchasing a portion of the assets of or equity in,
any business or corporation, partnership, association or other business organization or division
thereof, in each case, if the entering into of a definitive agreement relating to, or the consummation
of such acquisition, merger or consolidation could reasonably be expected to materially delay or
prevent the consummation of the Transactions.
6.4
Further Actions
. In addition to the governmental filing and submission requirements
addressed by Section
, each of the Parties will cooperate and use reasonable best efforts to take, or
cause to be taken, all appropriate actions and to make, or cause to be made, all filings and submissions
necessary or advisable under all other applicable Laws, to consummate and make effective the Transactions.
Without limiting the generality of the foregoing, (i) the Parties will use reasonable best efforts, as
applicable, to obtain all licenses, Permits, consents, approvals, authorizations, qualifications and Orders of
Governmental Authorities and to the extent required by Law to be obtained prior to the Closing in order to
consummate the Transactions, to obtain them prior to the Closing and (ii) the Sellers and the Company
Group will use reasonable best efforts to obtain all consents approvals, authorizations of parties to contracts
with the Company Group, in each case, as are necessary in connection with the consummation of the
Transactions and to fulfill the conditions to the Transactions.
6.5
D&O Indemnification; D&O Insurance
.
(a)
For a period of six years after the Closing, Buyer agrees that all rights provided in the
Organizational Documents or in any Contract to which a member of the Company Group is a party
with respect to exculpation, indemnification and advancement of expenses for acts or omissions
occurring at or prior to the Closing, whether asserted or claimed prior to, at or after the Closing
(including in respect of any matters arising in connection with this Agreement and the Transactions)
in favor of each individual who at the Closing is, or at any time prior to the Closing was, (i) a director,
manager or officer of any member of the Company Group or (ii) serving as a director, manager or
officer of any other Person at the request of any member of the Company Group (each Person
referred to in clause (i) or (ii), a “D&O Indemnified Party”) shall survive the Closing and shall
continue in full force and effect. For a period of six years after the Closing, Buyer shall not, and
shall not permit any member of the Company Group to, amend, repeal or modify any provision in
the Organizational Documents relating to the exculpation, indemnification or advancement of
expenses of any D&O Indemnified Party with respect to acts or omissions occurring at or prior to
the Closing, whether asserted or claimed prior to, at or after the Closing (including in respect of any
matters arising in connection with this Agreement and the Transactions), and all such D&O
Indemnified Parties shall continue to be entitled to such exculpation, indemnification and
advancement of expenses to the fullest extent permitted by applicable Law and that no change,
modification or amendment of such documents or arrangements may be made that will adversely
affect any such D&O Indemnified Parties’ right thereto without the prior written consent of that
D&O Indemnified Party.
(b)
In addition to the other rights provided for in this Section
thereof, from and after the Closing, Buyer shall cause the Company Group (each, a “D&O
Indemnifying Party”) to, to the fullest extent permitted by applicable Law, (i) indemnify and hold
harmless the D&O Indemnified Parties against all D&O Expenses (as defined below) and all losses,
59
claims, damages, judgments, fines, penalties, liabilities and amounts paid in settlement (“D&O
Losses”) in respect of any threatened, pending or completed investigation, claim, action, inquiry,
suit, judgment or other Proceeding, whether criminal, civil, administrative or investigative, based
on, arising out of, relating to or in connection with the fact that such Person is or was a director ,
officer or manager of any member of the Company Group arising out of or relating to acts or
omissions occurring or existing (or alleged to have occurred or existed) at or prior to the Closing
(including in respect of acts or omissions in connection with this Agreement and the Transactions)
(a “D&O Indemnifiable Claim”) and (ii) advance, interest-free, to such D&O Indemnified Party all
D&O Expenses incurred in connection with any D&O Indemnifiable Claim (including in
circumstances where the D&O Indemnifying Party is otherwise entitled to assume the defense of
such claim and has assumed such defense) reasonably promptly after receipt of statements therefor
(subject to reimbursement if the D&O Indemnified Party is subsequently determined by a non-
appealable judgment not to be entitled to indemnification under this Section
. Advance payment
of D&O Expenses in connection with any D&O Indemnifiable Claims shall continue until such D&O
Indemnifiable Claim is disposed of or all judgments, orders, decrees or other rulings in connection
with such D&O Indemnifiable Claim become final and nonappealable and are fully and finally
satisfied. None of Buyer or any member of the Company Group shall settle, compromise or consent
to the entry of judgment in any action or investigation or threatened action or investigation, in each
case, in any manner that would impose upon the D&O Indemnified Party any penalty or limitation
without the prior written consent of such D&O Indemnified Party (not to be unreasonably withheld,
conditioned or delayed). For the purposes of this Section
, “D&O Expenses” shall include
reasonable and documented attorneys’ fees, expert fees, arbitrator and mediator fees and all other
out-of-pocket costs, charges and expenses reasonably paid or incurred in connection with
investigating, defending, being a witness in or otherwise participating in (including on appeal or in
response to a non-party subpoena), or preparing to defend, to be a witness in or otherwise participate
in, any D&O Indemnifiable Claim.
(c)
On or prior to the Closing Date, Buyer will (or will cause the Company Group to)
purchase (the costs, fees and expenses of which shall be borne equally by Buyer, on the one hand,
and the Sellers, on the other hand), and for the six-year period commencing on the Closing Date,
Buyer shall maintain in effect directors’ and officers’ liability insurance covering acts or omissions
occurring at or prior to the Closing Date with respect to those Persons who are currently (and any
directors or officers of any member of the Company Group who prior to the Closing become)
covered by the existing director and officer insurance of the Company Group, in an amount and
scope, as well as terms, conditions and retentions, at least as favorable as the Company Group’s
existing directors’ and officers’ liability insurance policies (the “D&O Tail Policy”); provided,
however, that in no event will Buyer or the Company Group be required to expend for such six-year
period an amount in excess of 125% of the annual premium currently paid by the Company Group
for such insurance policy (the “Maximum Premium”). Buyer will maintain such D&O Tail Policy
in full force and effect, and continue to honor the obligations thereunder. If such insurance coverage
cannot be obtained at all, or can be obtained only at a premium in excess of the Maximum Premium,
Buyer will cause to be maintained the most advantageous tail policies of directors’ and officers’
insurance obtainable for a premium equal to the Maximum Premium.
(d)
The provisions of this Section
to be for the benefit of, and will be enforceable by, each D&O Indemnified Party and his or her heirs
and representatives, each of whom is an intended third-party beneficiary of this Section
, and
(iii) are in addition to, and not in substitution for, any other rights, including rights to indemnification
or contribution that any such Person may have be Contract or otherwise. Buyer will pay or cause to
be paid (as incurred) all reasonable and documented expenses, including reasonable fees and
expenses of counsel, that a D&O Indemnified Party may incur in enforcing the indemnity and other
60
obligations provided for in this Section
is subsequently determined not to be entitled to indemnification under this Section
.
Notwithstanding anything herein to the contrary, the rights and benefits of the D&O Indemnified
Parties under this Section
Indemnified Party without the prior written consent of such D&O Indemnified Party.
(e)
If (i) Buyer, any member of the Company Group or any of their respective successors
or assigns (A) consolidates with or merges into any other Person and is not the continuing or
surviving corporation or entity of such consolidation or merger or (B) transfers or conveys all or
substantially all of its properties and assets to any Person (including by liquidation, dissolution or
assignment for the benefit of creditors or similar action), then, and in each such case and (ii) neither
Buyer or a member of the Company Group to be controlled by Buyer after such transaction has
assumed the obligations set forth in this Section
, then Buyer shall, or shall cause, proper
provision to be made so that the successors and assigns of the Company Group member subject to
such transaction will assume the obligations set forth in this Section
(f)
Each of the Company Group shall be a full indemnitor of first resort, shall be required
to advance the full amount of all D&O Expenses incurred by a D&O Indemnified Party and shall be
liable for the full amount of all D&O Losses to the extent legally permitted and as required, without
regard to any rights a D&O Indemnified Party may have against any direct or indirect holder of the
Company Group or any of its respective Affiliates (collectively, the “Other Indemnitors”) or any
insurer providing insurance coverage under an insurance policy issued to any Seller or any of their
respective Affiliates. Each of Buyer and the Company Group further agrees that no advancement or
payment by any Other Indemnitor with respect to any D&O Indemnifiable Claim or any D&O
Expenses shall alter or limit the obligations of the Company Group hereunder and that any Other
Indemnitor shall have a right of contribution and be subrogated to the extent of such advancement
or payment to all of the rights of recovery of the D&O Indemnified Party against the Company
Group with respect thereto, and the Company Group hereby irrevocably waive, relinquish and
release the Other Indemnitors for indemnification, contribution or subrogation in respect thereof.
6.6
Employee Matters
.
(a)
Continuation of Employment
. The Parties intend that there shall be continuity of
employment with respect to the Company Group Employees as set forth below. Prior to the Closing
Date, the Sellers shall transfer (or cause to be transferred) the employment of any Company Group
Employee who is not employed by a member of the Company Group as of the date hereof (i.e., the
Company Group Employees listed on Schedule
1) to a member of the Company Group. Each
Company Group Employee who is actively employed by the Company Group as of the Closing shall
be known as a “Continuing Employee.” Following the date hereof, Sellers shall provide Buyer with
an updated version of the Company Group Employee List (i) upon Buyer’s reasonable request and
(ii) to the extent not already updated, no less than 15 days prior to the Closing.
(b)
Inactive Company Group Employees
. Notwithstanding the provisions of
Section
, and to the extent allowable under applicable Law, the employment of each Company
Group Employee who is not actively at work and is on a leave of absence as of the Closing Date
(each, an “Inactive Company Group Employee”) shall, prior to the Closing Date, be transferred to
an Affiliate of the Company Group (other than a member of the Company Group). An Inactive
Company Group Employee shall become a Continuing Employee only upon his or her return to
active employment with Buyer or its Affiliates, but only if such Inactive Company Group Employee
returns to active employment within six months following the Closing Date (or such longer period
61
as required by applicable Law). The Sellers agree to promptly notify Buyer upon receiving notice
of an Inactive Company Group Employee’s pending return to work.
(c)
Terms of Employment
. During the period from the Closing Date until
December 31, 2025, Buyer will, or will cause its Subsidiaries (including the Company Group after
the Closing) to, provide to each Continuing Employee (except as otherwise agreed to in an
employment agreement with an individual listed in Schedule A) (i) a base salary or wage rate, as
applicable, and target annual cash incentive opportunities (determined as a percentage of base salary
or wage rate), if any, that are at least as favorable on an aggregate basis to such Continuing Employee
as those provided to such Continuing Employee immediately prior to the Closing (provided,
however, that the performance metrics and structure of such annual cash incentive opportunities shall
be comparable to Buyer’s annual cash incentive plan), and (ii) other compensation and employee
benefits (excluding defined benefit pension, nonqualified deferred compensation, phantom share,
equity or equity-based or other long-term incentive compensation, retention, change in control,
transaction bonus and retiree or post-employment welfare or similar plans and arrangements) that
are substantially comparable in the aggregate to those provided to such Continuing Employee
immediately prior to the Closing.
(d)
Closing Year Bonuses
. On the Closing Date, the Sellers shall, or shall cause their
applicable Affiliates (which, for the avoidance of doubt, includes any member of the Company
Group), to make pro-rated payments under each annual cash bonus plan maintained by the Sellers
or their Affiliates (including the Company Group) to eligible Continuing Employees in respect of
the performance period in effect as of the Closing Date, with such pro-ration determined by
multiplying the actual annual cash bonus earned as of the Closing Date by a fraction, the numerator
of which is the number of days in such performance period that elapsed prior to the Closing Date,
and the denominator of which is 365. Effective as of the Closing Date, Buyer shall maintain, or
shall cause its Subsidiaries (including the Company Group after the Closing) to maintain one or
more annual cash bonus plans in which Continuing Employees who participated in an annual cash
bonus plan of a member of the Company Group immediately prior to the Closing Date shall be
eligible to participate.
(e)
Certain Welfare Plan Matters
. From and after the Closing Date, Buyer shall, or shall
cause its applicable Affiliate to, grant each Continuing Employee with credit for all service with the
Company Group earned prior to the Closing Date, to the same extent as such Continuing Employee
was or would have been entitled to such service under applicable Employee Plans before the Closing
Date, (i) for eligibility and vesting purposes and (ii) for purposes of vacation and paid time off
accrual and severance benefit determinations under each employee benefit plan or arrangement
maintained by Buyer or its Affiliates (including vacation, paid time off and severance plans) that is
made available to such Continuing Employee after the Closing (each, a “Buyer Plan”) (but not for
defined benefit pension plan accruals or where such service would result in duplication of benefits).
Without limiting the foregoing, Buyer shall, and shall cause its Subsidiaries (including the Company
Group after the Closing) to, provide, honor and recognize all accrued but unused vacation as of the
Closing Date. Buyer shall, or shall cause its applicable Affiliate to, use commercially reasonable
efforts to (x) waive, or cause to be waived, any pre-existing condition limitation, exclusions,
actively-at work requirements, waiting periods and any similar limitations under Buyer Plans that
would prevent immediate or full participation under any welfare benefit plan providing medical,
dental, hospital, pharmaceutical or vision benefits, except to the extent that such pre-existing
condition limitation, exclusions, actively-at work requirements and waiting periods would have been
applicable under the comparable benefit plan immediately prior to the Closing and (y) recognize, or
cause to be recognized, the dollar amount of all deductible or co-insurance expenses paid by each
Continuing Employee (and his or her eligible dependents) under an Employee Plan prior to the
62
Closing Date in the same plan year in which the Closing Date occurs for purposes of satisfying such
year’s deductible and co-payment limitations under any applicable, comparable Buyer Plan in which
the Continuing Employees participate from and after the Closing, as if such amounts had been paid
in accordance with such Buyer Plan.
(f)
Employee Plans Other than Company Group Plans; Sponsorship of Company Group
Plans
. Buyer and its Affiliates shall not assume any obligations or liabilities under or with respect
to, or receive any right or interest in any trusts relating to, any assets of or any insurance,
administration or other contracts pertaining to, any of the Employee Plans that are not Company
Group Plans. Unless Buyer instructs the Sellers otherwise prior to the Closing, the Sellers shall, at
least five Business Days prior to the Closing, transfer (or cause to be transferred) the sponsorship of
any Company Group Plan that is not sponsored by a member of the Company Group to a member
of the Company Group and take action as may be necessary to exclude any entity that is not a
member of the Company Group from participating in such Company Group Plans (including
amending any such Company Group Plan to reflect the transfer of sponsorship, and to exclude such
entities contingent on, and as of the Closing Date). The Company Group shall provide to Buyer for
its reasonable review and approval copies of all documents effectuating such transfer and
amendments. Buyer or its Affiliates shall assume, or cause the applicable member of the Company
Group to continue, sponsorship of and all obligations with respect to, the Company Group Plans.
(g)
No Third-Party Beneficiaries
. Nothing in this Agreement shall be construed to
prevent Buyer or any of its Affiliates from (i) terminating or modifying the terms of employment of
any Continuing Employee following the Closing Date or (ii) terminating or modifying to any extent
any Company Group Plan. Nothing in this Agreement will be construed as an amendment to any
Employee Plan or any other compensation or benefit plans maintained for or provided to directors,
officers or employees of Buyer, its Affiliates or the Company Group prior to or following the
Closing. The Sellers and Buyer acknowledge and agree that all provisions contained in this
Section
that nothing in this Section
, whether express or implied, shall create any third-party beneficiary
or other rights in any other Person, including any Continuing Employee or any other current or
former employee or participant (or any spouse, dependent or other beneficiary thereof), of the
Sellers, Buyer or their respective Affiliates, including with respect to continued employment, the
terms and conditions of employment, or to any benefit or compensation plan, program, policy,
agreement or arrangement.
6.7
Tax Matters
.
(a)
Tax Certificates
. At or prior to the Closing, the Sellers’ Representative shall deliver
or cause to be delivered to Buyer an executed IRS Form W-9 from each Transferor.
(b)
Pre-Closing Tax Returns
.
(i)
The Sellers’ Representative shall have exclusive control over the preparation
and filing of any Tax Return of any Seller or Transferor , including IRS Form 1120-S and
IRS Form 1065 and any similar state, local or foreign income Tax Returns filed by Echo
Lake Foods Transferor (as a successor to Echo Lake Foods), Echo Lake Properties or Elkin
Properties (such Tax Returns, the “Seller Returns”).
(ii)
The Sellers’ Representative will prepare and timely file any income Tax
Return of any member of the Company Group for any Pre-Closing Tax Period that ends on
or prior to the Closing Date that is required to be filed after the Closing Date and that reflects
items that flow through to (or are otherwise reportable by) any Seller or the Securityholders
63
(such Tax Return, a “Passthrough Return”). Each Passthrough Return shall be prepared on
a basis consistent with past practice except to the extent otherwise required by applicable
Law. At least 20 days prior to the due date (including extensions) for filing any Passthrough
Return, the Sellers’ Representative shall deliver a copy of such Passthrough Return, together
with all supporting documentation and work papers, to Buyer for its review and reasonable
comment, and the Sellers’ Representative shall consider in good faith all reasonable
comments received from Buyer at least five days prior to the due date (after giving effect to
any valid extensions thereof) of such Passthrough Return and shall provide an as-filed copy
of such Passthrough Return to Buyer upon filing.
(iii)
Buyer shall prepare and file, or cause to be prepared and filed, all Tax Returns
required to be filed by any member of the Company Group for any Straddle Period that is
required to be filed after the Closing Date and that is not a Passthrough Return (each, a
“Buyer Prepared Return”). To the extent such Buyer Prepared Return (A) reflects an
Indemnified Tax, (B) reflects a Tax included as a liability in the determination of the Tax
Liability Amount, Working Capital, Company Group Expenses or Indebtedness, or
(C) reflects a Tax Refund Sellers are entitled to pursuant to Section
, each Buyer
Prepared Return shall be prepared on a basis consistent with past practice to the extent
permitted by applicable Law under a “more likely than not” (or higher) level of authority. At
least 30 days prior to the due date (including extensions) for filing any Buyer Prepared
Return (other than Buyer Prepared Returns relating to payroll Tax, social security or property
Tax or similar Taxes, in each case a copy of which shall be provided to the Sellers’
Representative by Buyer upon the Sellers’ Representative’s written request), Buyer shall
deliver a copy of such Buyer Prepared Return, together with all supporting documentation
and work papers, to the Sellers’ Representative for its review and reasonable comment. If
the Sellers’ Representative objects to any item on any such Buyer Prepared Return, the
Sellers’ Representative shall, within 15 days after receipt of such Buyer Prepared Return,
notify Buyer in writing of the Sellers’ Representative’s objection, which the Sellers’
Representative and Buyer shall cooperate in good faith to resolve. If the Sellers’
Representative and Buyer are unable to resolve such objection within five days after receipt
by Buyer of notice thereof, then the Sellers’ Representative and Buyer shall submit the
objection to the Independent Accountant for resolution using the procedures outlined in
Section
, applied
mutatis mutandis
. If the Independent Accountant is unable to resolve
any such objection before the due date (with extensions) for the applicable Buyer Prepared
Return, the applicable Buyer Prepared Return shall be filed as prepared by Buyer and then
amended to reflect the Independent Accountant’s resolution. Buyer will cause each Buyer
Prepared Return to be timely filed and will provide a copy to the Sellers’ Representative.
(iv)
In any case under this Agreement involving a Straddle Period, (i) real,
personal and intangible property Taxes (“Property Taxes”) for the Pre-Closing Tax Period
shall be equal to the amount of such Property Taxes for the entire Straddle Period multiplied
by a fraction, the numerator of which is the number of days during the Straddle Period that
are in the Pre-Closing Tax Period and the denominator of which is the number of days in the
Straddle Period (provided, however, that for the purposes of apportioning such Straddle
Period Property Taxes, the effective date of any adjustment to the rate, taxability, exemption
or other change upon which such Property Taxes are computed shall be respected), and
(ii) Taxes (other than Property Taxes) for the Pre-Closing Tax Period shall be computed as if
such Tax period ended as of the close of business on the Closing Date; provided, however,
that, for the avoidance of doubt, all permitted allowances, credits, exemptions and deductions
that are normally computed on the basis of an entire year period (such as depreciation and
amortization deductions) shall accrue on a daily basis and shall be allocated between the pre-
64
Closing portion of the Straddle Period and the post-Closing portion of the Straddle Period in
proportion to the number of days in each such period.
(v)
Except to the extent attributable, in whole or in part, to the use of any item of
loss, deduction, creditor or other similar item arising in a Tax period beginning after the
Closing Date, without duplication of any Tax Refunds payable to the Sellers under
Section
, Buyer shall pay to the Sellers an amount of cash equal to the amount by which
(A) the Closing Tax Liability Amount exceeds (B) the Tax Liability Amount actually paid
(determined as of the date on which the final Tax Return for Income Taxes of the Company
Group for the Pre-Closing Tax Period is filed) within 30 days after the filing of the last Tax
Return for Income Taxes of the Company Group for the Pre-Closing Tax Period.
(c)
Cooperation on Tax Matters
. Buyer and the Sellers will cooperate fully, as and to the
extent reasonably requested by any other Party, in connection with the filing of Tax Returns pursuant
to this Section
cooperation shall include the retention and (upon any other Party’s request) the provision of records
and information that are reasonably relevant to any such audit, litigation or other Proceeding, making
employees available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder and signing any Tax Return prepared in accordance
with this Section
pertinent to the Company Group relating to any Tax period beginning before the Closing Date until
the expiration of the statute of limitations (including any extensions thereof) of the Tax periods to
which such books and records relate (or such longer period as may be necessary to resolve any
disputes hereunder), and to abide by all record retention agreements entered into with any Tax
authority and (ii) to give the Sellers’ Representative reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the Sellers’ Representative so requests,
the Company Group or Buyer, as the case may be, will allow the Sellers’ Representative to take
possession of such books and records.
(d)
Tax Contests
. From and after the Closing Date, Buyer shall give prompt notice to the
Sellers’ Representative if any Governmental Authority provides notice of an intent to audit, review
or conduct any other proceeding with respect to the Taxes or Tax Returns of any member of the
Company Group for any Pre-Closing Tax Period. The Sellers’ Representative, at the cost and
expense of the Sellers, shall have the right to control any audit, examination, claim or other
proceeding by any Governmental Authority with respect to any Taxes or Tax Returns of the
Company Group (a “Tax Claim”) for any Tax period ending on or prior to the Closing Date that
would or could reasonably be expected to (i) result in an Indemnified Tax, (ii) increase any Tax
liability of any Seller, Securityholder or any of their Affiliates, (iii) increase any Tax reflected as a
liability in the determination of the Tax Liability Amount, Working Capital, Company Group
Expenses or Indebtedness, or (iv) reduce a Tax Refund Sellers are entitled to pursuant to
Section
Representative shall provide Buyer with a timely and reasonably detailed account of each stage of
such Seller Tax Claim, (ii) the Sellers’ Representative shall consult with Buyer and offer Buyer an
opportunity to comment before taking any significant action or submitting any written materials with
respect to such Seller Tax Claim, (iii) the Sellers’ Representative shall defend such Seller Tax Claim
diligently and in good faith as if it were the only party in interest, (iv) Buyer shall be entitled, at its
own expense, to participate and attend any meetings or conferences with the relevant Governmental
Authority with respect to such Seller Tax Claim and (v) the Sellers’ Representative shall not settle
or compromise any material issue with respect to such Seller Tax Claim without the prior written
consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed. Buyer
shall control any Tax Claim for any Pre-Closing Tax Period (including any Straddle Period) that is
65
not a Seller Tax Claim (a “Buyer Tax Claim”). With respect to any Buyer Tax Claim, (1) Buyer shall
provide the Sellers’ Representative with a timely and reasonably detailed account of each stage of
such Buyer Tax Claim, (2) Buyer shall consult with the Sellers’ Representative and offer the Sellers’
Representative an opportunity to comment before taking any significant action or submitting any
written materials with respect to such Buyer Tax Claim, (3) Buyer shall defend such Buyer Tax
Claim diligently and in good faith as if it were the only party in interest, (4) the Sellers’
Representative shall be entitled, at the Sellers’ expense, to participate and attend any meetings or
conferences with the relevant Governmental Authority with respect to such Buyer Tax Claim and
(5) Buyer shall not settle or compromise any material issue with respect to such Buyer Tax Claim
that would or could reasonably be expected to (A) result in an Indemnified Tax, (B) increase any
Tax liability of any Seller, Securityholder or any of their Affiliates, (C) increase any Tax reflected as
a liability in the determination of the Tax Liability Amount, Working Capital, Company Group
Expenses or Indebtedness, or (D) reduce a Tax Refund Sellers are entitled to pursuant to
Section
, in each case without the prior written consent of the Sellers’ Representative, which
consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding anything to
the contrary contained in this Agreement, the procedures for all Tax Claims shall be governed
exclusively by this Section
.
(e)
Transfer Taxes
. All transfer, documentary, sales, use, stamp, registration and other
such Taxes (“Transfer Taxes”) incurred by a member of the Company Group in connection with the
Equity Purchase (but excluding any Taxes based on net income) shall be borne and paid 50% by the
Sellers, on one hand, and 50% by Buyer, on the other hand, when due. Buyer and the Sellers will,
at their joint expense, file all necessary Tax Returns and other documentation with respect to all such
Transfer Taxes, and, if required by applicable Law, Buyer and the Sellers will join in the execution
of any such Tax Returns and other documentation. The costs associated with filing these Tax Returns
and documentation will be borne and paid 50% by the Sellers, on one hand, and 50% by Buyer, on
the other hand.
(f)
Allocation of Purchase Price
. The Final Adjusted Equity Price paid in connection
with the Equity Purchase (along with any other items that are treated as additional consideration for
U.S. federal and applicable state and local Income Tax purposes (including, for the avoidance of
doubt, any liabilities that, for U.S. federal and applicable state and local Income Tax purposes, are
treated as assumed by Buyer)) shall be allocated among the assets of the Company Group in
accordance with Section 1060 of the Code, the Treasury Regulations promulgated thereunder, and
the methodologies set forth in Schedule B-2 attached hereto (the “Allocation Methodology”).
Within 60 days after the final determination of the Closing Statement pursuant to Section
, Buyer
shall prepare and provide, or cause to be provided, to the Sellers’ Representative an initial draft
allocation prepared in accordance with the Allocation Methodology (the “Proposed Allocation”).
Within 30 days after its receipt of such Proposed Allocation, the Sellers’ Representative will review
and comment on the allocation, and, absent objection, will sign and return an executed copy thereof
to Buyer, which allocation will be final. If the Sellers’ Representative requests any revisions to the
allocation, Buyer and the Sellers’ Representative will discuss such revisions in good faith, and, if
Buyer and the Sellers’ Representative are unable to finalize the allocation following such good faith
discussions, the allocation will be as finally determined by the Independent Accountant, or if the
Independent Accountant is not willing to be retained for such purpose or is determined not to be
independent of either the Sellers’ Representative or Buyer, a reputable, nationally recognized
independent accounting firm that is mutually agreed on by Buyer and the Sellers’ Representative
(with such Parties sharing the costs of such equally); provided, however, that in any event the
Independent Accountant or independent accounting firm retained pursuant to this Section
be instructed and bound to make such determination in a manner consistent with this Agreement and
the Allocation Methodology. The determination of such allocation shall be final and binding for all
66
applicable Tax purposes. The Parties (and their respective Affiliates) shall not take (or cause the
Company Group to take) any position inconsistent with the foregoing intent on any Tax Return or in
any Tax proceeding, except upon a final “determination” by a Governmental Authority within the
meaning of Section 1313(a)(1) of the Code; provided, however, that this Section
interpreted to prohibit or hinder any Party from settling any Tax audit or dispute in a manner
inconsistent with the final allocation determined hereunder.
(g)
Intended Tax Treatment
. For U.S. federal and applicable state and local Income Tax
purposes, the Parties covenant and agree to characterize the F Reorganization as an Income Tax-free
reorganization of Echo Lake Foods (as it existed as an S corporation for U.S. federal Income Tax
purposes immediately before the F Reorganization) under Section 368(a)(1)(F) of the Code (and all
comparable state, local and non-U.S. Income Tax Laws) into Echo Lake Foods Transferor (as the
continuing S corporation immediately after the QSub Election and no separate election for Echo
Lake Foods Transferor to be treated as an S corporation for U.S. federal Income Tax purposes was
required) as contemplated by Revenue Ruling 2008-18, with Echo Lake Foods becoming a
disregarded entity of Echo Lake Foods Transferor as a “qualified subchapter S subsidiary” as
described in Sections 1361 and 1362 of the Code, and then (after the Conversions) each of Echo
Lake Foods, Xenitel and Huntington becoming a disregarded entity of Echo Lake Foods Transferor
pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii). For U.S. federal and applicable state
and local Income Tax purposes, the Parties (and their respective Affiliates) shall treat the ELT
Contribution as an “assets-over” partnership merger pursuant to Treasury Regulations Sections
1.708-1(c)(1) and 1.708-1(c)(3)(i), with the result that (i) Echo Lake Properties will be treated as the
“resulting partnership,” (ii) ELT will be deemed to contribute all of its assets and all of its liabilities
to Echo Lake Properties in exchange for interests in Echo Lake Properties in a transaction described
in Section 721(a) of the Code, and immediately thereafter ELT will be deemed to distribute interests
in Echo Lake Properties to its members in complete liquidation, and (iii) Echo Lake Properties will
be treated as a continuation of the Echo Lake Properties partnership for purposes of Section 708 of
the Code. For U.S. federal and applicable state and local Income Tax purposes, the Parties (and their
respective Affiliates) shall treat the Equity Purchase as a taxable sale of the assets of each member
of the Company Group pursuant to Section 1001 of the Code. Each of the Parties (and their
respective Affiliates) shall file all Tax Returns consistent with the Tax treatment as set forth in this
Section
of any relevant Tax Return in any Tax proceeding with respect to such Tax Returns, except upon a
final “determination” by a Governmental Authority within the meaning of Section 1313(a)(1) of the
Code; provided, however, that this Section
Party from settling any Tax audit or dispute in a manner inconsistent with the Tax treatment described
herein.
(h)
Tax Refunds
. Except to the extent (i) reflected as an asset in Closing Working Capital
or (ii) attributable to a carry back or other use of any item of loss, deduction, credit or other similar
item arising in a Tax period beginning after the Closing Date, any refund of Taxes of the Company
Group for any Pre-Closing Tax Period (determined in accordance with the principles of
Section
by the applicable Governmental Authority (each, a “Tax Refund”), whether in the form of cash
received or a credit for overpayment of Taxes that may be used to offset cash Taxes otherwise
payable, shall be the property of the Sellers. For the avoidance of doubt, the Specified Tax Refunds
are Tax Refunds that shall be the property of the Sellers. Buyer shall pay or cause to be paid to
Sellers the amount of any such Tax Refund no later than five Business Days after the receipt of such
Tax Refund from the applicable Governmental Authority (or, if the Tax Refund is in the form of a
credit for overpayment of Taxes used to offset cash Taxes otherwise payable, no later than
five Business Days after the earlier of (x) the filing of the Tax Return claiming such credit or offset
67
and (y) the due date of such Tax Return after taking into account all valid extensions), in each case,
net of any unreimbursed reasonable and documented out-of-pocket costs (including Taxes) incurred
by Buyer and its Affiliates in respect of such refund (or credit). Buyer shall, at the sole expense of
the Sellers, if the Sellers’ Representative reasonably requests, cause the Company Group to file for
and use commercially reasonable efforts to obtain the receipt of any Tax Refund to which Sellers are
entitled under this Section
thereto) previously paid to the Sellers pursuant to this Section
Governmental Authority or are subsequently disallowed by a Governmental Authority, the Sellers
shall promptly repay to Buyer such previously paid amounts.
(i)
Certain Tax Matters
. Without the prior written consent of the Sellers’ Representative,
Buyer shall not, and shall cause each member of the Company Group not to, (i) amend or cause the
amendment of a Tax Return of any of the members of the Company Group with respect to any Pre-
Closing Tax Period, (ii) change an annual accounting period or adopt or change any accounting
method with respect to any Pre-Closing Tax Period, (iii) file or amend any Tax election concerning
any member of the Company Group with respect to any Pre-Closing Tax Period, (iv) extend or waive
the applicable statute of limitations with respect to a Tax of any member of the Company Group for
a Pre-Closing Tax Period, (v) file any ruling request with any Governmental Authority that relates
to Taxes or Tax Returns of any member of the Company Group for a Pre-Closing Tax Period, or
(vi) initiate or participate in any voluntary disclosure program with any Governmental Authority
regarding any Tax (or potential Taxes) or Tax Returns of any member of the Company Group for a
Pre-Closing Tax Period, in each case, if such action would, or could reasonably be expected to,
(A) increase any Tax liability of any Seller, Securityholder or any of their Affiliates, (B) give rise to
any Indemnified Taxes, (C) increase any Tax reflected as a liability in the determination of the Tax
Liability Amount, Working Capital, Company Group Expenses or Indebtedness, or (D) reduce a Tax
Refund Sellers are entitled to pursuant to Section
(j)
Other Tax Matters
.
(i)
The Parties agree that any gains, income, deductions, losses or other items
realized by any member of the Company Group for U.S. federal, state and local Income Tax
purposes with respect to any Buyer Closing Date Transaction shall be treated as occurring
on the day immediately following the Closing Date.
(ii)
The members of the Company Group shall treat any deductions attributable
to (A) any Transaction Tax Deductions and all related amounts paid, accrued or accruable
on or before the Closing Date, and (B) any Company Group Expenses paid, accrued or
accruable on or before the Closing Date, as deductible in a Pre-Closing Tax Period to the
fullest extent allowed by Law.
(iii)
Buyer shall not, and shall not allow any member of the Company Group to,
engage in any transaction after the Closing, but on the Closing Date, that is outside of the
ordinary course of business and is not contemplated by this Agreement for the intended
purpose of (A) increasing any Tax liability of any Seller or Securityholder or any of their
Affiliates, (B) giving rise to any Indemnified Taxes, (C) increasing any Tax reflected as a
liability in the determination of the Tax Liability Amount, Working Capital, Company Group
Expenses or Indebtedness, or (D) reducing a Tax Refund Sellers are entitled to pursuant to
Section
6.8
Confidentiality.
For a period of five years after the Closing, each Seller shall, and shall cause
its post-Closing Affiliates (excluding, for the avoidance of doubt, Buyer and the Company Group) and
68
representatives to, treat as confidential and safeguard any and all information, knowledge, data, ideas,
concepts, plans and strategies whether now or hereafter existing relating to or arising from the past, current
or planned business, activities, finances and/or operations of the Company Group and the Business that is
known to the Sellers or such Affiliates (the “Confidential Information”) except (a) as otherwise agreed to in
writing by Buyer, (b) for disclosures to any Governmental Authority having jurisdiction to require disclosure
or to any arbitral body to the extent required by same, (c) as otherwise may be required by applicable Law,
(d) in connection with enforcing any rights under this Agreement or any Ancillary Agreement, (e) as
required for internal audit, financial and Tax purposes, or (f) for disclosures to its representatives in the
ordinary course of business, but only if such representatives are made aware of and directed to abide by the
provisions of this Section
representatives. Notwithstanding the foregoing, if any Seller or any of its Affiliates or representatives is
requested or required disclose any Confidential Information in response to a court order or as otherwise
requested or required by any Law, or to comply with Tax reporting requirements (including the preparation
of Tax Returns), regulatory reporting, audit or other compliance obligations, to the extent permitted by such
Law or other compliance obligation, such Seller, Affiliate or representative thereof will notify Buyer in
writing of such request or obligation as soon as practicable after such Seller, Affiliate or representative
thereof becomes aware of it and, if possible, before any information is disclosed, so that a protective order
or other appropriate remedy may be obtained by Buyer at Buyer’s sole expense. The Parties acknowledge
that the confidentiality obligations set forth in this Section
and data that (i) is or becomes generally available to the public other than as a result of a disclosure by such
Seller or any of its Affiliates or representatives, (ii) is available or becomes available to such Seller or any
of its Affiliates or their respective representatives on a non-confidential basis from a source other than any
member of the Company Group that is not bound by a confidentiality or fiduciary obligation to the Company
Group, (iii) is requested or required by applicable Law to be disclosed, (iv) was independently developed
by such Seller, its Affiliates or their respective representatives without reference to or otherwise utilizing
the Company Group’s information, (v) to the extent it is owned by an Excluded Company but is not related
to or owned by a member of the Company Group. The Confidentiality Agreement shall terminate and be of
no further force and effect on the Closing Date. For the avoidance of doubt, the provisions of this Section
will not apply to any information regarding the negotiation or execution of this Agreement or the
consummation of the Transactions or the public announcement thereof, which shall be governed solely by
Section
6.9
Access to Books and Records.
From and after the Closing Date and for a period of five years
thereafter, the Sellers’ Representative and its representatives shall have reasonable access, upon reasonable
notice and during normal business hours to all of the books and records of the Company Group (including
the ability to make copies of any such information) to the extent that such access may be reasonably required
to permit the Sellers to perform or satisfy any accounting or regulatory obligation, in connection with any
legal proceeding by or before a Governmental Authority or the preparation and filing of Tax filings and
other Tax compliance obligations, in each case, relating to any period on or prior to the Closing Date, but
only to the extent that Buyer may do so without violating any obligations to any Person or waiving any legal
privilege and to the extent that Buyer has the authority to grant such access without breaching applicable
Law or any contract or other restriction binding on Buyer or the Company Group; provided, however, that
in any such case, Buyer shall, and shall cause the Company Group to, reasonably cooperate with the Sellers’
Representative to seek an appropriate remedy to permit the access contemplated hereby; provided further
that (i) such investigation will be conducted in a manner that does not unreasonably interfere with normal
operations of Buyer or the Company Group, (ii) such access (including the making of copies) shall be
conducted at the Sellers’ Representative’s sole expense, (iii) no Personal Data shall be disclosed or used
other than in compliance with applicable Privacy Law, (iv) neither Buyer nor the Company Group shall be
required to incur any third-party costs or expenses in connection with the rights granted pursuant to this
Section
, (v) nothing herein shall require any member of the Company Group or its representatives to
furnish to the Sellers’ Representative or provide the Sellers’ Representative with information or access to
69
any Trade Secrets related to any Company Group Intellectual Property and (vi) the Sellers’ Representative
and the Sellers will, and will direct their respective Affiliates and representatives to, keep all information
furnished in accordance with Section
period of six years following the Closing, or such longer period as may be required by applicable Law or
necessitated by applicable statutes of limitations, Buyer shall, and shall cause the Company Group to,
maintain all such books and records and shall not destroy, alter or otherwise dispose of any such books and
records, in each case, relating to the purposes described in the foregoing sentence. On and after the end of
such period, Buyer shall, and shall cause the Company Group to, provide the Sellers’ Representative with
at least ten Business Days’ notice before destroying, altering or otherwise disposing of any such books and
records, during which period the Sellers’ Representative may elect to take possession, at its own expense,
of such books and records relating to the purposes described in the first sentence of this Section
6.10
R&W Insurance Policy
.
(a)
If Buyer obtains an R&W Insurance Policy, (i) the costs, fees and expenses of any
such R&W Insurance Policy shall be borne equally by Buyer, on the one hand, and the Sellers, on
the other hand and (ii) then such R&W Insurance Policy shall provide that the insurer for such R&W
Insurance Policy shall not receive, irrevocably and unconditionally waives and releases, and agrees
not to exercise, directly or indirectly, any rights and claims of subrogation, contribution,
indemnification or recourse or other rights of recovery, or rights and claims acquired by assignment
against the Sellers, except in the case that a Seller commits Fraud. Prior to binding any R&W
Insurance Policy, Buyer shall provide notice to the Sellers’ Representative and provide the Sellers’
Representative a reasonable opportunity to comment on such policy with respect to the matters set
forth in the preceding sentence, which comments shall be considered in good faith and presented to
the insurer of the R&W Insurance Policy for inclusion into the R&W Insurance Policy by Buyer
prior to the binding thereof. In addition, the R&W Insurance Policy shall not be amended, restated,
supplemented, modified or altered, nor shall any terms thereof be waived, in any manner adverse to
the Sellers without the prior written consent of the Sellers’ Representative.
(b)
Except for those matters set forth in
, Buyer acknowledges and agrees that
if it obtains an R&W Insurance Policy, then such R&W Insurance Policy (whether or not such R&W
Insurance Policy is sufficient to cover the applicable losses) shall be the sole and exclusive remedy
of Buyer and its Affiliates (including, from and after the Closing, the Company Group), in Law,
equity or otherwise, arising out of, or related to any inaccuracy or breach of any representation or
warranty regarding the Company Group contained in this Agreement, the Ancillary Agreements or
in any certificates delivered with respect thereto, and Buyer, its Affiliates (including, from and after
the Closing, the Company Group), and the insurers under any such R&W Insurance Policy shall
have no recourse against any Seller with respect thereto, except with respect to claims for Fraud and
claims related to pre-Closing Taxes.
6.11
Notices of Certain Events
. From the date hereof until the Closing Date or the termination of
this Agreement in accordance with the terms of
, whichever is earlier, the Sellers’ Representative
shall promptly notify Buyer of:
(a)
any notice or other written communication received by any Seller or member of the
Company Group from any Person alleging that the consent of such Person is or may be required in
connection with the Transactions or any Ancillary Agreement;
(b)
any notice or other written communication received by any Seller or member of the
Company Group from any Governmental Authority in connection with the Transactions or any
Ancillary Agreement;
70
(c)
any Proceedings (i) commenced or (ii) to the Knowledge of the Company Group,
threatened against any Seller or member of the Company Group that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section
(d)
any breach of any (i) representation or warranty set forth in
or (ii) Pre-Closing Covenant; or
(e)
any change, event, circumstance, occurrence, state of facts, development or effect
that has had or could reasonably be expected to have a Material Adverse Effect, or would reasonably
be expected to make the satisfaction of any of the conditions in Section
unlikely;
provided, however, that no such notification required by this Section
to be given under any other Section of this Agreement) shall affect the representations, warranties, covenants
or agreements of the Parties or the conditions to the obligations of the Parties under this Agreement.
6.12
Director, Manager and Officer Resignations
. At least five Business Days prior to the
Closing, the Sellers shall deliver to Buyer a true and complete list of the directors, managers and officers,
as applicable, of each member of the Company Group. At the request of Buyer at least one Business Day
prior to the Closing, the Sellers and the Company Group shall cause the resignation of any directors,
managers or officers identified by Buyer in writing, with effect as of the Closing.
6.13
Termination of Affiliate Contracts
. Except as set forth on Schedule
, the Sellers and the
Company Group shall, prior to the Closing, terminate or settle in full (without any payments by Buyer, any
Affiliate of Buyer or any member of the Company Group following the Calculation Time) all Affiliate
Contracts, pursuant to documentation that is reasonably acceptable to Buyer such that as of the Closing, all
such Contracts, transactions or other obligations or liabilities shall be of no further force or effect and
without any liability to Buyer or any of its Affiliates or any member of the Company Group notwithstanding
any terms thereof to the contrary.
6.14
Exclusivity
. Each of the Sellers and the Company Group agree that from the date of this
Agreement until the Closing Date or the prior termination of this Agreement pursuant to Section
, none
of the Sellers or any member of the Company Group shall, and the Sellers and the Company Group shall
instruct their respective Affiliates and representatives not to, directly or indirectly, (a) provide any non-
public information to any third party (including via access to any data room or other records) other than
Buyer and its representatives with respect to any Conflicting Transaction, (b) solicit, initiate or knowingly
encourage proposals, offers or inquiries from a third party other than Buyer and its representatives with
respect to any Conflicting Transaction, (c) participate in any negotiations or discussions with any third party
other than Buyer and its representatives with respect to any Conflicting Transaction or (d) enter into a letter
of intent or other agreement with a third party other than Buyer with respect to any Conflicting Transaction.
In furtherance of the foregoing, promptly after the execution of this Agreement, the Sellers and the Company
Group shall, and shall cause their Affiliates and representatives to, (x) within two Business Days from the
date of this Agreement, terminate access of any Person (other than Buyer, any of its Affiliates or any of their
respective agents or representatives) to any physical or electronic data rooms hosted by or on behalf of the
Company Group and (y) deliver written notice to each such Person requesting that such Person (other than
Buyer, any of its Affiliates or any of their respective representatives) promptly return or destroy all
confidential information regarding the Company Group in accordance with applicable confidentiality
agreements.
71
6.15
Non-Compete and Non-Solicit
. In order to induce Buyer to enter into this Agreement and to
induce Buyer to consummate the Transactions, the Sellers agree as follows:
(a)
Each Transferor and each Person listed on Schedule
each such Person, a “Restricted Party”) hereby agrees that, without the prior written consent of
Buyer, during the period beginning immediately following the Closing and ending on the date that
is five years after the Closing Date, such Restricted Party shall not, and shall cause its Affiliates not
to, directly or indirectly:
(i)
(A) enter into or engage in (or prepare to enter into or engage in) any
Competitive Activity, (B) manage, operate or control any business or Person that is or
proposes to be engaged in any business that is competitive with the Business (a “Competing
Business”), or (C) permit Restricted Party’s name to be used in connection with any
Competing Business, in the case of each of clauses (A) through (C) above, anywhere in the
United States of America (the “Restricted Territory”); or
(ii)
(A) solicit or contact any customer or supplier or prospective customer or
supplier to induce or attempt to induce such Person to cease doing business with, or reduce,
divert or transfer the amount of business conducted with, the Company Group, (B) solicit or
contact any customer or supplier or prospective customer or supplier to induce or attempt to
induce such Person to conduct business with any Person that is a Competing Business; or
(C) solicit or contact any customer or supplier or prospective customer or supplier to
adversely impact such Person’s business relationship with the Company Group.
(b)
Without the prior written consent of Buyer, during the period beginning immediately
following the Closing and ending on the date that is three years after the Closing Date, each Seller
agrees that such Seller shall not, and shall cause its Affiliates (and its or their respective directors,
officers, executors, trustees or fiduciaries (or their equivalents)), (i) solicit, induce, entice or recruit
or attempt to solicit, induce, entice or recruit, directly or indirectly, any employee, independent
contractor or consultant of the Company Group to terminate such Person’s employment or
engagement with the Company Group, or (ii) solicit, recruit or hire, or attempt to solicit, recruit or
hire, directly or indirectly, any employee, independent contractor or consultant of the Company
Group who was employed or engaged by the Company Group at any time during the 12-month
period immediately prior to the Closing Date; provided, however, that nothing herein shall prohibit
any Seller from (i) conducting a general solicitation of prospective employees in the ordinary course
of business consistent with past practice or hiring any Person as a result of such general solicitation
or (ii) soliciting or hiring any individual whose employment with a member of the Company Group
is involuntarily terminated by the Company Group.
(c)
The Sellers acknowledge that the covenants set forth in this Section
essential element of this Agreement and that, but for the agreement of the Sellers to comply with
these covenants, Buyer would not have entered into this Agreement.
(d)
If any provision contained in this Section
jurisdiction to be unenforceable because of the duration of such provision, the geographic area
covered thereby or otherwise, the court making such determination shall have the power to, and is
hereby directed by the Parties to, reduce the duration or geographic area of such provision or
otherwise modify such provision, and, in its reduced or modified form, such provision shall be
enforceable. In addition, upon a determination that any such term or other provision, or any portion
thereof, is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to
72
modify this Agreement so as to effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that the Transactions are consummated to the fullest extent possible.
ARTICLE VII
CONDITIONS TO CLOSING
7.1
Conditions of Buyer to Closing
. The obligations of Buyer to effect the Transactions at the
Closing are subject to the satisfaction (or, to the extent permitted by Law, waiver by Buyer) of the following
conditions:
(a)
Representations, Warranties and Covenants of the Sellers.
(i)
(A) The representations and warranties of the Sellers regarding the Company
Group and Transferors set forth in Sections
,
,
,
(first sentence only) and
as if made at and as of the Closing, (B) the representations and warranties of the Sellers
regarding the Company Group and Transferors set forth in Sections
only),
made at and as of the Closing (except for
de minimis
representations and warranties of the Sellers regarding the Company Group and Transferors
set forth in
true and correct in all respects (ignoring and disregarding all materiality and Material
Adverse Effect qualifications set forth therein) at and as of the Closing as if made at and as
of the Closing, except for inaccuracies of a representation or warranty (individually or when
aggregated with other such inaccuracies of representations or warranties) that have not had
and could not reasonably be expected to have a Material Adverse Effect; provided, however,
that, in each case, representations and warranties that are made as of a particular date or
period shall be so true and correct (in the manner set forth in clause (A), (B) or (C), as
applicable) only as of such date or period;
(ii)
The representations and warranties of the Securityholders set forth in
Section
de minimis
provided, however, that, in each case, representations and warranties that are made as of a
particular date or period shall be so true and correct only as of such date or period;
(iii)
The Sellers and the Company Group shall each have performed (or caused to
have been performed) in all material respects all covenants required to be performed by the
Sellers or the Company Group (as applicable) at or prior to the Closing under this Agreement
(except for such covenants that by their nature may be performed only at the Closing);
(iv)
The Sellers’ Representative and each Transferor shall have furnished Buyer
at the Closing with a certificate certifying the matters set forth in Sections
,
and
, as applicable; and
(v)
The Sellers’ Representative shall have furnished Buyer at the Closing with a
certificate certifying the matters set forth in Sections
73
(b)
Statutory Requirements; No Governmental Restraints.
(i)
Any applicable waiting period under the HSR Act and any timing agreement
with any Governmental Authority to delay or not consummate the Transactions shall have
expired or been terminated; and
(ii)
There shall not be any pending action, suit or proceeding initiated by any
Governmental Authority seeking to restrain or invalidate the Transactions; and
(iii)
There shall not be in effect any Law or Order enacted, issued, promulgated,
enforced or entered by any court or other Governmental Authority of competent jurisdiction
that enjoins, restrains, makes illegal or otherwise prohibits the consummation of the
Transactions.
(c)
Completion of Pre-Closing Restructuring
. The Sellers shall have completed the Pre-
Closing Restructuring pursuant to documentation that complies with the requirements set forth in
Section
(d)
Payment of Company Group Indebtedness; Release of Liens
. At or prior to the
Closing, the Sellers have repaid, or caused to be repaid, in full all outstanding secured Indebtedness
of the Company Group identified in clauses (a), (b), (d) and (e) of the definition of Indebtedness and
terminated the Existing Credit Facility, and, as applicable, have obtained payoff letters and lien
releases with respect to any Liens relating to any of the foregoing Indebtedness, which payoff letters,
termination documents and release instruments shall be delivered to Buyer at least three Business
Days prior to the Closing Date.
(e)
Ancillary Agreements
. Each of the Ancillary Agreements contemplated by this
Agreement to be executed at Closing, and to which any member of the Company Group or any Seller
is a party, shall have been executed and delivered by such Party and shall be in full force and effect.
(f)
No Material Adverse Effect
. No Material Adverse Effect shall have occurred since
the date hereof.
(g)
Instruments of Transfer
. Each Transferor shall have delivered to Buyer a duly
executed unit power or similar instrument of assignment and conveyance, transferring the Purchased
Equity Interests from such Seller to Buyer.
7.2
Conditions of the Sellers to Closing
. The obligation of the Sellers to effect the Transactions
at the Closing are subject to the satisfaction (or, to the extent permitted by Law, waiver by the Sellers’
Representative) of the following conditions:
(a)
Representations, Warranties and Covenants of Buyer.
(i)
(A) The representations and warranties of Buyer set forth in Sections
,
and as of the Closing (except for
de minimis
warranties of Buyer set forth in
shall be true and correct in all material respects at and as of the Closing as if made at and as
of the Closing; provided, however, that representations and warranties that are made as of a
particular date or period shall be so true and correct (in the manner set forth in clause (A) or
(B), as applicable) only as of such date or period;
74
(ii)
Buyer shall have performed (or caused to be performed) in all material
respects all covenants required to be performed by Buyer at or prior to the Closing under this
Agreement (except for such covenants that by their nature may be performed only at the
Closing); and
(iii)
Buyer shall have furnished the Sellers’ Representative at the Closing with a
certificate certifying the matters set forth in Sections
(b)
Statutory Requirements; No Governmental Restraints.
(i)
Any applicable waiting period under the HSR Act and any timing agreement
with any Governmental Authority to delay or not consummate the contemplated Transactions
shall have expired or been terminated;
(ii)
There shall not be any pending action, suit or proceeding initiated by any
Governmental Authority seeking to restrain or invalidate the Transactions; and
(iii)
There shall not be in effect any Law or Order enacted, issued, promulgated,
enforced or entered by any court or other Governmental Authority of competent jurisdiction
that enjoins, restrains, makes illegal or otherwise prohibits the consummation of the
Transactions.
(c)
Ancillary Agreements
. Each of the Ancillary Agreements contemplated by this
Agreement to be executed at Closing, and to which Buyer is a party, shall have been executed and
delivered by Buyer and shall be in full force and effect.
ARTICLE VIII
NON-SURVIVAL OF REPRESENTATIONS
8.1
Survival of Representations and Warranties
. Without limiting any claims against any Party
for Fraud or any rights to indemnification set forth in
, the representations and warranties
contained in
, and
Section
, Section
and thereafter there shall be no liability on the part of, nor shall any claim be made by, any Party in respect
thereof.
8.2
Survival of Covenants and Agreements
. The covenants in this Agreement requiring
performance solely prior to or at the Closing (each, a “Pre-Closing Covenant”) shall, in each case, terminate
effective as of the Closing and shall not survive the Closing for any purpose, and thereafter there shall be
no liability on the part of, nor shall any claim be made by, any party in respect thereof, and the covenants in
this Agreement that contemplate performance on or after the Closing or expressly by their terms survive the
Closing shall survive the Closing in accordance with their respective terms.
8.3
Statute of Limitations
. Each of the Parties acknowledges and agrees that this
expressly intended to limit an otherwise applicable statute of limitations under applicable Law, and waives
the statute of limitations under such Law to the extent such statute of limitations period exceeds the periods
described in this
8.4
No Post-Closing Liability for Representations or Pre-Closing Covenants
. Buyer
acknowledges and agrees that, regardless of whether Buyer obtains an R&W Insurance Policy (and
regardless of whether any R&W Insurance Policy it obtains is sufficient to cover the applicable Losses),
75
except as set forth in
, neither Buyer nor any Affiliate thereof (including, from and after the
Closing, the Company Group), shall have any remedy at law, in equity or otherwise, arising out of, or related
to, any inaccuracy or breach of any representation, warranty or Pre-Closing Covenant by or regarding the
Company Group or the Sellers contained in this Agreement, the Ancillary Agreements or in any certificates
delivered with respect hereto or thereto. Buyer and its Affiliates (including, from and after the Closing, the
Company Group), and the insurers under any such R&W Insurance Policy shall have no recourse against
any Seller or any Affiliate thereof with respect thereto. Buyer expressly waives any other rights, remedies,
claims or causes of action Buyer may have against any Person, by contract, statute or otherwise, with respect
to the foregoing, whether in contract, tort or otherwise, or whether at law or in equity, and regardless of the
legal theory under which such entitlement, remedy or recourse may be sought or imposed (including all
rights afforded by any statute that limits the effects of a release with respect to unknown claims). Each
Seller acknowledges and agrees that, at and as of the Closing, neither such Seller nor any Affiliate thereof,
shall have any remedy at law, in equity or otherwise, arising out of, or related to, any inaccuracy or breach
of any representation, warranty or Pre-Closing Covenant by or regarding Buyer contained in this Agreement,
the Ancillary Agreements or in any certificates delivered with respect hereto or thereto. Each Seller
expressly waives any other rights or remedies such Seller may have with respect to the foregoing, whether
in contract, tort or otherwise, or whether at law or in equity, and regardless of the legal theory under which
such entitlement, remedy or recourse may be sought or imposed (including all rights afforded by any statute
that limits the effects of a release with respect to unknown claims). Notwithstanding anything to the contrary
in this Agreement, nothing in this Agreement shall limit, impair or release any claims for Fraud or any rights
to indemnification set forth in
ARTICLE IX
SPECIAL INDEMNIFICATION
9.1
Indemnification Provision
. From and after the Closing, subject to the terms, and conditions
provided in this
Buyer and its Affiliates and each of their respective members, partners, directors, managers, officers,
employees, stockholders, agents and other Representatives (in each case, the “Buyer Indemnified Parties”),
from and against (a) any and all Losses incurred by the Buyer Indemnified Parties to the extent arising out
of or resulting from any of the items listed on Schedule
Indemnified Taxes. Payment in full of any amount due from the Sellers to Buyer under clause (b) of this
Section
before the date the payment of the Taxes to which such payment relates is due, or, if no Tax is payable,
within 15 days after written demand is made for such payment.
9.2
Indemnification Procedure
.
(a)
A written notice of all Specified Liabilities shall be deemed to have been given
pursuant to this Section
instituted by a third party against a Buyer Indemnified Party (each, a “Third Party Claim”) with
respect to any Specified Liability, which such Buyer Indemnified Party intends to claim
indemnification for any Losses under Section
, the Buyer Indemnified Party shall supply the
Sellers’ Representative with such information and documents as it has in its possession regarding
such claim, and will allow reasonable access to relevant personnel, auditors and other
Representatives of the Buyer Indemnified Party (subject to customary exceptions for legal privilege)
together with all pertinent information in its possession regarding the amount of the Loss that it
asserts it has sustained or incurred, and will permit the Sellers (as well as the Sellers’ Representatives,
agents or assigns) to inspect such other records and books in the possession of the Buyer Indemnified
Party and relating to the Third Party Claim and asserted Loss as the Sellers shall reasonably request,
76
and the Buyer Indemnified Party shall cooperate with the Seller with respect to matters relating to
any Third Party Claims.
(b)
The Sellers, acting through the Sellers’ Representative, shall have the right to conduct
and control, at their own expense, through counsel of their choosing, the defense of a Third Party
Claim so long as the Sellers’ Representative notifies the Buyer Indemnified Party that the Sellers
have agreed to indemnify the Buyer Indemnified Party for any and all Losses arising out of or
resulting from the Third Party Claim of which they are assuming the right to conduct and control the
defense within 30 days of their receipt of the initial notice of the Third Party Claim, and shall do so
in good faith; provided, however, that the Buyer Indemnified Party may participate at its own
expense, with counsel of its choosing, in the defense of such Third Party Claim although such Third
Party Claim shall be controlled by the Sellers; provided further that if the Buyer Indemnified Party
requests, and the Sellers fail to provide to the Buyer Indemnified Party, evidence reasonably
acceptable to the Buyer Indemnified Party that the Sellers have sufficient resources to defend such
third-party action or suit and fulfill its indemnity obligations hereunder, the Sellers shall no longer
be entitled to conduct and control the defense of said third-party action or suit. The Party defending
such action or suit shall in any event defend any such matters vigorously and in good faith.
(c)
The Buyer Indemnified Party and the Sellers shall in each case cooperate with each
other to the fullest extent possible in regard to all matters relating to the Third Party Claim, including
corrective actions required by applicable Law, assertion of defenses, the determination, mitigation,
negotiation and settlement of all amounts, costs, actions, penalties, damages and the like related
thereto, access to the books and records of the Buyer Indemnified Party and its Subsidiaries and, if
necessary, providing the Party controlling the defense of the Third Party Claim and its counsel with
any powers of attorney or other documents required to permit the Party controlling the defense of
the Third Party Claim and its counsel to act on behalf of the other Party.
(d)
Neither the Buyer Indemnified Party nor the Sellers shall settle any Third Party Claim
without the consent of the other Party, which consent shall not be unreasonably withheld,
conditioned or delayed; provided, however, that if such settlement involves only the payment of
money and the release of the Third Party Claim and the Buyer Indemnified Party is completely
indemnified therefor and nonetheless refuses to consent to such settlement, then the Seller shall cease
to be obligated for such Third Party Claim or any Losses thereunder in excess of the amount of
Losses that would have been paid in such settlement. Any compromise or settlement of the Third
Party Claim under this Section
giving by the claimant in question to the Seller and the Buyer Indemnified Party a full and final
release of all liabilities in respect of such claims.
9.3
Determination of Losses
.
(a)
In calculating the amounts payable to a Buyer Indemnified Party, the amount of any
indemnified Losses shall be computed net of (i) payments already recovered by the Buyer
Indemnified Party under any insurance policy, with respect to such Losses or pursuant to any
contribution rights; and (ii) any prior recovery by the Buyer Indemnified Party from any Person with
respect to such Losses (including pursuant to any indemnification agreement or arrangement with
any third party).
(b)
In respect of any Loss for which indemnification may be sought pursuant to this
, the Buyer Indemnified Party shall (i) use reasonable best efforts to mitigate any Losses
upon becoming aware of any event that could reasonably be expected to, or does, give rise thereto
to the extent that such Losses can be mitigated; and (ii) use reasonable efforts to pursue all legal
77
rights and remedies available (including insurance recoveries and third-party indemnification) in
order to minimize the Losses to which it may be entitled to indemnification under this Agreement.
Notwithstanding anything to the contrary in this Agreement, the Sellers shall not be required to make
any payment to a Buyer Indemnified Party in respect of such Loss to the extent the Buyer
Indemnified Party has failed to comply with its obligations under this Section
(c)
Notwithstanding anything to the contrary in this Agreement, no Party shall be liable
for any (i) punitive damages, except to the extent such damages are finally determined to be payable
and actually paid to a third party in respect of a Third Party Claim in accordance with the terms of
this
, or (ii) consequential, special or other indirect damages, including any loss of future
business, distributions, revenue, profits or income, or loss of reputation (whether calculated based
on a multiple of lost profit or cash flow (or similar metric) or otherwise), in each case in the foregoing
clause (ii), except to the extent such damages or Losses arise from (A) a breach of a Party’s
confidentiality obligations expressly set forth in this Agreement or the Confidentiality Agreement or
(B) such Party’s Fraud.
9.4
Payments
. Subject to the other provisions of this Agreement, any Losses payable by the
Sellers to a Buyer Indemnified Party pursuant to Section
Indemnification Escrow Account and (b) then, to the extent the amount of Losses exceeds the amounts
available to the Buyer Indemnified Party in the Indemnification Escrow Account, from the Sellers; provided,
however, that with respect to the Sellers’ indemnification for Indemnified Taxes set forth in Section
(b),
with the exception of the Sellers’ indemnification for any Losses attributable to any Indemnified Taxes
relating to (i) Echo Lake Foods not qualifying as an S corporation for purposes of Subchapter S of the Code
and (ii) Huntington and Xenitel each not qualifying as a “qualified subchapter S subsidiary” as defined
under Section 1361(b)(3)(B) of the Code (in each case, as of the respective Qualification Dates set forth in
Section
, which, in each case, Buyer shall be entitled to receive payment from the Indemnification
Escrow Account and from the Sellers, Buyer shall be required to satisfy any Losses first from the R&W
Insurance Policy until the applicable caps or other limits under the R&W Insurance Policy have been met
(or recovery under the R&W Insurance Policy is not reasonably expected to be available) before seeking
recovery from the Indemnification Escrow Account or from the Sellers. If Buyer becomes entitled to any
distribution of all or any portion of the Indemnification Escrow Account pursuant to this
, Buyer
and the Sellers’ Representative will provide a joint written instruction to the Escrow Agent to pay to Buyer,
on behalf of the Sellers, by wire transfer of immediately available funds from the Indemnification Escrow
Account to the account designated by Buyer, the amounts to be paid from the Indemnification Escrow
Account to Buyer in accordance with this Agreement.
9.5
Tax Treatment of Indemnification Payments
. For all Tax purposes, Buyer and the Sellers
agree to treat any indemnity payment made by an indemnitor pursuant to this
the Adjusted Equity Price, unless otherwise required by Law.
9.6
Potential Partial Release from the Indemnification Escrow Account
. If (x) the Company
Group has received or entered into a Qualifying Order (as defined below) with respect to both Item 2 and
Item 3 on Schedule
required to be made by the Sellers to Buyer under this
been paid in full, including any applicable documentation, remediation and corrective costs required to be
taken by the Company Group with respect to each such matter addressed in the applicable Qualifying Order,
and (z) after all such indemnification payments have been made, the then-remaining balance in the
Indemnification Escrow Account is greater than $2,500,000, then Buyer and the Sellers’ Representative will
provide a joint written instruction to the Escrow Agent to pay such excess amount to the Sellers’
Representative, for the benefit of the Sellers, by wire transfer of immediately available funds from the
Indemnification Escrow Account to the account designated by the Sellers’ Representative. The term
78
“Qualifying Order” means a final Order issued by the applicable Governmental Authority that includes such
Governmental Authority’s unconditional confirmation to the Company Group that no further
documentation, remediation or corrective action is required to be taken by the Company Group with respect
to the matter addressed in such Order. Any amount remaining in the Indemnification Escrow Account as
of expiration of the latest-expiring statute of limitations applicable to Item 4 on Schedule
to the Sellers’ Representative, for the benefit of the Sellers, by wire transfer of immediately available funds
from the Indemnification Escrow Account to the account designated by the Sellers’ Representative;
provided, however, that if one or more Proceedings with respect to any of the Specified Liabilities are
pending at such time, then any amount remaining in the Indemnification Escrow Account shall remain until
such Proceedings are no longer pending or subject to appeal. Notwithstanding any provision in this
Section
, the release of amounts from the Indemnification Escrow Account shall not modify or terminate
the indemnification obligations of the Sellers expressly provided in this
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1
Termination
. This Agreement may be terminated, and the Transactions may be abandoned,
at any time prior to the Closing Date, as follows:
(a)
by mutual written agreement of the Sellers’ Representative and Buyer;
(b)
by Buyer, if there has been a breach by the Company Group or the Sellers, as
applicable, of any covenant, representation or warranty of the Company Group or the Sellers
contained in this Agreement, or if any such representation or warranty shall have become untrue, in
either case that would prevent or has prevented the satisfaction of any condition to the obligations
of Buyer at the Closing contained in Section
, Section
, and
such breach has not been waived by Buyer or cured, or cannot be cured, by the Company Group or
the Sellers, as applicable, on or prior to the date that is 30 days after written notice thereof has been
provided by Buyer (or by the second Business Day prior to the Outside Date, if earlier); provided,
however, that Buyer may not terminate this Agreement pursuant to this Section
in breach of this Agreement that would prevent or has prevented the satisfaction of any condition to
the obligations of the Sellers at the Closing contained in Section
(c)
by the Sellers’ Representative, if there has been a breach by Buyer of any covenant,
representation or warranty contained in this Agreement, or if any such representation or warranty of
Buyer shall have become untrue, in either case that would prevent or has prevented the satisfaction
of any condition to the obligations of the Sellers at the Closing contained in Section
Section
, and such breach has not been waived by the Sellers’ Representative or cured, or
cannot be cured, by Buyer on or prior to the date that is 30 days after written notice thereof has been
provided by the Sellers’ Representative (or by the second Business Day prior to the Outside Date, if
earlier); provided, however, that the Sellers’ Representative may not terminate this Agreement
pursuant to this Section
that would prevent or has prevented the satisfaction of any condition to the obligations of Buyer at
the Closing contained in Section
, Section
(d)
by either the Sellers’ Representative or Buyer, upon written notice to the other, if the
Closing shall not have occurred on or prior to July 7, 2025 (the “Outside Date”); provided, however,
if the conditions set forth in Section
Date, but all of the other conditions set forth in
(a) those that by their terms are to be satisfied at the Closing, but subject to the satisfaction thereof
79
at the Closing and (b) the completion of the Pre-Closing Restructuring, subject to the completion
thereof in accordance with Section
, either Buyer (upon written notice from Buyer to the
Sellers’ Representative) or the Sellers’ Representative (upon written notice from the Sellers’
Representative to Buyer) may elect to extend the Outside Date by up to 30 days; provided further
that (i) the Sellers’ Representative may not terminate this Agreement pursuant to this Section
if such non-occurrence of the Closing prior to the Outside Date is primarily due to the failure of the
Company Group or any Seller, as applicable, to perform or observe in all material respects the
covenants and agreements hereof to be performed or observed by it and (ii) Buyer may not terminate
this Agreement pursuant to this Section
Outside Date is primarily due to the failure of Buyer to perform or observe in all material respects
the covenants and agreements hereof to be performed or observed by it; or
(e)
by either Buyer or the Sellers’ Representative if there shall be any Law or Order
enacted, issued, promulgated, enforced or entered by any court or other Governmental Authority of
competent jurisdiction that is final and non-appealable permanently enjoining, restraining or
otherwise prohibiting the consummation of the Equity Purchase, but only if, prior to invoking this
condition, Buyer or the Sellers’ Representative (or with respect to the Sellers’ Representative’s right
to invoke this condition, the Sellers and the Company Group) shall have complied in all material
respects with its obligations under Section
10.2
Effect of Termination
. In the event of termination of this Agreement pursuant to Section
,
(a) this Agreement shall forthwith become void and have no further effect, except for the provisions of this
Section
, Section
, Section
, Section
, Section
, Section
Section
; and (b) there shall be no liability under this Agreement on the part of Buyer or the Company
Group, the Sellers or any of their respective officers or directors, and all rights and obligations of each Party
shall cease; provided, however, that nothing herein shall relieve any Party from liability for any willful
breach hereof occurring prior to such termination; provided further that any failure of any Party to
consummate the Transactions in breach of this Agreement shall be deemed to be a willful breach (regardless,
in the case of Buyer, of whether Buyer had sufficient funds available to consummate the Transactions);
provided further that following the termination of this Agreement, the obligations of the parties under the
Confidentiality Agreement shall continue in full force and effect in accordance with its terms. The Parties
agree not to bring any lawsuit, action or claim against any other Party inconsistent with the foregoing
provisions of this Section
. For purposes hereof, “willful breach” means, with respect to any
representation, warranty or covenant in this Agreement, acting or failing to act with the actual knowledge
that such action or failure to act could reasonably be expected to cause a material breach of this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1
No Third-Party Beneficiaries
. Except as expressly provided in this
or
, after the Closing, nothing in this Agreement will provide any benefit to any third party or
entitle any third party to any claim, cause of action, remedy or right of any kind, it being the intent of the
Parties that this Agreement will not be construed as a third-party beneficiary contract.
11.2
Expenses
. Except as otherwise set forth herein (including the definition of Company Group
Expenses), and notwithstanding anything to the contrary in the Organizational Documents, all costs and
expenses incurred in connection with this Agreement, the Ancillary Agreements and the Transactions
(including the fees and expenses of financial advisors, accountants and legal counsel): (a) if incurred by
Buyer, will be paid by Buyer, and (b) if incurred by the Sellers or the Company Group (but solely to the
extent incurred at or prior to Closing), will be paid by the Sellers prior to the Closing Date.
80
11.3
Notices
. All notices, requests, demands or other communications that are required or may
be given pursuant to the terms of this Agreement must be in writing and will be deemed to have been duly
given: (a) on the date of delivery, if personally delivered by hand; (b) upon the date scheduled for delivery,
if such notice is sent by a nationally recognized overnight-express courier or (c) upon written confirmation
of receipt by the recipient of such notice (including any automatic confirmation that is received), if
transmitted by electronic mail:
If to the Company Group (prior to the Closing) or any Seller, to the Sellers’ Representative:
c/o Echo Lake Foods, Inc.
316 W Grove St.
Burlington, WI 53105
Attention: Scott Meinerz, President
Email:
with a copy, in connection with any notice to the Company Group (prior to the Closing) or to any
Seller or to the Sellers’ Representative, which will not constitute notice, to:
Reinhart Boerner Van Deuren s.c.
N16 W23250 Stone Ridge Dr., Suite One
Waukesha, WI 53188
Attention: Vincent J. Beres; Blake Knickelbein
Email:
and in the case of Buyer (or following the Closing, the Company Group) to:
Cal-Maine Foods, Inc.
1052 Highland Colony Pkwy
Suite 200
Ridgeland, MS 39157
Attention: Sherman L. Miller, President and CEO
Email:
with a copy, which will not constitute notice, to:
Sidley Austin LLP
1000 Louisiana, Suite 5900
Houston, Texas 77002
Attention: J. Mark Metts
Email:
or at such other address or electronic mail address, as applicable, as may have been specified by like notice.
11.4
Headings
. The descriptive headings of the several Articles and Sections of this Agreement
are inserted for convenience only and do not constitute a part of the Agreement.
11.5
Entire Agreement
. This Agreement, the Ancillary Agreements, the Exhibits, the Schedules
and the Confidentiality Agreement constitute the entire agreement between the Parties (to the extent parties
thereto) pertaining to the subject matter hereof and supersede all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the Parties pertaining to the subject
matter hereof.
81
11.6
Waiver
. At any time prior to the Closing, any Party hereto may (a) extend the time for the
performance of any of the obligations or other acts of any other Party or (b) waive compliance with any of
the agreements of any other Party or with any conditions to its own obligations. Any agreement on the part
of a Party hereto to any such extension or waiver will be valid only if set forth in an instrument in writing
signed on behalf of such Party. Notwithstanding the foregoing provisions of this Section
, any extension
or waiver executed by the Sellers’ Representative on behalf of the Sellers in accordance with Section
shall be valid and binding with respect to each Seller.
11.7
Amendment
. This Agreement may not be amended except by an instrument in writing signed
by each of the Parties. No supplement, alteration or modification of this Agreement will be binding unless
executed in writing by the Parties. Notwithstanding the foregoing provisions of this Section
, any
supplement, alteration or modification executed by the Sellers’ Representative on behalf of the Sellers in
accordance with Section
11.8
Public Statements
. Following the date hereof, no Party (or Affiliate thereof) will issue a
press release or announcement concerning this Agreement and the Transactions without the prior written
consent of the Sellers’ Representative and Buyer; provided, however, that Buyer may issue any public
announcement or other public disclosures (a) required by applicable Law or (b) required by the rules of any
stock exchange upon which any class of Buyer’s capital stock is traded, but only if, in each case, Buyer uses
commercially reasonable efforts to afford the Sellers’ Representative an opportunity to first review the
content of the proposed disclosure and provide reasonable comments thereon. Buyer agrees to provide the
Sellers’ Representative a copy of any proposed press release or announcement permitted hereunder as soon
as practicable prior to the proposed date of dissemination thereof. Buyer shall give reasonable consideration
to any suggested changes to such proposed press release or announcement that are requested by the Sellers’
Representative. Notwithstanding the foregoing, no additional consent from the Sellers’ Representative is
required for any subsequent statements by or on behalf of Buyer that are consistent with any such public
announcements or other public disclosures that have already been made in compliance with this
Section
11.9
Assignment
. The provisions of this Agreement will be binding upon and inure to the benefit
of the Parties to this Agreement and their respective successors and permitted assigns, but no Party may
assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the
consent of Buyer or the Sellers’ Representative, as the case may be; provided, however, that Buyer may
assign its rights and obligations hereunder without the prior written consent of the other Parties to any
Affiliates; provided further that no such assignment shall relieve Buyer of its obligations under this
Agreement.
11.10
Independent Covenants
. The covenants contained herein are independent and separate, and
in the event that any provision contained herein is declared invalid or illegal, the other provisions hereof
will not be affected or impaired thereby and will remain valid and enforceable.
11.11
Governing Law
. This Agreement and the other documents delivered pursuant hereto and the
legal relations between the Parties will be governed and construed in accordance with the Laws of the State
of Delaware, without giving effect to principles of conflict of laws.
11.12
Jurisdiction; Venue
.
(a)
Except as specifically provided in Section
thereunder), each of the Parties (i) irrevocably submits itself to exclusive jurisdiction of the Court of
Chancery of the State of Delaware (provided, however, that, in the event subject matter jurisdiction
is declined by or unavailable in the Court of Chancery, then such action, suit or proceeding will be
heard and determined exclusively in any other state court sitting in the State of Delaware; provided
82
further that, in the event subject matter jurisdiction is declined by or unavailable in any such state
court, then such action, suit or proceeding will be heard and determined exclusively in any other
federal court sitting in the State of Delaware) with respect to any action, suit or proceeding arising
out of or relating to this Agreement, any of the Transactions or any facts and circumstances leading
to its execution or performance, (ii) agrees that it will not attempt to deny or defeat such jurisdiction
by motion or other request for leave from such courts, (iii) agrees not to bring any action, suit or
proceeding against any other Party arising out of or relating to this Agreement, any of the
Transactions or any facts and circumstances leading to its execution or performance in any other
court and (iv) waives any defense of inconvenient forum to the maintenance of any action, suit or
proceeding so brought. The Parties agree that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by applicable Law. Each of the Parties agrees to waive any bond, surety or other
security that might be required of any other Party with respect to any action, suit or proceeding,
including any appeal thereof.
(b)
Each of the Parties agrees that service of any process, summons, notice or document
in accordance with Section
brought against it by any other Party in connection with Section
; provided, however, that
nothing contained herein will affect the right of any Party to serve legal process in any other manner
permitted by applicable Law. Notwithstanding the foregoing, the consents to jurisdiction set forth
in Section
and shall have no effect for any purpose except as provided in this Section
deemed to confer rights on any Person other than the Parties.
(c)
EACH OF THE PARTIES HERETO HEREBY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY THAT MAY ARISE UNDER OR RELATING TO THIS
AGREEMENT, THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE ANCILLARY AGREEMENTS, THE TRANSACTIONS OR THE
FACTS OR CIRCUMSTANCES LEADING TO ITS EXECUTION OR PERFORMANCE. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO PARTY OR REPRESENTATIVE OR
AFFILIATE THEREOF HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVER, (iii) IT MAKES SUCH WAIVER KNOWINGLY AND
VOLUNTARILY AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS PARAGRAPH.
11.13
Counterparts
. This Agreement may be executed in any number of counterparts, each of
which when so executed will be deemed an original but all of which together will constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile
transmission or by electronic transmission of a .pdf or other electronic file shall be as effective as delivery
of a manually signed counterpart of this Agreement.
11.14
Withholding or Granting of Consent
. Except as otherwise provided in this Agreement
(including any provision that requires that consent is not to be unreasonably withheld, conditioned or
delayed), each Party hereto may, with respect to any consent or approval that such Party is entitled to grant
83
pursuant to this Agreement or any other document or instrument or agreement delivered or entered into
pursuant hereto, grant or withhold such consent or approval in its sole and uncontrolled discretion, with or
without cause, and subject to such conditions as it will deem appropriate.
11.15
Specific Enforcement
. The Parties acknowledge that, in view of the uniqueness of the
business of the Company Group and the Transactions, neither Buyer nor the Sellers will have an adequate
remedy at law for money damages, and that irreparable damage would occur, in the event that this
Agreement has not been performed in accordance with its terms by the other Parties, and therefore, the
Parties agree that Buyer or the Sellers’ Representative, as the case may be, will be entitled to seek an
injunction or injunctions and specific enforcement of the terms hereof with respect to the Transactions in
the event of breach or expressly threatened breach by the other Party in addition to any other remedy to
which the Parties may be entitled, at Law or in equity, for such breach without the requirement of the posting
of any bond therefor. The rights in this Section
may be entitled at law or in equity, and the exercise by a Party of one remedy shall not preclude the exercise
of any other remedy, and except as otherwise provided in this Agreement, nothing herein shall be construed
as a waiver by Buyer or the Sellers of any right they may now have or hereafter acquire to monetary damages
from the other Parties by reason of any injury to its property, or otherwise arising out of any breach or any
otherwise wrongful act or omission by such Parties; provided, however, that, notwithstanding the foregoing,
under no circumstances shall any Person be permitted or entitled to receive in connection with this
Agreement both (a) a grant of specific performance to require Buyer to consummate the Closing and (b) the
payment of monetary damages of any kind.
11.16
Non-Recourse
. All claims, obligations, liabilities or causes of action (whether in contract or
in tort, at law or in equity or granted by statute) that may be based upon, in respect of, arise under, out or by
reason of, be connected with, or relate in any manner to this Agreement or the negotiation, execution or
performance of this Agreement (including any representation or warranty made in, in connection with, or as
an inducement to, this Agreement), may be made against (and such representations and warranties are those
solely of) only the Parties. Notwithstanding anything that may be expressed or implied in this Agreement
to the contrary, the Parties agree and acknowledge that no recourse under this Agreement or any documents
or instruments delivered hereunder or the Transactions shall be had against any Person who is not a Party to
this Agreement, including any director, officer, employee, incorporator, member, partner, manager,
stockholder, Affiliate, agent, attorney or representative of, and any financial advisor or lender to, any of the
foregoing (together, the “Nonparty Affiliates,” it being acknowledged and agreed, for the avoidance of
doubt, that none of Buyer, the Company Group or the Sellers shall be Nonparty Affiliates hereunder),
whether by the enforcement of any assessment or by any legal or equitable litigation, or by virtue of any
Law, or by virtue of any breach or alleged breach hereof or thereof, the negotiation, execution or
performance hereof or thereof or the Transactions or in respect of any other document or theory of law or
equity or in respect of any oral or written representations made or alleged to be made in connection herewith
or therewith (whether by or through attempted piercing of the corporate veil, whether at law or in equity,
and whether in contract or in tort or otherwise), it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by any Nonparty Affiliate for
any obligation of any Party under this Agreement, any or any documents or instruments delivered hereunder
or the Transactions for any claim based on, in respect of or by reason of such obligations or their creation.
Without limiting the foregoing, no claim will be brought or maintained by any Party or any Nonparty
Affiliate or any of their respective successors or permitted assigns against, and no Person shall seek to
recover monetary damages from, any Nonparty Affiliate, and no recourse will be brought or granted against
any of them, by virtue of or based upon any alleged misrepresentation or inaccuracy in or breach or
nonperformance of any of the representations, warranties, covenants or agreements of any Party set forth or
contained in this Agreement or any documents or instruments delivered hereunder or the Transactions. Each
Nonparty Affiliate shall be an express third-party beneficiary of, and entitled to enforce, this Section
84
11.17
Waiver of Conflicts
. Reinhart Boerner Van Deuren s.c
.
(“Reinhart”) has acted as legal
counsel to the Company Group, its Affiliates and the Sellers
’
to various matters, including the Transactions and by acting as legal counsel to certain Affiliates of the
Company Group and the Sellers
’
certain Affiliates of the Company Group and the Sellers
’
including the Transactions and by acting as legal counsel to certain Affiliates of the Company Group and
the Sellers
’
Affiliates, hereby waives any conflicts of interest that may arise in connection with the representation by
Reinhart of the Company Group, its Affiliates and the Sellers
’
that have already occurred or that may arise in the future, including the Transactions and by acting as legal
counsel to certain Affiliates of the Company Group and the Sellers
’
that involve attorney-client confidences and that have arisen or may arise in the future between the Company
Group, on the one hand, and Reinhart, on the other hand, to the extent related to negotiation, documentation
and consummation of the Transactions, shall be deemed to be confidences that belong solely to the Sellers
’
Representative, and no other Person shall have any access thereto. Furthermore, all communications that
involve attorney-client confidences and that have arisen or may arise in the future with respect to any
representation by Reinhart of any Affiliate of the Company Group or the Sellers
’
any that may have arisen or that may in the future arise in connection with the Transactions) shall be deemed
to be attorney-client confidences that belong solely to such Person, and no other Person shall have any
access thereto. Without limitation of the foregoing, no Person may use or rely on any communications
described in the immediately preceding sentence in any claim, dispute, action, suit or proceeding against or
involving any of the Sellers. Notwithstanding the foregoing, if after the Closing a dispute arises between
Buyer or one or more of its Affiliates (including, after the Closing, the Company Group), on the one hand,
and a third party other than (and unaffiliated with) any of the Sellers, on the other hand, then Buyer or such
Affiliate (to the extent applicable) may assert the attorney-client privilege to prevent disclosure to such third
party of confidential communications by Reinhart; provided, however, that neither Buyer nor any of its
Affiliates may waive such privilege without the prior written consent of the Sellers
’
term of this Section
Reinhart.
[Signature Pages Follow; Remainder of Page Intentionally Left Blank]
1
IN WITNESS WHEREOF, each of the Parties has executed this Agreement as of the date first above
written.
BUYER:
CAL-MAINE FOODS, INC.
By: /s/ Sherman L. Miller
Sherman L. Miller
President and CEO
[Signature Pages Continue on Next Page]
1
TRANSFERORS:
ECHO LAKE PROPERTIES, LLC
By: /s/ Scott Meinerz
Name: Scott Meinerz
Title: Manager and President
ELKIN PROPERTIES, LLC
By: /s/ Scott Meinerz
Name: Scott Meinerz
Title: Manager and President
COMPANY GROUP:
ECHO LAKE FOODS, INC.
By: /s/ Scott Meinerz
Name: Scott Meinerz
Title: President
ELT, LLC
By: /s/ Scott Meinerz
Name: Scott Meinerz
Title: Manager and President
ECHO LAKE HUNTINGTON, INC.
By: /s/ Scott Meinerz
Name: Scott Meinerz
Title: President
2
XENITEL, INC.
By: /s/ Scott Meinerz
Name: Scott Meinerz
Title: President
ECHO LAKE HUNTINGTON 435, LLC
By: /s/ Scott Meinerz
Name: Scott Meinerz
Title: Manager
BLUE GRASS REAL ESTATE CO, LLC
By: /s/ Scott Meinerz
Name: Scott Meinerz
Title: Manager
ECHO YORKVILLE, LLC
By: /s/ Scott Meinerz
Name: Scott Meinerz
Title: Manager
[Signature Pages Continue on Next Page]
1
VOTING SECURITYHOLDERS:
THORNHILL FAMILY TRUST
By: /s/ Lynn Thornhill
Lynn Thornhill
Trustee
/s/ Leigh Peterson
Leigh Peterson
/s/ Sandra Townsend
Sandra Townsend
/s/ Timothy Meinerz
Timothy Meinerz
/s/ Gregory Meinerz
Gregory Meinerz
/s/ Scott Meinerz
Scott Meinerz
/s/ Luann Meinerz Namowicz
Luann Meinerz Namowicz
2
EXHIBIT A
ACCOUNTING PRINCIPLES
ARTICLE XIICAPITALIZED TERMS USED BUT NOT DEFINED IN THIS EXHIBIT A (THESE
“ACCOUNTING PRINCIPLES”) SHALL HAVE THE RESPECTIVE MEANINGS ASCRIBED
TO SUCH TERMS IN THE AGREEMENT.
ARTICLE XIIITHE CLOSING CERTIFICATE AND CLOSING STATEMENT (TOGETHER,
THE “STATEMENTS ”) SHALL BE PREPARED ON A COMBINED BASIS FOR THE
COMPANY GROUP IN ACCORDANCE WITH THE FOLLOWING POLICIES AND
PROCEDURES IN THE FOLLOWING ORDER OF PRIORITY:
13.1
the accounting principles, policies, practices, methodologies and procedures set out in these
Accounting Principles (“Specific Accounting Policies”);
13.2
to the extent not covered by clause
policies, treatments, categorizations, practices, methods, and bases as were used in the preparation of the
unaudited combined interim balance sheets as of February 28, 2025, included in the Unaudited Financial
Statements; and
13.3
to the extent not covered by clauses
Calculation Time.
In the event of a conflict, clause
, and clause
will have priority over clause
Specific Accounting Policies
As required by clause
principles:
ARTICLE XIVTHE SOLE REFERENCE FOR THE PREPARATION OF THE STATEMENTS
SHALL BE THE ASSOCIATED DEFINITIONS SET OUT IN THE AGREEMENT AND THESE
ACCOUNTING PRINCIPLES, AND IN THE EVENT OF A CONFLICT BETWEEN THE
DEFINITIONS SET OUT IN THE AGREEMENT AND THESE ACCOUNTING PRINCIPLES
THE DEFINITIONS SET OUT IN THE AGREEMENT SHALL PREVAIL.
ARTICLE XVTHE STATEMENTS SHALL:
15.1
be prepared on the basis the Company Group is a going concern and shall exclude the effect
of any change of Law or GAAP after the Calculation Time.
15.2
be interpreted to avoid double counting (whether positive or negative) of any item to be
included in the Statements.
15.3
be prepared in accordance with the specific procedures that would be adopted at a financial
year-end, including detailed analyses of prepayments and accruals and performance of cut-off procedures.
15.4
be prepared in a format set out in Schedule B-1 to the Agreement (the “Reference Balance
Sheet”) by reference to the trial balance account codes of the Company Group. The underlying assets and
liabilities shall be classified between the columns labeled “Cash,” “Working Capital,” “Indebtedness,”
“Company Group Expenses,” “Tax Liability Amount” and “Other” on a basis consistent with the
3
classification of the equivalent line item set forth in the Reference Balance Sheet. To the extent the
methodologies utilized in calculating the underlying amounts set forth in the Reference Balance Sheet
conflict with the Accounting Principles, the Accounting Principles shall prevail. To the extent any new
account codes are created between the date of the Reference Balance Sheet and the Calculation Time, the
amounts included therein will be (i) classified and allocated to an existing trial balance account code based
on the nature of the new account code and (ii) included in or excluded from “Cash,” “Working Capital,”
“Indebtedness,” “Company Group Expenses,” “Tax Liability Amount” and “Other” on a basis consistent
with the existing account code.
15.5
exclude any right-of-use assets or liabilities required to be recorded as such by FASB
Accounting Standards Codification Topic 842, Accounting for Leases, in respect of any operating leases
(except for any past due related liabilities, which shall be included as a liability in Working Capital).
15.6
not exclude any item or amount solely on the grounds of materiality.
ARTICLE XVIANY INTERCOMPANY BALANCES BETWEEN OR AMONG THE COMPANY
GROUP SHALL BE RECONCILED AND ELIMINATED PRIOR TO THE CALCULATION
TIME. ANY BALANCES THAT ARE NOT RECONCILED AS OF THE CALCULATION TIME
SHALL BE EXCLUDED FROM WORKING CAPITAL.
ARTICLE XVIIFOR PURPOSE OF CALCULATING WORKING CAPITAL:
17.1
there shall be no change in the classification (i) to a current asset or a current liability of
any asset or liability that has not previously been characterized as a current asset or current liability in the
Reference Balance Sheet or (ii) to a long-term asset or long-term liability of any asset or liability that has
not previously been characterized as a long-term asset or long-term liability in the Reference Balance Sheet,
in each case, other than such a change resulting solely from the passage of time between the date of the
Reference Balance Sheet and the Calculation Time.
17.2
prepayments made as of the Calculation Time shall be included in Working Capital only to
the extent they give rise to an economic benefit to Buyer after the Closing.
ARTICLE XVIIITHE OBLIGATION FOR FISCAL YEAR 2025 ANNUAL BONUS EARNED AND
UNPAID AS OF IMMEDIATELY PRIOR TO CLOSING SHALL BE INCLUDED IN
INDEBTEDNESS, CALCULATED ON A PRO RATA BASIS, BASED ON (A) THE NUMBER OF
DAYS BETWEEN JANUARY 1, 2025 AND THE CLOSING DATE AND (B) THE EMPLOYEE
BONUS BUDGET FOR FISCAL YEAR 2025. FOR AVOIDANCE OF DOUBT, THE
EMPLOYER PORTION OF ANY TAXES DUE ON SUCH AMOUNTS SHALL BE
CALCULATED AND INCLUDED IN INDEBTEDNESS IN ADDITION TO THE PRO RATA
PORTION OF THE UNPAID BONUSES EARNED AS OF IMMEDIATELY PRIOR TO
CLOSING. TO THE EXTENT THE BONUS IS EXPECTED TO EXCEED THE EMPLOYEE
BONUS BUDGET FOR FISCAL YEAR 2025, THE BONUS LIABILITY SHALL BE EQUAL TO
THE PRO-RATA AMOUNT BASED ON THE REVISED EMPLOYEE BONUS BUDGET FOR
FISCAL YEAR 2025.
ARTICLE XIXTHE REFUND FROM KENTUCKY RELATED TO SALES AND USE TAX
RECORDED IN
ACCOUNT #1212-00 (TAX RECEIVABLES)
, SHALL BE INCLUDED IN THE
CALCULATION OF CASH.
4
EXHIBIT B
FORM OF
CLOSING CERTIFICATE
“Agreement”), by and among Cal-Maine Foods, Inc., a Delaware corporation (“Buyer”); the following
companies to be acquired, directly or indirectly, by Buyer on the terms and subject to the conditions set forth
in the Agreement (each, a “Company” and, collectively, the “Companies” or the “Company Group”): (i)
Echo Lake Foods, Inc., a Wisconsin corporation (“Echo Lake Foods”), (ii) ELT, LLC, a Wisconsin limited
liability company (“ELT”), (iii) Echo Lake Huntington, Inc., a Wisconsin corporation (“Huntington”), (iv)
Xenitel, Inc., a Wisconsin corporation (“Xenitel”), (v) Echo Lake Huntington 435, LLC, a Wisconsin limited
liability company (“Huntington 435”), (vi) Blue Grass Real Estate Co, LLC, a Wisconsin limited liability
company (“Blue Grass”), and (vii) Echo Yorkville, LLC, a Wisconsin limited liability company
(“Yorkville”); the following transferring entities and securityholders (each, a “Seller” and, collectively, the
“Sellers”): (i) Echo Lake Properties, LLC, a Wisconsin limited liability company (“Echo Lake Properties”),
(ii) Elkin Properties, LLC, a Wisconsin limited liability company (“Elkin Properties”), (iii) the holders,
collectively, of 100% of the Class A voting shares of Echo Lake Foods, as set forth on the signature pages
to the Agreement (each, a “Voting Securityholder” and, collectively, the “Voting Securityholders”); and
Scott Meinerz, in his capacity as Sellers’ Representative. All capitalized terms used but not otherwise
defined herein shall have the respective meanings ascribed to them in the Agreement.
This Closing Certificate is delivered to Buyer pursuant to Section 2.3 of the Agreement. In
accordance with Section 2.3 of the Agreement, the Sellers’ Representative, on behalf of the Sellers, hereby
certifies that the items below set forth, in reasonable detail, the Sellers’ Representative’s good faith estimate
of: (a) the Estimated Adjustment Amount (and each component thereof and including the subtotal for each
Transferor Group); (b) the Estimated Adjusted Equity Price (including the subtotal for each Transferor
Group); and (c) the Closing Date Payment, in each case, as calculated in accordance with the Accounting
Principles.
1
Note to Draft
: The amounts shown below are illustrative and are consistent with the amounts shown in Exhibit C.
5
ARTICLE XXESTIMATED ADJUSTMENT AMOUNT:
20.1
Estimated Cash
$[●]
(a)
Echo Lake Foods Group
$[●]
(b)
Echo Lake Properties Group
$[●]
(c)
Elkin Properties Group
$[●]
20.2
Estimated Company Group Expenses
$[●]
(a)
Echo Lake Foods Group
$[●]
(b)
Echo Lake Properties Group
$[●]
(c)
Elkin Properties Group
$[●]
20.3
Estimated Indebtedness
$[●]
(a)
Echo Lake Foods Group
$[●]
(b)
Echo Lake Properties Group
$[●]
(c)
Elkin Properties Group
$[●]
20.4
Estimated Working Capital over Target Working
Capital
$[●]
(a)
Echo Lake Foods Group
$[●]
(b)
Echo Lake Properties Group
$[●]
(c)
Elkin Properties Group
$[●]
20.5
Target Working Capital over Estimated Working
Capital
$[●]
(a)
Echo Lake Foods Group
$[●]
(b)
Echo Lake Properties Group
$[●]
(c)
Elkin Properties Group
$[●]
20.6
Estimated Tax Liability Amount
$[●]
(a)
Echo Lake Foods Group
$[●]
(b)
Echo Lake Properties Group
$[●]
(c)
Elkin Properties Group
$[●]
20.7
Estimated Adjustment Amount
minus I.C plus the excess, if any, of I.D minus the excess, if any,
of I.E minus I.F)
($[●])
(a)
Echo Lake Foods Group
($[●])
(b)
Echo Lake Properties Group
($[●])
(c)
Elkin Properties Group
($[●])
ARTICLE XXIESTIMATED ADJUSTED EQUITY PRICE:
6
21.1
Purchase Price
$[250,000,000]
21.2
Estimated Adjustment Amount
$[●]
1.
Echo Lake Foods Group
$[●]
2.
Echo Lake Properties Group
$[●]
3.
Elkin Properties Group
$[●]
21.3
Adjustment Escrow Amount
$[●]
21.4
Indemnification Escrow Amount
$[●]
21.5
Estimated Adjusted Equity Price
(II.A minus II.B,
if II.B is negative or plus II.B, if II.B is positive minus II.C minus
II.D)
$[●]
1.
Echo Lake Foods Group
$[●]
2.
Echo Lake Properties Group
$[●]
3.
Elkin Properties Group
$[●]
ARTICLE XXIICLOSING DATE PAYMENT: $[●]
[Signature Page Follows; Remainder of Page Intentionally Left Blank]
7
IN WITNESS WHEREOF, the undersigned has executed this Closing Certificate as of the date first
written above.
SCOTT MEINERZ,
solely in his capacity as Sellers’ Representative
8
EXHIBIT C
CONSIDERATION ALLOCATION SCHEDULE
“Agreement”), by and among Cal-Maine Foods, Inc., a Delaware corporation (“Buyer”); the following
companies to be acquired, directly or indirectly, by Buyer on the terms and subject to the conditions set forth
in the Agreement (each, a “Company” and, collectively, the “Companies” or the “Company Group”): (i)
Echo Lake Foods, Inc., a Wisconsin corporation (“Echo Lake Foods”), (ii) ELT, LLC, a Wisconsin limited
liability company (“ELT”), (iii) Echo Lake Huntington, Inc., a Wisconsin corporation (“Huntington”), (iv)
Xenitel, Inc., a Wisconsin corporation (“Xenitel”), (v) Echo Lake Huntington 435, LLC, a Wisconsin limited
liability company (“Huntington 435”), (vi) Blue Grass Real Estate Co, LLC, a Wisconsin limited liability
company (“Blue Grass”), and (vii) Echo Yorkville, LLC, a Wisconsin limited liability company
(“Yorkville”); the following transferring entities and securityholders (each, a “Seller” and, collectively, the
“Sellers”): (i) Echo Lake Properties, LLC, a Wisconsin limited liability company (“Echo Lake Properties”),
(ii) Elkin Properties, LLC, a Wisconsin limited liability company (“Elkin Properties”), (iii) the holders,
collectively, of 100% of the Class A voting shares of Echo Lake Foods, as set forth on the signature pages
to the Agreement (each, a “Voting Securityholder” and, collectively, the “Voting Securityholders”); and
Scott Meinerz, in his capacity as Sellers’ Representative. All capitalized terms used but not otherwise
defined herein shall have the respective meanings ascribed to them in the Agreement.
9
ARTICLE XXIIIALLOCATION OF PURCHASE PRICE:
THE PURCHASE PRICE SHALL BE ALLOCATED AMONG THE TRANSFEROR
GROUPS AS FOLLOWS:
23.1
Echo Lake Foods Group
$[248,540,813]
23.2
Echo Lake Properties Group
$[1,762,300]
23.3
Elkin Properties Group
$[7,777,550]
ARTICLE XXIVESTIMATED ADJUSTMENT AMOUNT / FINAL ADJUSTMENT AMOUNT (
AS
APPLICABLE
):
24.1
Estimated Cash / Closing Cash (as applicable)
$__________
(a)
Echo Lake Foods Group
$__________
(b)
Echo Lake Properties Group
$__________
(c)
Elkin Properties Group
$__________
24.2
Estimated Company Group Expenses / Company
Group Expenses (as applicable)
$__________
(a)
Echo Lake Foods Group
$__________
(b)
Echo Lake Properties Group
$__________
(c)
Elkin Properties Group
$__________
24.3
Estimated Indebtedness / Closing Indebtedness (as
applicable)
$__________
(a)
Echo Lake Foods Group
$__________
(b)
Echo Lake Properties Group
$__________
(c)
Elkin Properties Group
$__________
24.4
Estimated Working Capital over Target Working
Capital / Closing Working Capital over Target Working Capital
(as applicable)
$__________
(a)
Echo Lake Foods Group
$__________
(b)
Echo Lake Properties Group
$__________
(c)
Elkin Properties Group
$__________
24.5
Target Working Capital over Estimated Working
Capital / Target Working Capital over Closing Working Capital
(as applicable)
$__________
(a)
Echo Lake Foods Group
$__________
(b)
Echo Lake Properties Group
$__________
(c)
Elkin Properties Group
$__________
24.6
Estimated Tax Liability Amount / Closing Tax
Liability Amount (as applicable)
$__________
(a)
Echo Lake Foods Group
$__________
(b)
Echo Lake Properties Group
$__________
(c)
Elkin Properties Group
$__________
24.7
Estimated Adjustment Amount / Final Adjustment
Amount (as applicable)
excess, if any, of II.D minus the excess, if any, of II.E minus II.F)
$__________
(a)
Echo Lake Foods Group
$__________
(b)
Echo Lake Properties Group
$__________
(c)
Elkin Properties Group
$__________
10
ARTICLE XXVESTIMATED ADJUSTED EQUITY PRICE / FINAL ADJUSTED EQUITY PRICE
(
AS APPLICABLE
):
25.1
Purchase Price
$[258,080,663]
1.
Echo Lake Foods Group
$[248,540,813]
2.
Echo Lake Properties Group
$[1,762,300]
3.
Elkin Properties Group
$[7,777,550]
25.2
Estimated Adjustment Amount / Final Adjustment
Amount (as applicable)
$__________
1.
Echo Lake Foods Group
$__________
2.
Echo Lake Properties Group
$__________
3.
Elkin Properties Group
$__________
25.3
Adjustment Escrow Amount (allocated in the same
proportions as the Purchase Price)
$__________
1.
Echo Lake Foods Group
$__________
2.
Echo Lake Properties Group
$__________
3.
Elkin Properties Group
$__________
25.4
Indemnification Escrow Amount (allocated in the
same proportions as the Purchase Price)
$__________
1.
Echo Lake Foods Group
$__________
2.
Echo Lake Properties Group
$__________
3.
Elkin Properties Group
$__________
25.5
Estimated Adjusted Equity Price / Final Adjusted
Equity Price (as applicable)
(III.A minus III.B, if III.B is negative
or plus III.B, if III.B is positive minus III.C minus III.D)
$__________
1.
Echo Lake Foods Group
$__________
2.
Echo Lake Properties Group
$__________
3.
Elkin Properties Group
$__________
2
remainder allocated to Echo Lake Foods Group.
11
EXHIBIT D
FORM OF
EXCLUDED ASSET ASSIGNMENT AGREEMENT
THIS EXCLUDED ASSET ASSIGNMENT AGREEMENT (this “Agreement”) is made and entered
into as of April [__], 2025 by and between ECHO LAKE FOODS, LLC, a Delaware limited liability
company, as successor by conversion to ECHO LAKE FOODS, INC., a Wisconsin corporation
(“Assignor”), and MEINERZ HOLDINGS, INC., a Wisconsin corporation (“Assignee”). Reference is made
to that certain Securities Purchase Agreement, dated April [__], 2025 (the “Purchase Agreement”), by and
among Assignor, ELT, LLC, a Wisconsin limited liability company, Echo Lake Properties, LLC, a
Wisconsin limited liability company, Elkin Properties, LLC, a Wisconsin limited liability company, Echo
Lake Huntington, Inc., a Wisconsin corporation, Xenitel, Inc., a Wisconsin corporation, Echo Lake
Huntington 435, LLC, a Wisconsin limited liability company, Blue Grass Real Estate Co, LLC, a Wisconsin
limited liability company, Echo Yorkville, LLC, a Wisconsin limited liability company, Cal-Maine
Foods, Inc., a Delaware corporation, the holders of 100% of the issued and outstanding shares of Class A
voting common stock of Assignor and certain other parties.
RECITALS
A. Assignee is the sole member of Assignor, and Assignor is classified as a disregarded entity
(within the meaning of Treasury Regulations Section 301.7701-3(b)(1)(ii) and analogous state and local
provisions) of Assignee for U.S. federal and applicable state and local income tax purposes.
B. Assignor desires to distribute and assign the Excluded Assets to Assignee, and Assignee
desires to accept such assignment.
C. Capitalized terms not otherwise defined herein have the meaning given to them in the
Purchase Agreement.
AGREEMENTS
In consideration of the recitals and the mutual agreements contained herein, the parties agree as
follows:
12
ARTICLE XXVIEFFECTIVE AS OF IMMEDIATELY AFTER THE CONVERSIONS, ASSIGNOR
HEREBY DISTRIBUTES, TRANSFERS AND ASSIGNS TO ASSIGNEE ALL RIGHT, TITLE
AND INTEREST IN AND TO THE EXCLUDED ASSETS, AND ASSIGNEE HEREBY ACCEPTS
SUCH ASSIGNMENT.
ARTICLE XXVIITHE PARTIES AGREE THAT THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT ARE INTENDED TO BE TREATED AS DISREGARDED FOR FEDERAL
AND APPLICABLE STATE AND LOCAL INCOME TAX PURPOSES, AND SHALL FILE ALL
TAX RETURNS IN A MANNER CONSISTENT WITH SUCH INTENT.
ARTICLE XXVIIIIN THOSE CASES WHERE (A) ANY EXCLUDED ASSET IS NOT BY ITS
TERMS ASSIGNABLE OR (B) THE ASSIGNMENT OF SUCH EXCLUDED ASSETS
REQUIRES THE CONSENT OF A THIRD PARTY IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, ASSIGNOR AND ASSIGNEE
WILL, PRIOR TO AND AFTER THE CLOSING, COOPERATE AND USE THEIR
RESPECTIVE REASONABLE BEST EFFORTS TO OBTAIN ALL CONSENTS AND WAIVERS
AND TO RESOLVE ALL IMPRACTICALITIES OF ASSIGNMENTS AND TRANSFERS
NECESSARY TO CONVEY OR GIVE ASSIGNEE THE RIGHT TO ANY SUCH EXCLUDED
ASSETS. IF ASSIGNOR COLLECTS ANY PAYMENTS WITH RESPECT TO THE
EXCLUDED ASSETS, ASSIGNOR WILL REMIT SUCH AMOUNTS, WITHOUT OFFSET OR
HOLDBACK, TO ASSIGNEE NO LATER THAN FIVE BUSINESS D
AY
S AFTER THE DATE
ON WHICH SUCH COLLECTION OCCURS.
ARTICLE XXIXTHE TERMS AND CONDITIONS OF THIS AGREEMENT SHALL BE BINDING
UPON AND SHALL INURE TO THE BENEFIT OF THE PARTIES AND THEIR RESPECTIVE
SUCCESSORS, ASSIGNS AND HEIRS. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
DELAWARE, REGARDLESS OF CONFLICT OF LAW PRINCIPLES. THIS AGREEMENT
MAY BE EXECUTED IN ONE OR MORE COUNTERPARTS, EACH OF WHICH SHALL BE
DEEMED AN ORIGINAL AND ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE
DOCUMENT. THIS AGREEMENT MAY BE SIGNED AND DELIVERED BY FACSIMILE OR
ELECTRONICALLY IN PORTABLE DOCUMENT FORMAT (“.PDF”) OR ANY SIMILAR
ELECTRONIC FORMAT, AND FACSIMILE OR .PDF SIGNATURES SHALL BE BINDING
FOR ALL PURPOSES HEREOF.
[
Signature Page Follows; Remainder of Page Left Intentionally Blank
]
13
IN WITNESS WHEREOF, the parties have executed this Assignment Agreement as of the date first
written above.
ASSIGNOR:
ECHO LAKE FOODS, LLC
By:
Scott Meinerz, President
ASSIGNEE:
MEINERZ HOLDINGS, INC.
By:
Scott Meinerz, President
14
EXHIBIT E
FORM OF
OPERATING AGREEMENT
OF
ECHO LAKE FOODS, LLC
The undersigned, Meinerz Holdings, Inc., a Wisconsin corporation (the “Member”), is entering into this
Operating Agreement (this “Operating Agreement”) for the purpose of establishing the governance,
management and capitalization of Echo Lake Foods, LLC, a Delaware limited liability company (the
“Company”). The undersigned acknowledges and agrees as follows:
15
1.
THE CERTIFICATE OF FORMATION OF THE COMPANY, FILED WITH THE
DELAWARE SECRETARY OF STATE , EFFECTIVE AS OF [__], 2025, PURSUANT TO THE
CONVERSION OF ECHO LAKE FOODS, INC., A WISCONSIN CORPORATION, INTO A
DELAWARE LIMITED LIABILITY COMPANY, IS HEREBY ADOPTED, RATIFIED AND
CONFIRMED.
2.
THIS OPERATING AGREEMENT, TOGETHER WITH THE APPLICABLE
PROVISIONS OF THE DELAWARE LIMITED LIABILITY COMPANY ACT (THE “ACT”), AS
SUPPLEMENTED BY THIS OPERATING AGREEMENT, SHALL GOVERN ALL RIGHTS AND
OBLIGATIONS OF THE MEMBER.
3.
THE SOLE MEMBER AND EQUITY OWNER OF THE COMPANY SHALL BE
THE MEMBER, WHO SHALL OWN 100% OF THE ISSUED AND OUTSTANDING EQUITY
INTERESTS IN THE COMPANY, CONSISTING OF ONE CLASS CALLED LIMITED
LIABILITY COMPANY MEMBERSHIP INTERESTS.
4.
THE MEMBER SHALL BE ENTITLED TO A 100% INTEREST IN THE
CONTRIBUTIONS, PROFITS, LOSSES AND DISTRIBUTIONS OF THE COMPANY. ANY
DISTRIBUTION OR RETENTION OF THE PROFITS AND ASSETS OF THE COMPANY
SHALL BE MADE IN THE DISCRETION OF THE MEMBER.
5.
THE COMPANY SHALL BE MEMBER-MANAGED AND SHALL CONDUCT
SUCH OPERATIONS AND BUSINESS AS THE MEMBER SHALL DETERMINE ARE IN THE
COMPANY’S BEST INTERESTS.
6.
UNLESS OTHERWISE SET FORTH IN A WRITTEN AGREEMENT, ALL DEBTS,
OBLIGATIONS AND LIABILITIES OF THE COMPANY, WHETHER ARISING IN CONTRACT
OR OTHERWISE, SHALL BE THE DEBTS, OBLIGATIONS AND LIABILITIES OF THE
COMPANY AND NOT OF ANY MEMBER.
7.
THE MEMBER IS HEREBY AUTHORIZED AND DIRECTED, FOR AND ON
BEHALF OF THE COMPANY, TO TAKE ANY ACTIONS AND EXECUTE, DELIVER AND
PERFORM ANY DOCUMENTS, AGREEMENTS AND OTHER INSTRUMENTS AS THE
MEMBER DEEMS NECESSARY OR APPROPRIATE TO ORGANIZE THE COMPANY AND
CONDUCT ITS BUSINESS. ALL OF SUCH DOCUMENTS, AGREEMENTS AND OTHER
INSTRUMENTS ARE TO BE IN SUCH FORM AND CONTAIN SUCH PROVISIONS AS THE
MEMBER EXECUTING THE SAME SHALL APPROVE, AND THE SIGNATURE OF THE
MEMBER APPEARING THEREON SHALL BE CONCLUSIVE EVIDENCE OF ITS APPROVAL
THEREO
F.
8.
THE MEMBER MAY BESTOW UPON EMPLOYEES OR REPRESENTATIVES OF
THE COMPANY SUCH TITLES AS THE MEMBER DEEMS NECESSARY OR EXPEDIENT TO
ENABLE IT TO CARRY OUT ITS DUTIES ON BEHALF OF THE COMPANY . SUCH TITLES
MAY INCLUDE “CHAIR,” “PRESIDENT,” “CHIEF EXECUTIVE OFFICER,” “CHIEF
FINANCIAL OFFICER,” ONE OR MORE “VICE PRESIDENTS,” “TREASURER” OR
“SECRETARY ,” OR SUCH OTHER POSITIONS OR TITLES AS THE MEMBER DEEMS
ADVISABLE. SUCH PERSONS, IN THEIR RESPECTIVE ROLES AS OFFICERS OF THE
COMPANY, MUST DISCHARGE THEIR DUTIES IN GOOD FAITH WITH THE CARE THAT
AN ORDINARY, PRUDENT PERSON IN A LIKE POSITION WOULD EXERCISE UNDER
SIMILAR CIRCUMSTANCES, AND IN A MANNER THE MEMBER REASONABLY BELIEVES
TO BE IN THE BEST INTERESTS OF THE COMPANY.
16
9.
NO OFFICER OR AGENT APPOINTED BY THE MEMBER SHALL BE LIABLE,
RESPONSIBLE OR ACCOUNTABLE IN DAMAGES OR OTHERWISE TO THE COMPANY OR
THE MEMBER FOR ANY ACTS PERFORMED OR OMITTED BY SUCH PERSON IN GOOD
FAITH, EXCEPT FOR ACTS OR OMISSIONS THAT CONSTITUTE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. THE OFFICERS SHALL BE INDEMNIFIED AND HELD
HARMLESS BY THE COMPANY, TO THE EXTENT OF THE COMPANY’S ASSETS, AGAINST
OBLIGATIONS AND LIABILITIES ARISING OR RESULTING FROM OR INCIDENTAL TO
THE MANAGEMENT OF THE COMPANY’S AFFAIRS AND, IN ALL CASES, TO THE EXTENT
THAT THE ACT PROVIDES FOR INDEMNIFICATION OF SUCH PERSONS; PROVIDED,
HOWEVER, THAT NO PARTY SHALL BE ENTITLED TO INDEMNIFICATION HEREUNDER
FOR ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
10.
AT ANY TIME WHEN THERE IS ONLY ONE MEMBER OF THE COMPANY AND
THERE IS AN EVENT OF DISSOCIATION, INCLUDING A MEMBER CEASING TO BE A
MEMBER OF THE COMPANY BY REASON OF DEATH, A SALE OR OTHER TRANSFER OF
INTEREST OR BANKRUPTCY, ANY PERSON OR ENTITY SUCCEEDING TO THE
MEMBER’S INTEREST AS A RESULT OF SUCH EVENT OF DISSOCIATION SHALL BE A
MEMBER WITHOUT FURTHER ACTION ON THE PART OF THE TRANSFEREE, THE
COMPANY OR THE DISSOCIATED MEMBER, AND SUCH EVENT OF DISSOCIATION
SHALL NOT CAUSE OR RESULT IN THE DISSOLUTION OF THE COMPANY.
[
Signature Page Follows; Remainder of Page Intentionally Left Blank
]
17
Dated as of the ____ day of __________________, 2025.
MEMBER
:
MEINERZ HOLDINGS, INC.
By: